Severance pay might seem like a take-it-or-leave-it offer, but often times it’s not. If you’ve been offered a severance agreement, don’t assume the terms are final or that signing quickly is in your best interest. Depending on the circumstances of your termination, you may have significant leverage to negotiate better terms.
Why Severance Agreements Exist
As we discussed in our previous blog (link other blog post), severance agreements are primarily designed to benefit the employer. In exchange for financial compensation (separation pay), the employer expects a release of claims from the employee. This, of course, includes any legal claims you may have relating to your termination.
For that reason, it is critical to consider why you were terminated before agreeing to sign anything. The release your former employer is after may be worth more than they’re offering to pay you.
When You Should Consider Negotiating
You may not want to sign your separation agreement if your termination was against the law. Generally, in an employment at-will jurisdiction (like Texas), employers are free to terminate their employees for no reason at all. There are, however, statutory protections that prohibit employers from terminating employees under certain circumstances, as discussed below:
1. Employers may not discriminate based on protected characteristics
If your termination followed complaints about discrimination or disparate treatment or if you believe your race, religion, sex, national origin, pregnancy, disability, or other protected characteristic played a role, you may have a legal claim.
Claims based on discrimination must be directly tied to the protected characteristic to give rise to a legal claim. Examples of conduct that may be actionable include:
- A qualified Latino candidate is passed over for promotion in favor of a less qualified White colleague.
- A supervisor makes derogatory comments about Asian employees and subsequently terminates one without clear justification.
- A Sikh applicant is rejected for a front-facing role because of his turban, despite meeting all qualifications.
- Jewish employees are regularly scheduled to work on Yom Kippur, while non-Jewish coworkers receive holidays off upon request.
- A woman is denied a raise because her supervisor believes she will become pregnant and leave the company.
- Male sales representatives are allowed to entertain clients after hours at company expense, while female employees are told to “stay in the office.”
If you think there’s a chance you faced discrimination, you should talk to a lawyer before signing your rights away in a separation agreement.
2. Employers may not retaliate against employees for engaging in protected activity
If you were recently on protected medical leave under the Family and Medical Leave Act (FMLA) or requested a reasonable accommodation under the ADA, and then found yourself terminated, your severance agreement deserves careful scrutiny. Timing matters and if the termination closely follows protected activity, that could signal retaliation. Examples of conduct that may be actionable include:
- An employee is terminated immediately after requesting FMLA leave for a sick child.
- An employee is terminated after requesting a reasonable accommodation for a disability.
- An employee is terminated after disclosing a disability.
In these situations, a severance agreement might be an attempt to prevent legal exposure. You may be able to negotiate for a larger payout or additional benefits.
Should I Negotiate? Or Should I File a Lawsuit?
If you believe that your termination was wrongful for the reasons discussed above, you should carefully consider how to proceed. Filing a lawsuit is time consuming, expensive, emotionally draining, and often times a gamble—negotiating a fair separation package may be a compromise worth making.
Accordingly, if you feel that you have a legal claim, you should talk to an attorney to discuss your rights and the value of any potential claims you may have. Before you waive your rights, make sure you fully understand what you’re giving up and whether the offer reflects the circumstances of your departure.
At our firm, we regularly review and negotiate severance agreements to ensure our clients are treated fairly and legally. If you’ve been offered a severance package, and you feel the circumstances of your termination are suspect, we can help you determine whether negotiation is in your best interest.
Contact us today to schedule a consultation.