3 Reasons Not to Sign that Severance Agreement

Being presented with a severance agreement can feel like a lifeline during a difficult time, but signing it without fully understanding the terms can be a mistake. Severance agreements often include legal jargon and hidden clauses that may limit your rights and leave you with less than you’re entitled to. Before you sign anything, knowing what you’re agreeing to and what you might be giving up is important.

Think Twice Before Signing a Severance Agreement

In this blog, we’ll explore three key reasons why you should think twice before signing that severance agreement.

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1. General Release: You’re Waiving Your Right to Make Claims

The general release clause is one of the most important sections of a severance agreement. By signing the agreement, you are waiving any legal claims you could bring against the company, its managers, and employees. This means that once you sign, you lose your ability to sue the company for wrongful termination, discrimination, or unpaid wages.

Before you agree to this, consider the potential claims you may be giving up. Were you recently passed over for a promotion? Do you believe you were treated unfairly due to age, gender, or another protected characteristic? If you sign the severance agreement, you will likely waive your right to pursue any of these claims.

Even if nothing seems wrong, workplace harassment or wage theft can come to light later. By signing the general release, you’re closing the door on any possibility of legal recourse. Ensure you fully understand what rights you are forfeiting before you sign away your ability to hold the company accountable.

2. Severance Pay: Is the Package Enough?

Severance pay is often the main incentive to sign an agreement, but before you accept the offer, it’s crucial to ensure that it includes all the compensation you’re owed. A severance package should cover unpaid wages, benefits, paid time off (PTO), and any severance pay.

Many employees think severance pay is simply a bonus for leaving the company, but it’s more than that. If you have unpaid wages or unused vacation days, these must be included in your severance package. In addition, if you are waiving potential legal claims, your severance pay should be enough to compensate you for the claims you’re giving up.

For example, if you believe you’ve been wrongfully terminated, the value of that claim could far exceed the severance amount being offered. In such cases, negotiating for a higher severance amount or reconsidering whether to sign the agreement. Don’t rush into accepting the first offer without ensuring you’re fairly compensated for everything you’re entitled to.

3. Nonmonetary Terms: Understand Confidentiality Clauses and Other Conditions

Severance agreements often include nonmonetary terms that may have long-lasting effects on you, even after you’ve left the company. One of the most common nonmonetary terms is a confidentiality clause, which prohibits you from discussing the details of the severance agreement or your time at the company.

While these clauses may seem harmless, they can prevent you from speaking out about your experience, which could be a problem if your termination involved wrongful actions by the company. For example, if you were fired due to discrimination, a confidentiality clause may stop you from sharing your story or alerting others to harmful practices within the company.

Other nonmonetary terms may include non-disparagement agreements (which prevent you from speaking negatively about the company), non-compete clauses (which restrict you from working for competitors), and non-solicitation agreements (which prohibit you from hiring current employees if you start a new job). These terms can significantly impact your future career prospects and personal freedom.

Before signing, ensure you thoroughly review and understand all nonmonetary terms in your severance agreement. These conditions are often buried in the fine print and can have lasting consequences on your professional and personal life.

Think Before You Sign

Severance agreements are not just about money; they often come with strings attached that can affect your legal rights, career, and future. Before signing anything, take the time to carefully review the terms and make sure you fully understand what you’re agreeing to. If necessary, consult an attorney to ensure that your severance package fairly compensates you and doesn’t leave you vulnerable to future legal or professional challenges.For more information on navigating employment issues and understanding your rights, follow Lipsky Lowe on TikTok. Stay informed and empowered in your workplace decisions!