A Lawyer's Best Tips for Navigating Severance
Recession

A Lawyer's Best Tips for Navigating Severance

From tech world mass-firings to that friend getting real in your LinkedIn feed, it feels like everyone is getting laid off lately. And it’s rough. Finding out that you no longer have a job is kind of like going through a breakup. Even if you saw it coming, the sudden change in routine, the confusion and sense of rejection can wreck your self-esteem and send you into a stress-filled spiral of self doubt. But it can also be a transformative time that pushes you to try something new or make a radical change. This week on Girlboss, we’re talking all about getting laid off—and how to bounce back.

When you get laid off, those initial moments usually go a little something like this: Your employer or HR rep will tell you that your services are no longer needed (and  platitudes about “organizational changes” or “a challenging market environment” and “tough decisions” they accompany this with will likely be white noise to you), they’ll ask for your access card and laptop back, and then, if you’re lucky, they may slide an envelope across the desk, or, if this is happening remotely, tell you to expect an email from HR or the company’s lawyer containing a document shortly. 

This document is your severance package (or agreement) and it’s the first hurdle you need to navigate in this disorienting new chapter of your life. Here’s what you need to know, featuring expert knowledge from Paige Sparks, a Missouri-based labor and employment lawyer. (Who also wants to ensure you’re aware that this isn’t legal advice, and that laws can vary state-by-state so you should consult a local lawyer for your specific situation.)

What is severance, exactly?

In the context of employment, “a severance agreement is usually a contractual offer from an employer upon separation of employment where the company offers an employee a benefit, usually money, in order to waive and release any and all claims they may have against a company so that employee cannot later pursue litigation against a company for anything that happened during employment,” says Sparks. Your severance package refers to the amount of money and other benefits (like continuing your health insurance for X number of weeks) that you receive when you agree to those terms. 

Said another way: Severance is your former employer offering you money for “breaking” your employment contract—the one where they agreed to pay you for working for them, and guaranteed benefits like health insurance—so you can’t come back and sue them later. 

Severance pay is not an automatic right

This—and the notion that you can always negotiate a better offer—is one of the biggest misconceptions about severance pay that Sparks encounters. “Unfortunately, both of these myths are not true and I hear these frustrations a lot from individuals who googled it or found out from their cousin's friend,” she says. In the United States, at least, there is no requirement by federal law for your employer to give you severance pay, unless it’s specifically outlined in your employment contract. (Here’s a tip for future-you: Negotiate severance pay as part of your next job offer.) That said: Sparks says some companies may offer severance as a “good faith” gesture to help ease the blow of sudden unemployment. While it’s a nice gesture, that’s not entirely altruistic on their part, since getting your package, as we’ve discussed, also generally contingent on you signing away your ability to sue them later.

Your severance pay is usually tied to how long you’ve worked there

There’s no legal formula for severance pay, but the general rule of thumb is one or two weeks of your salary for every year you’ve worked there, and can often include other benefits like paying your health insurance coverage for a certain period, or allowing you to keep your laptop. The more senior you are, the likelier it is that your severance package may be more generous. (CEOs, for example, could get a year or more in severance pay.) 

You could also have a specific “termination clause” in your employment contract that lays out exactly how much your severance will be, although these are not always enforceable, if they violate current employment law, for example. 

If you’re part of a mass layoff—usually more than 50 people in a 30 day period—there may also be some different regulations that apply which might entitle you to more severance pay, but this varies state by state. 

Have a lawyer review your severance agreement

If you’re someone who isn’t waiving a major legal claim—like, for example, signing away your right to sue them for discrimination in a scenario where you know it happened and you’ve got the receipts—you’re probably not going to get very far when you try to negotiate for a “better” severance package, whether or not you lawyer up. . In fact, if you could actually put your current offer at risk, says Sparks, because “a ‘counter offer’ of trying to negotiate technically rejects the original offer from the company and they could take it off the table altogether.” They probably won’t do this, but you will likely get a polite, firmly-worded response saying that their first offer was their final offer.  That said, it’s still worth having a lawyer look over your severance agreement to ensure you are being fairly treated, just like you would any other legal document. 

There are cases, however, when you may have some leverage (like the aforementioned discrimination situation, or if you have cause to sue for harassment) where you may be able to negotiate for more. This is why it’s important to have a lawyer review your severance agreement. “If someone has a great legal claim we can sometimes use that to leverage negotiations for increasing the monetary severance offer, or depending on the claims, it may be more valuable to forgo the severance and pursue with the valid legal claim,” says Sparks. A lawyer can also alert you to any “red flags” in the agreement, although it’s likely any illegal terms won’t be enforceable anyway. “There is very good contract law where you cannot contract to waive certain rights,” explains Sparks. “For example, they cannot force you to agree not to report discrimination to the [Equal Employment Opportunity Commission] as part of the severance offer per federal law.” 

You don’t have to sign on the spot

You’re under no obligation to sign your severance agreement before you leave the office on the day of your layoff. Say, “I need some time to digest this,” and then take it away. (TBH, you’ll probably be in no fit state to absorb anything at that moment, especially not complicated legalese.) Your agreement will likely have a “sign back by” date on it—often 21 days—but if you need more time, it’s likely negotiable. 

Also: You don’t have to sign this document, although that will cause a delay in getting your severance package, which is contingent on agreeing to their terms. FYI: If you did feel pressured in the moment to sign, but now you regret it, especially if you feel like you may have signed away a right to sue for a legitimate cause, don’t panic. “A severance package, or really any contract, that someone is forced to sign is likely not valid and unenforceable,” says Sparks.

Remember: It's all going to be okay

Just like the lay off process itself, severance agreements can feel overwhelming, so take it—if needed—one word at a time. Read it over carefully, and take the time to take it to a lawyer for that added peace of mind. Signing your severance agreement is often the last “official” contact you have with your former employer, so expect to feel All The Things. It’s probably not the closure you want—that will likely involve getting some “why me” answers—but try to see it as the end of something, and the start of a new chapter for you. You might not believe this now, but it really is all going to be fine. 

READ MORE
So, You Got Laid Off—Here’s *Exactly* What to Do Next

7 Women on What It's Like to Get Laid Off
What It's Like to Be The One Doing the Layoffs