I strongly recommend that you locate an experienced employment attorney and pay them on an hourly (or flat fee) basis to review and advise on this issue.
It is unlikely you will become ineligible, but income may disqualify in some circumstances.
Check AVVO for qualified candidates in your area.
Please check the law of your state
If you are facing unemployment and disability, don't overpay for legal services. It shouldn't cost you $3,833 to get a legal opinion on this. This kind of thing shouldn't take more than three hours. Even if the attorney charged you $1,000 per hour – which would be a ridiculously high amount – it wouldn't cost you that $3,833. When I review severance agreements, I also speak with the client about the circumstances of his or her employment to make sure the client is not waiving important rights. Unless there is something unusual, this rarely takes more than three hours.
So hire an experienced employment attorney on an hourly basis. Be sure the attorney knows something about long term disability (LTD) policies, too. That extra knowledge usually doesn't matter in a severance package, but you want to be sure, just in case. You could discuss your LTD application and the process with the attorney, too. Insurance companies spend all day, every day, looking for ways to defeat LTD claims, so this can only be to your benefit.
You may have to look a little longer or pay a little more in an hourly fee to find someone who will defer payment 'til you get your disability payment, but the good thing is you can retain an attorney anywhere in the state and for document review and consult; you don't have to go to the attorney's office. If you and the attorney have Skype or a web cam, so much the better.
To find a plaintiffs employment attorney in California, please go to the web site of the California Employment Lawyers Association (CELA). CELA is the largest and most influential bar association in the state for attorneys who represent working people. The web site is www.cela.org. Click on "Find a CELA Member" and you can search by location and practice area. Many CELA attorneys represent clients throughout the state.
I hope you can resolve your situation and wish you the best.
twitter.com/MikaSpencer *** All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your claim, you will lose the opportunity to pursue your case. Please consult with an experienced employment attorney as soon as possible to better preserve your rights. *** Marilynn Mika Spencer provides information on Avvo as a service to the public, primarily when general information may be of assistance. Avvo is not an appropriate forum for an in-depth response or a detailed analysis. These comments are for information only and should not be considered legal advice. Legal advice must pertain to specific, detailed facts. No attorney-client relationship is created based on this information exchange. *** Marilynn Mika Spencer is licensed to practice law before all state and federal courts in California, and can appear before administrative agencies throughout the country. She is eligible to represent clients in other states on a pro hac vice basis. ***
It is unclear from your question whether you are currently receiving long term disability benefits. Assuming that you are currently receiving long term disability benefits, your employer is right that you will continue to receive these benefits even if you sign the severance agreement; however, the problem you face is that, depending on the language of the severance agreement, you may be giving up the right to sue for reinstatement of benefits if your benefits are terminated (which, in our experience, can happen no matter how disabled you are). If the Release section of your severance agreement specifically mentions the release of claims under ERISA or the Employee Retirement Income Security Act of 1974 (which is the law that governs employee benefits such as long term disability plans), then you will lose the right to sue to have your benefits reinstated if your benefits are terminated. In addition, courts have held that even broad, general releases of "all claims arising out of employment" release long term disability claims for reinstatement of benefits even if the release does not mention long term disability benefits or ERISA. In order to prevent the release of rights under your long term disability plan, the release in the severance agreement must state that you do not release rights under your long term disability plan. You should ask your employer to include these words at the end of the Release section of the severance agreement. Sometimes employers do not agree to add these words because they do not want to alter their standard severance agreements. If the employer is not willing to alter the agreement, the employer may be willing to have you write in words stating that you do not agree to release rights under your long term disability plan, initial these words, and have the employer initial the words. If you write this sentence after the release provision in the agreement, initial it, and the employer initials it, it will be legally binding. You are right to be concerned about the severance agreement because, in our practice, we have seen clients lose the right to sue for reinstatement of benefits when their benefits are terminated because they signed releases in severance agreements that failed to state that they do not release their rights under their long term disability plan. You can hire a lawyer to review your agreement.
Ruth Silver Taube
Law Office of Silver & Taube
1339 Pauline Drive
Sunnyvale, CA 94087
(408) 737-2313 (phone)