Severance Agreements in Virginia

By Kimberly H. Berry, Esq., www.berrylegal.com

In Virginia, most employees are considered “at will,” which generally means they can be terminated or resign at any time. Even if they are “at will,” when an employee’s employment ends, an employer may offer severance to an employee in exchange for the employee’s waiver of his / her rights, including the right to file suit for any work-related issues. In Virginia, in the absence of an employment contract, an employer usually has no obligation to provide an employee severance pay. If severance pay is offered, an employer will almost always provide the employee with a severance agreement. It is important to obtain legal advice before signing such an agreement.

What is a Severance Agreement?

In Virginia, a severance agreement is a contract between an employee and an employer that specifies the terms of an employment departure. Severance agreements can be offered in cases of terminations, resignations, layoffs and/or retirement. They may be available in other types of situations as well. In order for a severance agreement to be valid, it must usually provide something of value to the employee to which the employee is not already entitled. For example, in most cases, a certain financial sum is provided to the departing employee by an employer in exchange for a waiver of rights, usually referred to as a general release, by the employee.

Additionally, in Virginia and many other states, employers are generally required to provide an employee time to consider a severance agreement before signing. The Older Workers Benefit Protection Act (OWBPA), in part, requires that an employer provide employees over 40 years of age with a 21-day consideration period, or a 45-day consideration period in the case of a large reduction-in-force (RIF), and at least a 7-day revocation period. Oftentimes, employers rush employees to sign a severance agreement and do not adhere to the procedures for severance agreements. The terms of a severance agreement are generally negotiable between the employer and employee. However, an employee will not necessarily be told this when the employer offers the severance agreement.

Considerations in Negotiating Severance Agreements

Some of the issues to consider in advance of signing a severance agreement may include, but are not limited to, the following:

Financial terms and timing of severance payments

Tax consequences

Non-disparagement clauses

Re-employment/re-hiring possibilities for departing employee

Continuation of employment benefits (i.e. health)

Unemployment compensation issues

Which claims are waived

Confidentiality terms

Scope of non-competition after leaving employment

Preservation of trade secrets

References and points of contact for prospective employers

Recommendation letters

Consequences of violating the severance agreement

Each severance case is different and an employee may need legal representation in negotiating a severance agreement. Before an employee signs a severance agreement, he or she should consult with an attorney to discuss the rights that he or she may be waiving and the terms of the severance agreement.

Conclusion

If you need assistance with negotiating a severance agreement in Virginia, please contact our office at 703-668-0070 or at www.berrylegal.com to schedule a consultation. Please also like and visit us on Facebook at www.facebook.com/BerryBerryPllc.