Employee Contract and Severance Negotiations

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Employment Attorney Assisting with Severance and Employee Contract Negotiations

Serving Employees and Employers in Howard and Anne Arundel Counties, Including Columbia, Frederick, Glen Burnie, Annapolis and Silver Spring, Marylannd

Attorney Joyce E. Smithey has prepared a checklist for employees facing termination to consider when negotiating the terms of their severance. Read below for tips on negotiating your severance, and then contact Ms. Smithey for assistance with maximizing your compensation while protecting your legal rights.

When it comes to negotiating the terms of a severance agreement, each employee’s goals are unique. While one employee may simply be focused on securing as much money from his or her former employer as possible, another may need to ensure that he or she has the freedom necessary to transition into a fulfilling new career environment. The options are almost endless, and as an employee, it is critical that you make informed decisions about protecting your interests now and in the future.

The following considerations are provided for general informational purposes only, and should not be considered legal advice. If you need legal advice for an employment severance negotiation, contact Maryland employment lawyer Joyce E. Smithey for a confidential consultation.

10 Considerations for Negotiating a Severance Agreement in Maryland

1. Consider Your Options for Settlement Versus Suit

Talk to a lawyer about whether you have a cause of action under state or federal law for discrimination, breach of contract, defamation, invasion of privacy, or any other employment-related claim. If so, is your employer willing to offer you a favorable settlement in exchange for a release? What would need to be included to make the settlement worthwhile? Money? Continuation of insurance benefits? A positive letter of reference? Now is the time to get your priorities in line.

2. Reevaluate Any Administrative Charges

Your employer is going to be concerned about exposure to future litigation, especially if you have filed a charge of discrimination with the Maryland Human Rights Commission or the Equal Employment Opportunity Commission (EEOC), and this could factor into your severance negotiations. Note, however, that the EEOC’s position is that covenants not to file administrative charges are unenforceable.

3. Protect Your Confidentiality

Disclosure of the terms of your severance agreement can have a negative effect on your marketability as a prospective employee. As a result, you should insist that the terms of your severance agreement remain confidential.

4. Secure a Neutral Reason for Your Termination

The stated reason for your termination can have significant consequences for your future marketability and your eligibility for unemployment compensation benefits. As a result, you need to try to negotiate an explanation for your termination that will not disqualify you from unemployment compensation benefits or dissuade prospective employers from hiring you.

5. Obtain a Positive Letter of Reference

If at all possible, insist on obtaining a positive letter of reference. Such a letter will help you if your employer later asserts a statutory “good faith” defense for disclosing harmful information regarding your job performance to prospective employers.

6. Sanitize Your Employee Personnel File

As part of your severance negotiations, you should insist on removal of all adverse references from your personnel file.

7. Negotiate the Retention or Return of Company Property

You do not want to be deemed to be in breach of your severance agreement for failing to return company property, so your agreement should specifically address retention or return of items such as laptops, cell phones, and company cars. Make sure your employer affirmatively acknowledges that it received all company property that you returned.

8. Avoid Agreeing to an Unreasonable Non-Compete

If you signed a non-competition agreement when you joined your former employer, you may be able to negotiate for a release from the covenant as part of your severance package. If you have not already signed a non-competition agreement, your employer may demand one, and you will need to be sure that it is precisely and narrowly drawn.

9. Negotiate the Amount and Form of Severance Pay

Whether your severance pay is classified as wages, salary, or severance may have an effect on its tax treatment and the continuation of your insurance or COBRA benefits. Form of payment can have tax consequences as well. Make sure you also address things like paid vacation time, accrued sick leave, retirement compensation, and other miscellaneous benefits.

10. Avoid Signing a Release that Waives Your Rights

Your employer is going to be concerned about exposure to future liability and will want you to sign a general release of all claims. Your signature on a general release may preclude you from suing that employer in the future (though Maryland and federal laws provide certain protections), so you need to make sure that you fully understand what you are signing.

Speak with Maryland Employment Law Attorney Joyce E. Smithey

With offices in Annapolis, employment law attorney Joyce E. Smithey represents employees and employers throughout Maryland. To discuss your severance in confidence, call (410) 269-5066 or request an initial consultation online today.