Severance Review and Negotiation
Understand what you are receiving, and also what you are giving up, before you sign.
A severance or separation agreement can affect much more than the amount of severance pay offered. I review severance agreements for executives and professionals so they can understand the financial terms, legal releases, post-employment obligations, and other provisions that may affect their departure and future opportunities.
My review may include severance pay, bonuses and commissions, equity and vesting, benefits, restrictive covenants, confidentiality obligations, cooperation provisions, references and communications, return-of-property requirements, arbitration provisions, and other terms that continue after employment ends.
I also help clients evaluate whether particular provisions warrant clarification or negotiation. When appropriate, I can develop proposed revisions or negotiation points and communicate directly with the employer or its counsel on the client’s behalf.
The goal is to help you make an informed decision about the agreement as a whole, not simply whether the severance amount is acceptable.
Ms. Mijares is an excellent attorney. She helped me with my work contract, addressed my issues and concerns, and did it in a timely manner. She was very thorough. I would highly recommend her.
What I Review in a Severance Agreement
A severance agreement is both a compensation arrangement and a legal contract governing the end of the employment relationship. I review the agreement as a whole so clients understand not only the severance payment being offered, but also the rights, restrictions, and continuing obligations attached to accepting it.
Depending on the agreement, my review may include:
- Severance pay and the timing or method of payment
- Salary continuation and other compensation during the separation period
- Bonuses, commissions, incentive compensation, and deferred compensation
- Stock options, RSUs, restricted stock, vesting, and other equity interests
- Health insurance, COBRA, and other employee benefits
- Release and waiver provisions
- Existing or newly imposed noncompetition and nonsolicitation obligations
- Confidentiality and nondisclosure provisions
- Nondisparagement provisions
- Cooperation and post-employment assistance requirements
- Return-of-property and information-security obligations
- References, internal and external communications, and announcement language
- Arbitration and other dispute-resolution provisions
- Repayment, clawback, forfeiture, and other continuing financial obligations
- Provisions addressing future employment, rehire eligibility, or professional activities
I also compare the severance agreement with any existing employment agreement, equity documents, compensation plans, restrictive-covenant agreements, or other contracts that may continue to affect the client after employment ends.
That broader review can be important because a separation agreement may modify, reaffirm, or incorporate obligations contained in documents the employee signed earlier in the employment relationship.
How I Help With Severance Review & Negotiation
Severance review can range from a focused consultation about the meaning of an agreement to a more involved negotiation concerning compensation, restrictions, and the terms of departure. I tailor the scope of the engagement to the client’s circumstances and objectives.
Depending on the situation, I can assist with:
- Reviewing the severance or separation agreement and explaining its legal and practical effect.
- Identifying provisions that deserve particular attention before the agreement is signed.
- Evaluating severance pay, bonuses, commissions, benefits, equity, and other compensation affected by the separation.
- Reviewing releases, confidentiality provisions, nondisparagement terms, restrictive covenants, cooperation obligations, and other continuing requirements.
- Comparing the severance agreement with existing employment agreements, compensation plans, equity documents, and other contracts.
- Helping the client identify priorities and develop reasonable negotiation points.
- Preparing proposed revisions or counterproposal terms.
- When appropriate, negotiating directly with the employer or its counsel on the client’s behalf.
- Reviewing revised drafts and helping the client evaluate whether the final agreement meets their objectives.
Not every severance agreement requires extensive negotiation. In some matters, the most valuable service is a clear explanation of the agreement and its consequences. In others, the financial terms, restrictive covenants, equity treatment, or circumstances surrounding the separation may provide meaningful issues to address before the agreement is signed.
My role is to help the client understand the available options, identify the issues that matter most, and approach the decision with a clear strategy.
Important Legal & Timing Considerations Before You Sign
A severance agreement may require an employee to release significant legal rights in exchange for compensation or other benefits. Part of my review is identifying what the agreement asks the employee to give up, what obligations will continue after employment ends, and whether particular provisions require closer attention before the agreement is signed.
Issues that may warrant review include:
- The scope of the release and the claims the agreement asks the employee to waive.
- Whether the agreement attempts to impose obligations that extend beyond the employee’s existing employment agreements or policies.
- The consideration being provided in exchange for the release.
- Acceptance deadlines, effective dates, and any applicable revocation period.
- Provisions affecting bonuses, commissions, equity, benefits, or other compensation.
- Confidentiality, nondisparagement, cooperation, and restrictive-covenant provisions.
- Whether the agreement affects rights relating to administrative agencies or other rights that may not be waived in the manner stated.
- For employees age 40 or older, whether the agreement contains the additional provisions required for a valid waiver of claims under the Age Discrimination in Employment Act.
Employees age 40 or older should pay particular attention to the Older Workers Benefit Protection Act (OWBPA). When an employer seeks a waiver of ADEA claims, federal law imposes specific requirements concerning the form and content of the waiver. An individual employee generally must be given at least 21 days to consider the agreement and seven days after signing to revoke acceptance. Certain group termination or reduction-in-force programs require at least 45 days to consider the agreement and additional disclosures.
Because the legal effect of a severance agreement depends on the language of the agreement and the circumstances of the separation, I review these issues in the context of the client’s particular documents, compensation arrangements, and objectives.
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