Severance Agreements in Wisconsin: What Every Employee Should Know
It may come as a surprise that Wisconsin labor laws do not mandate that employers provide severance pay. If you find yourself with a severance package, here are some things you should know before signing on the dotted line:
Negotiating Can Be a Slippery SlopeDeciding whether to negotiate largely depends on your personal situation. If you plan to use the employer for references, you hope to be re-employed with the same company in a different position, or you're worried it will impact your ability to find another position in your local market, it may be better to avoid "poking the bear" and accept the terms so long as they are fair, reasonable, and legal. If none of these issues are a concern, and you subscribe to the ideology that "it doesn't hurt to ask," it may beneficial to send a polite email asking for more.
On the other hand, if you have outstanding legal claims against your employer, these claims will likely be a source of power aiding you in your ability to readily negotiate terms. But proceed with caution -- throwing around frivolous claims won't get you anywhere and will likely hurt your professional relationship. If you intend to use an outstanding claim to negotiate terms, it's best to seek the advice of an attorney to understand whether the claim has merit. You should also consider whether there would be enough evidence to bring the claim successfully in a court of law.
You're Waiving Your Rights.Severance agreements by nature are an exchange; you agree to receive payment and, in return, you waive your right to bring any current and outstanding legal claims against the company, its employees, affiliates and anyone else listed in the contract. For most employees, the waiver has no impact, but for those who do have a claim, it's important to think twice. If an outstanding claim is worth much more monetarily than the severance package, signing the agreement may not be the most beneficial decision.
It's important to note that this waiver should never include claims that arise after the contract has been signed or for claims related to the contract itself.
Be Wary of Clauses that Restrict You and Your LivelihoodSome agreements will contain a non-compete clause that limits the employee's ability to work for similarly situated companies in the geographical location for a certain period of time. While this is common practice, it's imperative this clause does not drastically impact your livelihood. Non-compete clauses, and non-compete agreements generally, can be needlessly limiting making it almost impossible for an employee to continue working in the field they're most experienced. If you feel the non-compete clause will prevent you from finding a new position then you should not hesitate to contact your employer and insist the clause be re-drafted.
If you've already signed a non-competition agreement when you were first hired, then a non-compete clause in your severance agreement should simply reiterate those terms. Be sure to review whether the terms have been expanded beyond what you've previously agreed to.
Work Within the DeadlinesIf your agreement waives claims related to the federal Age Discrimination in Employment Act, your employer must give you 21 days to review the agreement and, in turn, an additional 7 days to revoke it. The purpose of this waiting period is to ensure you have plenty of time to consult with an attorney, have any questions answered by your employer, and make more certain that you entered the agreement knowing and voluntarily.
Understand Your ObligationsIt's common for the agreement to limit your ability to share the employer's confidential and proprietary information and prevent you from making public comments about the employer that are negative or disparaging. If, after you sign the agreement, you fail to abide by these and other obligations listed in the contract, you risk having your previous employer bring a claim against you for breach of contract and seeking monetary damages. Many agreements will contain a liquidated damages provision, which makes you obligated to pay the company a fixed amount of money in the event of a breach. This simplifies the amount of damages the employer may seek and the amount is often large to persuade employees not to breach the contract in the first place.
Look for How Accrued Benefits and Time Off Will be HandledIn addition to time off, health insurance, pension benefits, and 401k plans may change upon your termination. Some employers will extend healthcare plan access to provide you with ample time to purchase your own plan in the marketplace. In these instances there will be important deadlines for when coverage ends, premiums change, and new enrollment begins.