Understanding Severance Agreements: Key Points to Know

Navigating job loss is one of life’s more challenging experiences, and the legal jargon in severance agreements can make it even more overwhelming. While it’s a situation no one hopes to face, understanding what you’re agreeing to in a severance package is crucial. These agreements often have long-term implications for your career and financial future, so taking the time to educate yourself can make all the difference.

There are important elements to consider in a severance agreement:

• General Release of Claims: This clause typically relinquishes your right to sue the company in exchange for severance pay. It's essential to evaluate whether the severance payment justifies this concession.
• Non-Compete Clauses: These clauses might restrict your future employment opportunities. It's important to assess whether the severance package adequately compensates for this limitation.
• Non-Solicitation and Confidentiality Agreements: These agreements could restrict contact with former colleagues or sharing company information. Evaluate the reasonableness of these clauses based on their scope and duration.
• Reference to Unfulfilled Promises: Look out for any verbiage referencing obligations you did not previously agree to. Such statements might impact future employment opportunities.
• Consideration Period: Employees 40 and older have a legal right to a 21-day review period. Use this time to thoroughly review the agreement and seek legal advice.

Understanding the details of a severance agreement is a vital step toward making informed decisions during a challenging time. If you’re facing a severance agreement or want to prepare for the unexpected, consult a legal professional who can guide you through the process.