With the economy partially shut down by the coronavirus, the unemployment rate is skyrocketing. Employers are scrambling to cut costs by reducing headcount, cutting compensation packages, and furloughing workers. This is obviously causing a great deal of financial pain to those directly affected, and uncertainty among those who still have jobs but wonder if the axe will fall on them next.
Along with the layoffs will come severance packages.
If you've been presented with a severance agreement, here are some things to consider.
- Deadlines apply, so act promptly. But if you're over 40 you're entitled to at least 21 days to review a severance agreement, so don't be pressured into signing right away.
- If you sign a severance agreement, you will be giving up legal claims against your employer. Depending upon what kind of claims you do (or don't) have, it might (or might not) be a good idea to sign the agreement.
- Severance agreements often are negotiable. Just because you have been given a "form" agreement, do not assume that the company will not negotiate something better. If you have negotiating leverage in the form of some potential legal claim against the employer, they often will make a better deal.
- Never try to negotiate a better deal directly with your employer before you retain an attorney. It almost never works and in virtually every case that I have seen this done, the employer has refused to go higher once an attorney is involved. That leaves litigation as your only remaining option, and that is not a good place to be. So if you want to argue for more, retain an attorney first and let him do the negotiating for you.
If you're an employer and in the difficult position of having to let employees go, consult first with employment counsel, then make your business decisions and let the lawyers do the drafting. This is a complex area and requires specialized knowledge if it's to be done correctly.
What will a lawyer cost you? That varies by firm.
For employers the common fee arrangements typically are flat fees or hourly.
For employees, a simple severance agreement review, at which you learn about your rights, the implications of the agreement, and pick up some tips about how to tweak the agreement a little more in your favor, can be done for a modest flat fee. If there is leverage and you want to seek a better deal, other arrangements make sense. For instance, my firm's terms involve a flat fee coupled with a contingency fee. The contingency is keyed to the amount by which we are able to increase the employer's opening offer. By doing this we share risk with you, and you know that we will do our best to improve the offer, since the better we do for you, the better we do for ourselves. Incidentally, we have found that most of our clients opt for this fee arrangement.
There are other possibilities. It is important to understand that you should negotiate a fee agreement with your lawyer that makes sense. You're not tied to hourly billing, for instance. Do your research until you find the combination of lawyer and fee agreement that you're comfortable with.