Factors to Consider When Your Wisconsin Employer Offers a Severance Agreement
If a Wisconsin employer has offered you a severance agreement, you should consider the following factors.
Consider Deadlines, and Act PromptlyWhen you are given a severance agreement, check it for a deadline. For workers 40 years old or older, federal law requires employers give at least a 21-day period to review the severance agreement.
If the employer has not given you a reasonable amount of time, or rushes your decision, that is a red flag.
If you are being rushed, consider asking for more time. Make any such requests in writing. If you are over 40 and the employer is asking you for a decision in fewer than 21 days, consider telling the employer (politely, and in writing) that the law requires you be provided at least 21 days.
Review the agreement promptly.
If you decide you want an attorney to review the agreement, make all such arrangements sooner rather than later. The later an attorney is contacted, the harder it is for him or her to effectively help with severance matters.
Know That Signing a Severance Agreement Involves Waiver of Legal Claims and Other Key ObligationsThe main benefit to you in signing a severance agreement is to receive payment or other beneficial terms provided in the agreement.
The main benefit to the employer is that, in exchange for your receipt of payment, you will be signing away your right to bring legal claims against the employer.
A severance agreement may also have the worker give up other things, e.g. rights to work for competitors, etc., but usually the waiver of potential legal claims is the biggest concession/value given up by the worker.
Know there could be substantial value in the potential legal claims you are giving up.
The most reliable way to learn the value is to have an employee rights attorney assess your potential legal claims and assess their value as compared to the offered severance payment.
When I review a severance agreement and evaluate that given employee’s potential legal claims, sometimes I feel the proposed severance payment is worth far less than the value of potential legal claims. In those instances, the employee (with an attorney’s assistance) has significant leverage in negotiating to increase the severance, or may have the option to forego the severance and pursue a legal action instead.
Because of this, it is probably worth your while to have an employee rights attorney assess potential claims, and their potential value. That attorney should be able to tell you why the severance offer (as compared to potential legal claims) is a fair offer, or why it is too low.
Closely Review Terms About Your Obligations (e.g. Confidentiality) and Make Sure to ComplyIt is important you review the severance terms that provide obligations for you, and that you comply with those obligations if you sign the agreement.
One particularly important obligation that's often in severance agreements involves confidentiality.
Employers are understandably very concerned that the parties keep confidential the severance terms, especially the amount of money paid. Pay special attention to the wording of any confidentiality provision in your severance agreement. Make sure you read all confidentiality language in full, understand it, and do not violate it. A breach of confidentiality- perhaps more than any other type of breach- is likeliest to trigger strict penalty provisions and to motivate litigation.
You should start keeping things confidential well before you sign the severance agreement and before the confidentiality provision officially applies. If you start discussing severance numbers with others, that could create problems in the employer’s perception and have a negative effect on you even if you feel you did not violate the agreement. (Note, however, that confidentiality terms usually allow certain exceptions where an employee can talk to an attorney and other specified types of persons).
You may have former coworkers ask you “Did you settle? How much did you get?” The best answer is no answer. Sometimes, the severance itself will supply you with an answer phrase to respond with, such as “The matter has been resolved.” In any event, do not discuss the severance agreement or any of its terms as to dollar values etc.
Know Severance Terms Can Sometimes Be Negotiated and Favorably Changed or IncreasedMany employees will accept a severance agreement as is, or will assume there is no room for negotiation. Do not assume this.
Many employers will negotiate and favorably change severance terms. I have found this to be the case even with employers that originally said at termination (prior to my involvement in negotiations) that they would not negotiate with my client-employee.
If a lawyer gets involved in severance negotiations and helps the worker identify potential legal rights, often an employer will respond by negotiating with the lawyer (rather than risk litigation if the severance falls through for them).
There are instances where some employees must ask for changes to a proposed severance agreement. For example, a proposed severance agreement may need to be changed (or not signed at all) if it has terms problematic to one's career, such as restrictive non-compete terms that block future employment. These too are issues a lawyer can often effectively assist with.
Consider Having an Attorney Review the Severance Agreement and/or Assist in NegotiationsAn employee rights attorney could provide value by reviewing the severance terms, by evaluating your potential legal claims and severance-negotiation leverage, and/or by assisting in severance negotiations.
Such assistance can often be done for an affordable charge or on a contingency basis where no out-of-pocket fees are paid.
Many attorneys (including myself) offer a free initial evaluation of an employee’s potential legal claims and severance leverage. Also, many attorneys (including myself) assist workers in severance negotiations and/or in litigation on a contingency basis where we are not paid fees unless our clients' financial situation is improved upon.
If you contact an attorney about potentially assisting with your severance matters, he or she should be able to describe for you-- before you are charged anything-- the potential fee options (e.g. contingency or out of pocket fee value etc.) as well as the value you could possibly gain from legal services, .