Severance Agreements

 A severance agreement is a legal contract regarding an employee's departure from a company. It may be called a separation agreement, termination agreement or similar. Typically, a severance agreement will include details such as the effective date of the break, the compensation and benefits the employee will receive upon leaving the company, and any restrictions on the employee's future employment or conduct.
 
An employer will offer a severance agreement to employees that were terminated, laid off, or who left the company voluntarily. Severance agreements often include a release of claims, which means that the employee agrees not to sue the company for any claims related to their employment or separation. In exchange for this release, the employer typically offers the employee a package of compensation and benefits.
 
Some of the critical elements of a severance agreement may include:

• Compensation: The agreement typically outlines the severance pay and other benefits the employee will receive, such as outplacement services or continuation of health insurance.
• Release of claims: The agreement may include a disclaimer in which the employee agrees not to sue the company for any claims related to their employment or separation.
• Non-compete clause: The agreement may include a non-compete clause. This clause disallows the employee from working for a company competitor for a certain period after leaving. 
• Non-disclosure and non-solicitation clauses prohibit the employee from disclosing confidential information or soliciting the company's customers or employees after leaving the company.
• Timing of payment: The agreement should specify when the employee will receive severance pay and benefits.
• Intellectual Property. The agreement may have provisions that cover intellectual property and trade secrets that you will be prohibited from using or disclosing in any future work.

 
There are state and federal rules that must be upheld by the agreement.  It is important to consult with an employment attorney that can guide you and explain the severance agreement so you can make an informed decision about whether you want to sign it and release your claims. Also, if you are filing for unemployment benefits, it is important to know how a severance agreement may affect those benefits. These agreements can affect your future positions and hireability, so it is vital to know what you may be giving up if you choose to accept a severance agreement.
 
It is necessary for employees to review these agreements carefully and consult with legal representation, as they may give up fundamental rights in exchange for the severance package.
 
At Cohoon Legal, we assist clients with severance agreement negotiation, wage claims, wrongful termination, discrimination claims, TWC/EEOC filing, and settlements. Set up an employment consultation today to determine your options when faced with an employment issue.


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