Laid Off: Should I Sign a Severance Agreement?

Upon termination, an employer may offer you a severance agreement. The intent of these agreements is to compensate a laid off employee in exchange for a promise not to sue the employer in the future. Because severance agreements are not mandatory, employers may choose to offer laid off employees a severance agreement with the terms of its choice.

If you've been laid off and presented with a severance agreement, it is important to understand the terms that you may be agreeing to. Here are a few things you should consider before you sign.

• Is there a non-compete clause? If so, will it prevent you from finding employment locally? Attorney Donna M. Ballman also warns that a non-compete clause that lasts longer than severance payments may not be worth it.
• How does the severance agreement handle your pension and any other employer contributions? The last thing you want is to sign your pension away.
• Is the agreement mutual? In other words, does an employer also have to promise not to sue you in the future and maintain confidentiality?
• Do you have any potential claims against the employer? It's possible that you have a wrongful termination suit as a result of being laid off. Such a suit can result in more compensation than a standard severance agreement.

The list doesn't end here. In addition to making sure the offered terms of a severance agreement are favorable, you may want to consider making them more favorable. It's possible to negotiate a severance agreement, or even to ask for one if not initially offered. This process, however, may require an employment attorney, as complicated issues of contract and employment law are involved.

Related Resources:

• Severance Pay and Benefits Considerations (FindLaw)
• Wrongful Termination Claims (FindLaw)
• Employee Rights after a Job Termination (FindLaw)
• Job Loss: Your Rights (FindLaw)