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A severance agreement is a legal contract that an employer may ask a worker to sign when he or she is terminated or otherwise leaves employment. If your employer requests that you sign a severance agreement, you should carefully review it with an experienced employment law attorney. There are several clauses that employers sometimes include in such agreements that can negatively impact you, making legal review imperative. In this article, we discuss what to look for before signing a severance agreement.
Non-Competition or Non-Solicitation Clause
A non-competition clause is a contractual language that limits who, where, and when you can work after you are terminated from your current position. Although such clauses are sometimes enforceable, they must be narrowly tailored. For example, a non-competition clause may stipulate that an employee is prohibited from working for any competitors of their former employer within a specific geographic region.
A non-solicitation clause, on the other hand, prohibits you from soliciting your former company’s employees or clients after you leave. In other words, if you sign a severance agreement that contains a non-solicitation clause, you can’t later encourage your former co-workers to come work for your new company. In addition, you cannot solicit your ex-employer’s clients to become customers of your new employer. Like non-competition clauses, non-solicitation clauses are legally enforceable under certain circumstances. However, you should consult with an attorney before signing an agreement that contains either type of provision.
Failure to Make a Lump-Sum Severance Payment
A lump-sum severance payment typically accompanies a severance agreement. However, some companies attempt to make severance payments in installments. It is not advisable to agree to installment payments in a severance agreement. Doing so increases the risk that your employer will stop making payments before the total amount due is paid.
Speech Limitations
Severance agreements sometimes contain non-disparagement clauses, which limit what you can say about your former employer and co-workers. The goal with this type of provision is to keep you from saying anything negative about your former company to others. However, when a severance agreement contains this type of provision, it’s important to make sure that it also contains such a limitation for your former employer, including a limitation on the company’s ability to speak negatively about you to future prospective employers who contact the company for a reference.
Provisions Limiting Your Ability to File for Unemployment
Finally, in the majority of states, you can’t receive unemployment benefits if you quit your job or were terminated for cause. Therefore, you should carefully review your severance agreement for language indicating that you are quitting or being terminated for performance issues. Signing an agreement that contains such language can affect your ability to obtain unemployment benefits.
Contact Our Experienced Employment Law Attorney in Rhode Island & Massachusetts
If you need assistance reviewing a severance agreement, you should contact an experienced attorney as soon as possible. At Herman Law Group, our experienced lawyers are here to meet your legal needs. Regardless of your situation, we will evaluate your situation, plan a legal strategy, and take the necessary steps to resolve your issue. Please contact us today to schedule a consultation with a talented employment law attorney.
Herman Law Group is based in Providence but offers its services throughout Rhode Island, including Bristol County, Kent County, Washington County, Providence County, Warwick, & Cranston. Additionally, the firm extends expertise in Attleboro, Boston, and across the rest of Massachusetts.