Why Severance Exists At All

Hey, it's Mark, and welcome back to another edition of the Employee Survival Guide. Today we're mastering severance negotiation, the skill every employee needs, but nobody teaches. Except for me. That's what I do. Here's what your employer knows that you don't. Over ninety percent of you, employees, are at will. And so they don't have to offer anything to you. Nothing. They offer severance because they want your signature on a full release of claims. That signature is valuable, and I suggest you use it. What are employees getting? Employers are getting a release of claims and the ability to operate businesses with predictability. And that's what they are requesting of you when you sign a full release. When you don't sign a release and you bring claims against them, that brings a problem for them because they can't operate as normal or with predictability. So here's some power moves we use every day. Ask if the severance is under an ERISA plan. Many are, and that gives you extra rights. And what do I mean by ERISA? ERISA is the Employee Retirement Income Security Act. I've talked about it a lot on this podcast. I'm an ERISA attorney. There's a process under federal law. That law was passed in 1973, I believe. And essentially what it is, for you just to boil it down for you, is there's a plan document. You can get it in your employer portal, and you want to look for a plan document that specifies what your rights are, how many weeks you're going to get for years of service. That's different than a policy. And policies are just, you know, unenforceable, just activities the employer engages in. And you oftentimes hear people talk about how many weeks they got, etc. But a severance plan under ERISA does something different. It gives you rights that as a participant under plan, like a pension, and the employer has to follow the rules. They can't screw around with it. ERISA plans provide a floor, not the ceiling. And so I talk about this a lot that find out if you have a severance plan. So let's say you get, I don't know, six months of uh severance. And let's say you also have a claim for um, you know, discrimination of some form, or blowing the whistle, or retaliation, whatever it is. And you use those additional claims to leverage on top of the existing plan benefit of, let's say, six months, and the employer can't take it away. Because if they take the severance plan benefit away from you, after you complain, let's say, of discrimination, that would be considered retaliation because taking the benefit away is you know illegal. And so you would make that part of your case. There is one catch with ERISA severance plans, you have to sign a full release to get them. So now you're saying, well, shoot, I have a claim, I have a release to get it. So what we normally do is negotiate severance negotiations with employers directly using your claims, and on top of what the severance benefits are. And so that's the severance benefit under Arista is the floor, the legal claims that we have to bring to the employer through a written affidavit, maybe it's an EOC case complaint. We negotiate directly with the employer to enhance that severance benefit to something additional. Again, employers want the release of claims because it provides predictability. So now the next topic point is to bring up is push for a lump sum payment. And I have a caveat. So lump sum payment, not installments. And oftentimes employers say, well, if you get a job, and this is contained in the language of the severance agreement, if you get a job, we'll stop the payments. You want to negotiate that out. You want to make sure that the severance payments pay out, either lump sum or pay out over a period of time, but don't have this clawback in the event that you get employed somewhere. So look for that language. Very, very important. The caveat I have is this I can build an ERISA severance plan benefit without the existence of a plan document. I know this is a little technical, but I've done it. Where the employer pays the severance, no plan benefit exists. And I say, well, you're gonna if they if I find out that they pay the benefit over a period of time through payroll, that procedure to pay out over a period of time can create a de facto severance plan, and we can use it even though if they don't have an official plan. It's very it's a it's a trick, but I I use it a lot and it works. And so we negotiate that and on top of the claims they have, and if an employer wants to you know retaliate against them, there's also section 510 of ERISA, which also complies to protect the employee from getting retaliated against under that plan I just made up. So very important caveat to know. Number three, demand mutual and non-disparagement. They can't bad bath you, and you want to make sure that they don't, because it happens a lot. And unless you have it in the agreement, there's a mutual non-disparagement of either party, they're gonna make you sign a non-disparagement, of course, uh, but you want them to sign a non-disparagement of you so that you can't they can't uh disparage you by blacklisting you to any employer checks that happen. Here's what the reference by a future employer back to an old employer. Old employer will say, do not recommend for hire, or do not make them recommend for rehire for that matter. And that's Segal Code for you to understand. And you want to have a friend of yours call on the company and check the reference and see what the employer says. It does happen. We've seen it, it's hard to prove, hard to you have to really get people to document by affidavit that it happened, but you can avoid all that chaos by having a mutual non-disparagement inside of the severance agreement itself. Again, we're talking about the severance negotiation, which leads to a severance agreement. Again, mutual non-disparagement. The next topic is limit cooperation clauses. Employers put these clauses in the severance agreements to have you, in case they have a litigation that's ongoing, to have you come and volunteer your time. I mean, literally, they'll put it in language of the cooperation that they can talk to you. They don't put a time constraint on it, they don't give you any money for it, they just put it in there. It's like, you know, it's bad enough you're getting fired and you got to have to deal with the cooperation clause. Like, give me a break. So what we do is we put in there, we limit the time and we also limit to the actual hourly rate of pay that people received in the last job. So if you want cooperation, you're gonna have to pay for it. Okay, Mr. Employer, sorry. Uh the next one is gonna be negotiate out non-competes. You may have a non-compete currently, and in your severance agreement, it's re-upped in there and you'll see it. Try to negotiate it out, or limit it down to a number of weeks or months, or limit it to a list of companies. Sometimes employers put non-competes inside of a severance agreement and you don't have a non-compete. So they try to get you on the way out and kick you in the butt. So you got you have to negotiate that term out of the agreement. How do you do all these negotiations? You use your legal leverage of claims that you have. If you're if you don't have a legal claim, the employer is going to push upon you to enforce these types of uh clauses in the agreement, a non-compete, non-disparagement that's not mutual, cooperation clauses where they're not going to pay you any money. Uh so you have to find the leverage, some facts, some something in there that happened to you that you want to build, again, by affidavit, because I haven't talked about this yet on this part of the app, the uh episode, but the affidavit is king here. It controls what happens if you have legal claims and you document things to the letter about what took place, whether age discrimination or race or fraud or anything that happened, whistleblowing. So using the affidavit to build legal leverage to get around in adverse terms in the severance agreement, like non-compete, non-disparagement clauses, you may make mutual. So you think about creating legal claims to help yourself. The next item is uh this whole idea that I got 21 days to sign this darn thing and people just complain about all the time. Just take a breath. It's not a requirement. There's no law of saying out there that they put it into an agreement, but you haven't signed it yet, so there's no requirement. What we normally do is saying, you know, we're gonna review it. We ask for extensions of time as we're gonna build the case to see if there is a case. Uh, you should do the same thing to ask for more time. They may hardball you if you don't have an attorney, but just ask and say they can uh you know uh extend it out for another two weeks to figure out because you've got to figure out what you're gonna do. Sometimes they offer 45 days and whatever the time limit is, just use it wisely. Do not come at the employment attorney last minute because you're just uh delaying it. It's it's hard for us to react on a dime call that you want to, you know, you know, deal with your case. These cases are complex, they require some fact gathering to evaluate what's there, so don't wait. Just as soon as you get severed, have an attorney review it and don't delay. Never accept the first offer. We always routinely increase severance packages significantly by pushing back professionally using legal claims, much higher than what the employer generally offers. And we do track our settlements and we know exactly how much employers are providing. We are pretty skilled at what we're doing, and we can try to benefit you if you call us. Thank you for letting me be a service on severance negotiation today, and talk to you soon.