By Kimberly H. Berry, Esq., www.berrylegal.com
In Virginia, most employees are considered “at will” which usually means they can be terminated at any time and for any reason, unless illegal. Even if an employee is considered “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 or her rights, including the right to file a lawsuit or other claim for any work-related issues. When dealing with severance agreements in Virginia, it is important to have a lawyer review them before they are signed. This article discusses the importance of hiring a severance agreement lawyer and how they can assist employees when they leave an employer.
Most Typical Ways in Which Severance Agreements Arise
In the Commonwealth of Virginia, in the absence of an employment contract, an employer typically has no obligation to provide an employee severance pay or make other agreements with the department employee. If severance pay is offered, an employer will almost always provide the employee with a severance agreement, along with a release to sign. It is important for an employee to obtain legal advice and an agreement review 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 retirements. Severance agreements may be available in other types of situations as well. In order for a severance agreement to be upheld, 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 amount of compensation or salary 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.
Other Severance-Related Laws
Additionally, in Virginia, along with many other states, employers are generally required to provide an employee necessary time to consider a severance agreement before signing. The Older Workers Benefit Protection Act (OWBPA), in part, requires that an employer provide employees that are 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), along with a 7-day revocation period. It is too often the case that employers inform an employee of their pending termination and then push them 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 usually be told this when the employer offers the severance agreement. This is why it is very important for an employee to obtain legal advice before signing a severance agreement in Virginia.
Typical Issues and Terms in Negotiating Severance Agreements
Some of the more common issues to consider in advance of signing a severance agreement may include, but are not limited to, the following:
(1) Financial terms and timing of severance payments; (2) Continuation of employment benefits (i.e. health or disability insurance); (3) Unemployment compensation challenges; (4) Non-disparagement clauses; (5) Re-employment/re-hiring possibilities for departing employee; (6) Defining the employee and employer claims which are waived; (7) Confidentiality terms and exceptions; (8) Scope of non-competition after leaving employment; (9) Preservation of trade secrets; (10) References and points of contact for prospective employers; (11) Reference Letters; and (12) Consequences of violating the severance agreement
Each severance agreement and termination are different and individually fact-based. Before an employee signs a severance agreement, he or she should consult with an experienced severance agreement lawyer to discuss the rights that he or she may be waiving and potential improvements to the terms of the severance agreement.
Reasons to Retain a Severance Lawyer
Given the above variables in severance agreements, it is crucial to have an employment lawyer review a proposed severance agreement. Besides understanding the terms like those discussed above, a severance agreement attorney can help with the following negotiable issues:
a. Terms: It is important to know that when an individual is given a proposed severance agreement that they can actually negotiate over the terms. Often, when the individual is unrepresented management is unwilling to change the terms of the proposed agreement. However, when an attorney is involved the chances of having a meaningful negotiation and the employee receiving better terms goes up.
b. Money Owed to Employee: If an employee is owed money by an employer (e.g. leave, expenses) the employer must usually pay it with or without a severance agreement. However, it is helpful to include terms in a severance agreement specifying when and how such payment will occur.
c. Severance Payment Terms: This is usually one the more important items in negotiating severance. Having counsel argue for a longer period of severance pay can often be important to an agreement. Experienced severance lawyers have a good sense as to the best arguments to obtain the best potential severance package.
d. Employee Benefits: Severance attorneys can also help clients negotiate over health insurance other employee benefits. This can be critical, especially where health issues are involved, children have insurance coverage, and must usually be negotiated.
e. Non-Disparagement and Reference Terms: If a severance lawyer is representing an employee, they can be useful in addressing and resolving how the parties will refer to the dispute and termination (i.e., will it be change to a resignation, will the individual receive a reference or reference letter, etc.). A severance attorney can also negotiate the terms of non-disparagement involving a former employer and co-workers. A severance lawyer can navigate and propose solutions to these types of issues in advance.
f. Non-Compete Clauses: Included within many severance agreement are non-compete clauses which can be negotiated. Sometimes attorneys can get the employer to agree not to include one and other times an attorney can potentially get the terms favorably altered.
g. Confidentiality Information Clauses: In most boilerplate severance agreements, there are strict confidentiality clauses. A severance attorney can assist an employee in ensuring that exceptions are made where appropriate.
h. Proprietary Information: When an employee is represented by a severance attorney, they can negotiate over the issues involved. For instance, an employer will want to protect their confidential business information, but an employee may also have personal information that they wish to retain and can be part of the severance negotiations.
i. Release of Claims: An attorney can help to maximize the types of claims released in a severance agreement and claims that can be asserted against the employee. This can often be very important.
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. It is very important to have an employment attorney review all severance agreements. Given the legalese that is prevalent in these types of agreements, most employees are fully aware of what they are agreeing to or the ramifications of certain provisions. We review and provided advice on severance agreements in Virginia and the District of Columbia.