It’s 4:45 on a Friday afternoon and your boss walks into your office with a strange look on his face. “I have to let you go,” he says. “Times are tough” he says and you are let go without a severance package. Can they do that? The short answer is yes. The long answer is a more complicated. If your company has a policy of offering severance packages to employees who are laid off and doesn’t offer one to you, then you need to start asking yourself a few questions about why that is. Did you happen to complain about not getting reimbursed for business expenses or working in unsafe conditions? Maybe your boss, a staunch Republican, saw those photos you posted on Facebook of you and your friends at a rally, protesting Donald Trump’s presidential campaign. If your employer doesn’t offer you a severance for retaliatory or discriminatory reasons, that is something it cannot do without repercussion.
The real problem is not missing out on a severance, it’s being offered one. I know that sounds counter-intuitive but stay with me and I’ll explain. About 99% of the time an employer offers a severance package, there are strings attached. As a condition of receiving the severance, that as a recently terminated employee, you probably desperately need, you are required to sign a severance agreement. That seems innocent enough unless you read the “severance agreement,” which as it turns out is actually a waiver your rights and a release of all potential legal claims you may have against your employer. Many times, your choice is to sign this “severance agreement” on the spot or lose the severance. So, like any distraught employee worried about paying the bills would do, you sign it. Then, when you get home and tell your spouse what happened, you are reminded that everything was fine at the office until last week when you told your boss that you need surgery and requested a leave of absence. You both wonder if this is the reason you were let go.
Trying not to get worked up, you spend the weekend researching attorneys and setting up a consultation. The following week you show up for your appointment and tell the attorney about how when your boss terminated you, he mentioned something about needing “all hands on deck.” It also comes to light that you were not properly paid for overtime. The more facts you share with the attorney, the worse it looks for your employer, until you break out the “severance agreement.” After reading through it, the attorney advises you that it is iron clad and despite the strength of what appears to be a meritorious case, you cannot file a lawsuit. You relinquished all of your rights for 2 weeks of pay and may be out of work for months.
In hindsight, this was obviously not the best decision. “What could I have done differently,” you ask. The attorney responds that when something seems too good to be true, it probably is. She goes on to say that whenever you are asked to sign any kind of severance agreement, you should always ask for time to review it thoroughly. You should then have an attorney review the entire agreement. As part of the review, the attorney should thoroughly question you about your employment to determine if there were any violations of the law. These violations may be used to negotiate a better severance package or serve as the basis for a lawsuit. In either event, the more the employer wants you to sign the waiver and release, the more bargaining strength you have but the first priority is always to protect your rights.