Sometimes a severance agreement, which includes a severance package, is offered when an employee is leaving their job. A severance agreement is a contract which outlines both an employee and an employer’s rights and responsibilities at the end of an employment relationship. The severance agreement will specify both the severance pay the employee will receive in exchange for signing the agreement as well as the circumstances when that pay can be withheld or rescinded if there is a violation of the agreement.

Under Washington State law, severance pay is considered a gift. Employers are not legally required to offer severance pay to a departing employee. However, if a company has a policy regarding severance pay, then that policy can be legally enforced in certain situations.

A severance agreement will most likely require an employee to waive any potential legal claims they may have against the employer, including any discrimination claims. Federal regulations regarding age discrimination require giving an employee a minimum 21 day period to consider a severance agreement before opting to sign it. Although the 21 day period only applies to age claims, employers often apply the 21 day period to the entire agreement. The Equal Employment Opportunity Commission (EEOC) has information on its website regarding severance and waiver of discrimination claims.

If you are offered a severance agreement, then you should immediately consult with an experienced employment law attorney. Your attorney can explain whether you have a valid discrimination claim and might be able to negotiate a more favorable severance agreement for you. An attorney can explain whether you would be waiving any legal liability and may actually advise that you not sign the agreement and instead take action through the court system. Once you sign the severance agreement you might be permanently barred from bringing a discrimination claim against the employer.

Finally, severance agreements can potentially reduce unemployment benefits. Generally, if you receive a lump sum severance payment, it will not affect your unemployment benefits. However, if it is structured as a continuation of salary, it may be considered as “pay” by employment security which could affect your benefits. The Employment Security Department’s frequently asked questions page contains some information on what it considers “severance pay” for eligibility purposes. An experienced employment law attorney can assist you negotiate proper severance language with your employer to ensure your continuation of unemployment benefits.

If you’ve been offered a severance agreement or severance package, contact Cooney Law Offices today and let them guide you through the process.