How to identify problematic severance agreement conditions

On Behalf of | May 23, 2024 | Severance Agreements

Severance agreements can be tricky. Understanding the details is important before signing.

You should be aware of several key signs and terms that indicate that your severance agreement might be problematic.

Unclear or complex language

Something to watch out for is unclear or overly complex language. Legal jargon can be confusing, and some employers might use it to hide unfair terms. Look for straightforward language. If the agreement is hard to understand, it is wise to seek legal advice.

Non-compete clauses

Non-compete clauses restrict where and when you can work after leaving your job. A new ruling in April 2024 by the Federal Trade Commission banned the use of non-compete clauses nationwide. A problematic severance agreement might have a non-compete clause that prevents you from working in your field for a long time or in a large geographical area. This is no longer legal, so review anything related to this carefully.

Waiving important rights

Some severance agreements require you to waive your rights to sue for discrimination or wrongful termination. While it is common to waive some rights, be cautious if the agreement asks you to waive all potential claims. This might include rights to benefits or unpaid wages. Make sure you understand what rights you are giving up and if it is fair.

Lack of compensation details

A good severance agreement clearly states the compensation you will receive. This includes severance pay, unused vacation and other benefits. If the agreement is vague about the compensation or does not match what you were promised, it could be a problem. Ensure the details are specific and written clearly.

Confidentiality clauses

Confidentiality and non-disparagement clauses are common in severance agreements. However, if these clauses are too broad, they can be problematic. A broad confidentiality clause might prevent you from discussing your job experience, which could be harmful in future job searches. Similarly, a non-disparagement clause that is too restrictive might prevent you from speaking honestly about your experiences.

Pressure to sign quickly

Employers should give you enough time to review the severance agreement. If you feel rushed or pressured to sign quickly, this is a red flag that there may be issues with the agreement. Take the time to read and understand the agreement thoroughly. If needed, seek legal counsel to ensure the terms are fair.

Reviewing a severance agreement carefully can help avoid future problems. Watch for these signs to ensure the agreement is fair and reasonable.