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Should You Sign a Severance Agreement?

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The unexpected news shocks you and fills you with fear for your future. Your longtime employer is firing you. Your boss tells you he is “laying you off,” but is that true? How come no one else in your department is being laid off? You suspect that your employer is actually firing you because you recently applied for Family and Medical Leave Act (FMLA) benefits.

Your boss ushers you into his office and drops a lengthy contract in front of you titled “Severance Agreement.” “We appreciate your service,” the boss states warmly. “Just sign this Agreement and we will pay you four (4) weeks severance.” You don’t know when you will next see a paycheck. It’s tempting to take the money being offered you. But what might you be giving up?

If your employer asks you to sign a severance agreement when terminating your employment, you should always review and discuss the agreement before you sign it with an employment attorney who represents employees. Typically, an employee who signs a severance agreement releases his or her employer, fully and finally, from liability for all claims the employee may have had against the employer, in exchange for whatever severance benefits the employer offers to pay. The employee in the example above might have a winning FMLA retaliation claim. Winning the FMLA claim may entitle the employee to recover his lost wages, liquidated damages equivalent to his lost wages, and reasonable attorney’s fees. If the employee signs the severance agreement and accepts the four (4) weeks of severance pay, however, he has probably given up his right to pursue any claim against his employer.

Know your rights. More often than not, generosity does not motivate an employer to pay severance benefits. Employers generally pay severance benefits in order to prevent their employees from bringing claims against them. Your employer’s lawyer probably drafted the severance agreement that your employer hands you to sign, to make sure the agreement achieves all the employer’s objectives. So, why not get your own lawyer when faced with a severance agreement? Make sure that you are not giving up your right to pursue valuable claims against your employer in exchange for a few weeks’ pays.