If you have ever had your employment terminated, or been a part of the process, you will probably know that the process can be very fast, and for those on the receiving end, a big surprise.
Often, the soon to be former employee will be told they are being terminated and have a “severance agreement” or “separation agreement” dropped on the desk in front of them. Someone (e.g., a boss, manager, or HR representative) with limited knowledge of the agreement will then generally talk through the agreement and ask that it be signed.
So, the question is, if this were to happen to you, what would you do? You might think you could be calm and level headed, but in reality, the situation is awkward, you are uncomfortable and all you want to do is get away.
Well, the answer is first and foremost, take a deep breath and read the document – and remember, you do not have to sign anything if you are not comfortable with it.
Here are some questions for you to keep in mind:
- Is the document stating that the company is firing you, letting you go, laying you off or asking you to say you quit? Do the statements in the document match what you believe is happening? Does it match what your manager/supervisor told you?
- Does the letter demand that you give up some personal rights, such as your right to file a claim/complaint against the company?
- How detailed is the letter – does it simply say you are being terminated on a specific day or does it state the reason for termination?
- Does the letter deviate from your understanding of your employment agreement or company handbook?
- Does the letter offer you some amount of money in exchange for your agreement to release all potential claims or your cooperation with a non-compete agreement?
GET MORE INFORMATION
If you are confused, flustered, or uncomfortable, ask some questions. There is no law or rule that says you have to sign anything without getting all the information you require. If the person speaking with you cannot explain what’s in the document, ask to speak with someone who can. If no one can answer your questions, ask to take the document home with you to think about it.
SEVERANCE AGREEMENT PITFALLS
The last thing you want to do is sign something that you are unclear about. If the severance agreement is asking for a confession or admission of guilt or is stating you that you give up some employee rights, you can refuse to sign it or can opt to instead take it home for further review.
Another important factor to consider is the letter’s impact on your unemployment compensation, if any. For example, if the company wants you to say you quit and you are being laid off, are you still eligible for unemployment? Be sure to check your State Unemployment regulations.
Nowadays, many separation agreements will often contain non-compete clauses and/or confidentiality clauses. You want to make sure you take as long as you need to review these clauses to be absolutely clear in your understanding. Litigation related to non-compete clauses is almost a constant in today’s business environment.
Finally, another major concern is giving up your employee rights to any benefits, monies due (bonus, stock, equity), EEOC and unlawful termination claims or any rights to sue in exchange for a financial settlement.
CONSIDER AN ALTERNATIVE
If you refuse to sign your termination paperwork, your ex-employer will not be happy. Do you care? Maybe not, though it is always best to leave on good terms and there may be a win-win solution.
When you sign the termination papers, you can include the following phrase under your signature:
Signature acknowledges receipt only
By including this caveat, you leave little doubt about why you are signing the document. There is no admission of guilt or agreement on why the company is terminating your services.
Additionally, always ask the company to make a copy of your termination paperwork for your records. The company is not obligated to do this (unless you are being asked to sign a separation agreement), so if they say “no” do not be surprised. Remember though, if you do not ask, you will never receive what you want.
In most states, you are not required to sign a termination document – check your state’s regulations for additional information. There are companies who terminate people in many ways – by phone, fax or e-mail – all without signatures required.
Most states have payday laws that make it illegal for companies to withhold your final paycheck for not signing a termination notice. If they do, contact your local Department of Labor. Some states require employers to have the final paycheck at the time of termination or within a set amount of days.
Employees who are in a union or are under an employment agreement will have a defined process in their contract and should refer to it for the correct procedure.
But no matter what, it is important to remember not to rush through this process. We all understand it can be difficult an awkward, but the last thing you want to do is make an unwise decision that will haunt you for years to come.
NOTE: Situations involving the end of an employment relationship and severance agreements are often complicated and require individual analysis. Please remember that this advice does not apply to every situation and is not meant to be legal advice. If you have any questions about a termination or severance agreement, please consult with a knowledgeable and experienced employment attorney.