Why would I not want to sign a severance agreement?

On Behalf of | Aug 10, 2021 | wage and hour claims

While getting let go from a job is never pleasant, the silver lining is that many employers in Colorado are now offering severance agreements rather than simply turning their employees out the door.

Ideally, severance agreements benefit both parties. A former employee receives ongoing payments and benefits that can be a valuable source of support while she looks for a new job.

An employee may also receive intangible benefits, including a favorable or at least neutral reference.

On the other hand, employers can secure important protections for lawsuits and other claims, including claims for unemployment benefits. They also may get valuable non-compete and confidentiality agreements that can protect a company’s brand and reputation.

An employee should not be too quick to give up his or her rights

However, when offered a severance agreement, a Denver employee may feel put on the spot, particularly if an employer is insisting that he sign the agreement quickly.

Especially since getting fired or laid off leaves an employee in a financial pinch, she may feel like she almost has to accept the agreement and take the money being offered.

However, a severance agreement will frequently require an employee to give up, or waive, valuable rights.

Among these waivers, a severance agreement will frequently require that an employee give up his right to sue an employer in court for certain employment law violations, including violations of federal and state anti-discrimination laws.

Usually, a severance agreement will also include a worker’s waiver of unemployment benefits.

It is important for employees to remember a couple of points. First, a severance agreement has to be signed knowingly and voluntarily.

It is also has to be supported by what the law calls consideration; in practice, this means the agreement has to offer compensation over and above what an employee already earned.

Finally, an employee may not be allowed to sue in court, but she still may file a complaint with an administrative agency like the federal Equal Employment Opportunity Commission.

Nevertheless, an employee should evaluate his legal options carefully before giving up his valuable legal rights.