SEVERANCE PACKAGE REVIEWS AND NEGOTIATIONS
Back in the “good old days”, companies would reward their employees with a severance package that paid the employee wages and other benefits in return for their years of loyal service.
The landscape has changed. Today, businesses rarely offer a severance package or “golden parachute” unless the employee is willing to sign a release, which is a binding agreement that is designed to prevent the employee from filing any claims against the company. Because almost every severance package offer incorporates a “release of claims”, it is prudent that the employee consult with an experienced employment law attorney.
For businesses, it sometimes makes sense to offer a severance package even if the employee did not endear himself or herself to the company. In other words, sometimes it makes sense to agree to pay a certain amount of money to the employee in return for a release because it buys ‘peace of mind’ from lawsuits that are arguably frivolous. Unfortunately for some businesses, they feel compelled to offer a severance package to ‘less than stellar’ employees simply to ensure that the company will not have to engage in the protracted, expensive litigation process.
On the flip side, many businesses hesitate to fire a ‘problem employee’ because of the fear of a lawsuit. One mechanism available to companies is to provide a severance package that includes the “release of claims” because it buys the company peace of mind. In other words, it may be worth paying the employee some additional unearned wages at the termination of the employment relationship versus spending significantly more money defending the company’s actions in litigation.
It is also worth noting that a severance package with a release of claims to an employee over the age of forty (40) should remember that the Older Workers Benefits Protection Act (OWBPA) imposes certain requirements for the release of claims to be valid. For example, the document must provide the employee a 21 day review period and a 7 day revocation period. There are numerous other requirements pursuant to OWBPA.
Whether you are an individual or a small to mid-size company, if you are interested in becoming a DPS client, please contact us through our website or call our main telephone number (617) 357-1888 to schedule a consultation with a member of the DPS legal team.
