Areas of Law That Could Relate to a Severance and/or Job Termination

If your employment has been terminated and you have been offered a severance agreement, many areas of law could potentially be involved with your situation.  An employee rights attorney who reviews a severance situation will have a mental checklist of such laws to consider.

Those laws generally include: (1) contract law; (2) laws that make certain job-terminations unlawful, e.g. various Federal and State discrimination laws, whistleblower-retaliation laws, “wrongful discharge” laws, etc.; (3) wage laws that govern severance pay or payment of residual unpaid wages from employment such as commissions, bonuses, overtime, deferred compensation, etc.; (4) laws that govern employer-provided benefits such as health insurance coverage, 401k or pension benefits, etc.; (5) laws involving State benefits such as unemployment benefits or workers compensation benefits; and (6) laws pertinent to post-employment actions such as searching for or starting new employment, e.g. laws governing non-compete agreements, trade secrets, defamation, or privacy that prohibit a former employer or employee from undertaking certain actions (e.g. working with certain competitors to a former employer) or making certain kinds of statements (e.g. disclosing proprietary information, making false and reputation-damaging statements), etc.

Each of the general areas above has many sub-categories and nuances. For example, “contract” law involves not only a review of language in formal contracts between a worker and employer, but knowledge of external laws such as State statutes and court decisions that set forth how certain contract principles should be interpreted.  Also, sometimes a given document or spoken agreement that a worker may think is not a contract– e.g. a commission or bonus “plan”, a handbook provision, etc.– can in some instances be considered a contract by a legal authority.

A worker who is presented a severance agreement will not, unless he or she is an employment attorney, be aware of all the laws above and their potential legal rights or responsibilities.  Yet, a severance agreement, once signed, typically waives the worker’s rights to pursue legal claims under most laws.   All too often, workers sign severance agreements that waive legal rights without knowing beforehand what all their legal rights are.  Relatedly, it is common for workers to waive rights that had potentially significant value.

This post has hopefully given an overview to help “know what you don’t know”, so to speak.  Only an employment attorney could give an informed assessment of actual potential legal claims and rights. If such an attorney is willing to consult with you at no charge (and many employee-rights attorneys do in fact provide free initial phone calls, myself included), I see no downside to having the attorney review your situation and potential legal rights above.  In those instances an attorney finds potential legal rights with significant value, often a severance can be negotiated and/or successful legal action can be pursued with an outcome better than the initial severance offer.  Employers typically have the assistance of employment attorneys in drafting severance agreements and evaluating laws at issue, including those above.  So learning more about your own potential legal rights can help even the playing field, so to speak.

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Filed under Employee Tip - Severance & Settlement

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