Severance Agreement Lawyer Lansing, MI

When an employer–employee relationship in Lansing ends, an employer may ask the employee to sign a severance agreement. This document governs the terms of the end of an employee’s employment and imposes various obligations on both parties, some of which may last after the relationship otherwise ends. As a severance agreement can have significant consequences as you leave your employer and your professional life, it’s important that you consult an experienced employment law attorney to help you make an informed decision about whether to sign or to propose alternative terms.

Don’t put your future at risk. Instead, contact Fagan McManus, P.C. today for a free initial case evaluation with a severance agreements lawyer serving Lansing. We are ready to advise you on your options and advocate for your rights.

Understanding Severance Agreements

In a severance agreement, an employer and employee enter a contract to outline the terms of the employee’s departure from the company. Employers may ask employees to sign severance agreements under various circumstances of an employee’s departure, including termination, layoff, or the employee’s voluntary resignation.

Under a severance agreement, an employee usually waives claims they may have against the employer in exchange for the employer providing compensation or other benefits to the employee. Employers prefer severance agreements to have finality at the conclusion of an employee’s employment; by releasing claims, the employer knows the employee will not try to sue the company after leaving employment.

Employers can also benefit from various legal protections in a severance agreement, such as non-disclosure, non-competition, non-solicitation, and non-disparagement clauses. However, employees may also receive benefits from a severance agreement, including financial compensation or the temporary continuation of employment benefits like health insurance, which can provide a cushion to employees as they look for their next job.

An employee does not need to sign a severance agreement to obtain payment of their final wages and earned commissions, as wage and hour laws entitle workers to that pay within a certain period after their last day of work.

Key Components of Severance Agreements

A severance agreement may contain various provisions to address employers’ and employees’ specific issues or concerns. Some of the most common aspects of severance agreements in Lansing are as follows:

Severance pay: Severance agreements may provide additional financial payments (beyond last wages) to an employee as consideration for the employee signing the agreement. This financial payment may take the form of a single lump sum payment (usually when intended as a payment to settle claims) or periodic payments that can provide a financial bridge until the employee can find and start new employment.
Continuation of employment benefits: A severance agreement may temporarily continue an employee’s employment benefits, such as health/dental/vision insurance, either paid for by the employer or via COBRA (at the employee’s expense).
Retirement benefits and deferred compensation: Agreements can address the disposition of an employee’s retirement benefits, such as 401(k) accounts or pension benefits, deferred compensation, and unvested stock options.
Non-disparagement: A severance agreement may require an employee not to make negative oral or written statements about the employer to other parties.
Restrictive covenants: Severance agreements may impose various temporary restrictive covenants, such as non-compete and non-solicitation clauses, on employees in exchange for their severance pay.
Confidentiality: The parties may negotiate a confidentiality clause for a severance agreement, which prohibits them from discussing the agreement’s terms except with their legal counsel.
Releases of legal claims: Severance agreements usually contain mutual releases of claims, under which an employee agrees not to sue the employer under wage and hour or other employment laws and to release any active claims they have already filed, such as discrimination, harassment, or retaliation claims. The employer may also agree not to file any claims against the employee relating to their work.
References and rehire eligibility: A severance agreement may obligate an employer to give a favorable reference to an employee or prohibit the employer from giving a negative reference. The agreement can also address the employee’s eligibility for rehire in another position by the employer or its affiliates.

Considerations Before Signing Severance Agreements

Before you sign any severance agreement, you should

Know your rights to review the agreement: Employers should provide employees with a reasonable amount of time to review a severance agreement and seek legal counsel. The Older Workers Benefit Protection Act requires at least 21 days to review a severance agreement for workers 40 and older (45 days for a worker terminated as part of a group layoff).
Understand waivers of rights: You should understand what rights or claims you will waive by signing a severance agreement. An employment law attorney can advise you of the validity or enforceability of such waivers.
Consider negotiating the agreement’s terms: Be sure to evaluate the fairness of a severance agreement based on your employer’s willingness to negotiate its terms. A severance agreement presented as a “take-it-or-leave-it” affair may have terms that disproportionately favor the employer.
Watch for potential red flags: Be on the lookout for provisions such as extremely broad waivers of claims or vague language that leaves your rights or obligations subject to interpretation.

Can You Negotiate a Severance Agreement?

An employee who has issues with one or more terms in a proposed severance agreement can request to negotiate those terms to reach a fairer agreement. Most employers will entertain negotiations over various severance agreement terms due to the benefits that the employer can obtain from the agreement. Some of the terms that employers may negotiate include the severance payment amount, the duration of continued employment benefits, the scope of restrictive covenants, and the employer’s obligations regarding employment references.

An experienced employment law attorney from Fagan McManus, P.C. can help you negotiate a severance agreement with your employer by sitting down with you to discuss your needs, concerns, and goals to develop a tailored negotiation strategy. As skilled negotiators, we are well-positioned to argue persuasively that your employer agree to more favorable terms. We can also review proposed agreements to explain your rights and obligations under the agreement and advise you whether it represents a fair agreement. Armed with this knowledge, you can make an informed decision about whether to sign a proposal.

Common Legal Issues and Challenges with Severance Agreements

Here are some of the top issues that can later cause problems or conflicts over severance agreements:

Invalid or unenforceable provisions: Some state and federal employment laws restrict an employer’s ability to secure an employee’s waiver of their rights to bring a claim under those laws. Furthermore, restrictive covenants like non-compete provisions may have overly broad temporal, geographic, or industry scopes.
Improper pressure to sign: An employer’s efforts to pressure or coerce an employee to sign a severance agreement may later raise questions about its enforceability.
Retaliation concerns: Employees should watch out for the possibility of further retaliation if they refuse a voluntary resignation under a severance agreement.

Contact an Employment Law Attorney Today for Help with a Severance Agreement

If your employer has presented you with a proposed severance agreement, consider getting help from an experienced employment law attorney who can help you protect your professional and financial interests under the agreement. Contact Fagan McManus, P.C. today for a free, confidential consultation with our legal team to discuss how we can advocate for your rights and seek a more favorable deal under a severance agreement in Lansing.