Top 5 Signs Of A One-Sided Severance Agreement

Douglas J. Carroll, Jr. Employment Contracts, Milwaukee Employment Lawyer, Milwaukee Severance Attorney, severance agreements

As a Milwaukee Employment Attorney, I am often asked to review proposed Severance Agreements for employees, professionals and executives.  As these agreements almost universally contain a release of claims, the first, and most important step is to evaluate what employment law related claims the employee will be releasing by signing the agreement.  One cannot determine whether the monetary consideration provided by the Severance Agreement is fair without knowing if the employee has a compelling legal claim related to his or her employment such as Age Discrimination, Sexual Harassment, Disability Discrimination or Retaliation.

The second step is to evaluate the fairness of the non-monetary terms of the proposed Severance Agreement.  This second step is the focus of this article.  The following are the top 5 signs you are being asked to sign a one-sided Severance Agreement.

5.   Non-Compete Language

Some employers who failed to secure non-compete agreements from their employees or have out dated and unenforceable non-compete agreements, attempt to use severance agreements as a cover to limit the post termination employment opportunities of their employees.

4.  Attorney’s Fees For Breach

Many proposed Severance Agreement allow the employer to recover its actual reasonable attorney’s fees and costs if the employee breaches the agreement.  This is one-sided.  The agreement should provide that the prevailing party is entitled to its reasonable attorney’s fees and costs.

3.  Liquidate Damages

If you were presented with a Severance Agreement that requires you to repay the severance payment if you breach the agreement in the future, you are being asked to sign a one-sided agreement.  The employer should have to prove that it suffered damages as a result of your breach to obtain monetary recovery.  This term is especially important in Severance Agreements that contain confidentiality clauses.

2.  Unemployment Compensation

A proposed Severance Agreement that fails to address how the employer will respond to your application for and entitlement to Unemployment Insurance Benefits is one-sided.  An oral promise from your employer not to contest your Unemployment is not good enough.  It needs to be in the agreement.

1.  Employment References

The monetary compensation provided by a Severance Agreement will eventually be spent but to some degree the reference you receive from a former employer lasts forever.  Accordingly, knowing what information your former employer will provide to your prospective future employers is often the most important concern for an employee leaving a job and it is often a term that is completely absent from Severance Agreements.  A fair Severance Agreement should contain detailed language about both the process by which a reference will be provided and the substance of the reference itself.

If you have been offered a severance package, contact Carroll Law Firm, SC, a Milwaukee Severance Agreement Law Firm that will meet with you, provide you with a detailed evaluation of the potential claims you would be releasing by signing the agreement, explain your rights and obligations under the agreement and tell you what is unfair or missing from the proposed severance agreement.