5 Severance Agreement Red Flags

Severance agreements can be difficult to interpret and when emotions are running high after losing your job, you may not be in the best position to clearly understand everything that is written in the agreement. It’s always in your best interest to work with an New York severance agreement attorney who can review the agreement for potential issues. Here are 5 severance agreement red flags you need to be on the lookout for.   

  1. General Release of All Claims 

One of the most common clauses included in a New York severance agreement is a “general release of all claims.” Look for a general release at the end of a severance package – it usually starts by saying something like, “You agree to release any and all claims….”  Some releases are “limited,” or are for only particular claims, but most are for all possible claims, and you will no longer be able to hold the company responsible for any claim or prior grievance you may have against them.

Signing a general release of all claims could prevent you from collecting on workers’ compensation claims or bringing a discrimination claim against your former employer for claims which accrued during your employment i.e. for “past claims,” but you cannot release “future claims,” or claims which arise following your signing of the release.

  1. A Non-Disparagement Agreement That Is Not Mutual

Another common clause included in New York severance agreements that you need to watch out for is a non-disparagement agreement. If you sign, you could be barred from ever speaking “ill” of the company or disparaging them in any way; it sounds simple enough, but the definition of “disparagement” is largely a subjective one. If asked to sign a non-disparagement agreement, it’s important that you work with a severance agreement lawyer to ensure it is mutual versus one sided. 

  1. A Lack of References

Many New York employers will offer to provide references in a severance pay agreement. Naturally, this can be helpful when you seek out a new job. However, be wary of severance agreements that do not offer to provide references, especially if the company you’re working for is simply reducing their workforce. If you’re getting the pink slip and aren’t being let go for anything you have done, you should be able to secure good references from your former employer.

  1. A Gap in Health Insurance Coverage 

A significant concern for individuals who have been terminated or let go is the continuance of health coverage. Often, severance agreements in New York will have provisions for “bridge the gap” health insurance, or COBRA. You want to be certain there will be no gap in your insurance coverage and if there is no mention of health insurance continuation or any mention of termination of health insurance immediately, you absolutely do not want to sign until you consult with a lawyer.

  1. A Reason for Termination that Excludes You from Unemployment Benefits

Typically, a severance agreement will include the reason for your termination. If possible, the severance agreement should list a reason for termination that will not automatically exclude you from being able to file for unemployment benefits.

Any time you are terminated from a position and are offered a severance package, it’s crucial that you speak with a qualified New York severance agreement attorney before signing any documents. A lawyer can review the agreement to ensure that every point is in your best interests. Contact the Law Office of Christopher Q. Davis today to learn more by calling (646) 430-7930.