In general, when employers decide to give severance packages to “laid-off” workers, they are usually trying to exchange certain benefits for the employee’s promise to not sue for wrongful termination. However, the EEOC is now taking a more aggressive stance toward such agreements. It’s indicating that workers’ rights must not be too broadly restricted and that workers must be allowed to pursue specific rights under “employment discrimination statutes.”
Some of the other more subtle aspects of severance agreements that must be carefully addressed include: “covenants not to compete” with the company for a set period of time; promises to not disclose any of the company’s proprietary information to others; refraining from saying derogatory things about the former employer; and providing workers with all accrued and fully vested pension benefits, stock options and any other vested rights.
The following list looks at some of these more subtle aspects of severance agreements that must be very carefully worded.
Important Ways to Address Subtle Aspects of Severance Agreements
Covenants not to compete. When a computer software and repair technician leaves a company, obviously that individual cannot be forbidden to stop using all of his/her hard-earned skills in that field when seeking a new position. However, a company does have the right to forbid the “laid-off” employee from “soliciting” any of the former employer’s customers. State laws provide courts with additional guidance about how to properly interpret severance agreements;
Covenants not to disclose proprietary information. Many companies have “preferred” ways of doing business with their clients and some of them actually have a set pattern of activities that they believe help create their success. Such information can take the form of current research and development projects; marketing information that reveals how the company selects its potential clients and vendors; and financial data that reveals the company’s current budget allotments for different projects, personnel and various other sensitive areas. Companies have every right to fully forbid “laid-off workers from sharing this information with anyone else;
Covenants not to disparage the company’s name or reputation. While most workers usually learn at some point in their careers that it’s almost never wise to say negative things about a former employer, it’s especially important for “laid-off” employees who accept severance packages to avoid commenting in a negative manner to the press about their situation or publishing any negative articles about their experience. However, some former employees might allege violations of their First Amendment rights if they believe their free speech rights are being wrongfully infringed upon;
The right to receive all fully vested pension rights, stocks options and other earned financial privileges. Companies must be very careful to not violate any aspect of the federal Older Workers Benefit Protection Act. This aspect of severance agreements should be fairly self-explanatory. Every effort must be made to pay everything owed to all workers, including older ones. This should include all financial gains achieved during the time of employment.
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