What looks like a great severance agreement at first glance might not be what you think it is. In fact, it could actually end up costing you your rights. Don’t sign that severance agreement until you read this. Below, we discuss important information about these agreements that you should know and understand before you accept any severance offer. When in doubt, hire a Colorado employment lawyer to read the fine print and verify the legitimacy of the severance agreement.
Common Issues With Severance Agreements
One of the biggest problems we find with severance agreements is a voluntary forfeiture of employment rights hidden in the fine print. Once you sign, you may inadvertently relinquish your right to claim discrimination, unpaid wages, or wrongful termination. For this reason, it’s important to understand the rights afforded to you by law before you give them up in exchange for a severance offer.
Understanding What a Severance Agreement Is
A severance agreement is sometimes also referred to as a separation agreement. It is a legal agreement between an employee and their employer. It provides employees with certain benefits or monetary compensation in exchange for certain employment rights. Not all employers offer severance agreements. However, if yours does, and both you and your employer sign the agreement, it becomes a legally binding contract.
The purpose of these agreements is to legally protect the employer. They are making an offer in exchange for this protection, but so is the employee, who may be trading their rights. A severance agreement should be beneficial to both parties. If it isn’t, an attorney who is familiar with Colorado employment laws can verify that the agreement is written in your interest.
The unemployment rate in Colorado is 3.8%, which is lower than the national rate of 4.4%. Being unemployed can be scary and difficult, so when a company provides a severance offer, it can be hard to know whether to accept it or not. An ideal resource for advice on severance agreements is a qualified and experienced Colorado employment lawyer.
When a severance agreement involves discrimination against a protected class, it is even more imperative that you contact a legal professional.
Common Conditions in a Severance Agreement
The terms laid out in a severance agreement may be difficult to understand. Oftentimes, the language used in these documents is purposefully made to be confusing or vague. If you cannot understand the document, don’t sign it. Instead, hire an employment lawyer to review the agreement, explain it to you, and identify any terms that may not be in your favor. Some common provisions of these documents are listed below:
- Release of right to legal claims: These terms mean that you are agreeing not to file claims against your employer for anything that occurred during your employment, such as claims of discrimination, unequal pay, harassment, violations concerning family leave or medical leave, unpaid wages, or wrongful termination.
Phrases like ‘any and all claims, known or unknown’ are vague so as to cover every type of claim you could possibly file. - Non-Disclosure/Confidentiality Conditions: These clauses mean that you agree not to share certain company information with anyone outside the company, such as trade secrets, customers’ personal information, or any company-related materials.
- The severance agreement itself is often marked confidential, which means you can’t share the terms of your severance, including the amount of severance pay offered to you. You can, however, share these documents with a Colorado employment lawyer for the purpose of legal, professional review of the terms.
- Non-Compete Clause: You agree not to work for any competitors. The terms of a non-compete are usually defined by region and/or timeframe.
- Non-Disparagement Language Clause: You agree not to speak about the employer negatively, whether on social media, in job interviews, in online reviews, or publicly.
- Severance Payment: You agree to the terms for severance payment.
Why Choose Us?
King Employment Law has a proven record of past successful cases, and our employment attorneys are highly esteemed in the communities. We are familiar with Colorado employment laws and with the CO Department of Labor and Employment located on 17th Street in Denver. We have a collective 90 years of experience in Colorado employment law, and we are well-equipped to handle many kinds of employment law cases in our community.
FAQs
What if I Don’t Sign a Severance Agreement?
You are not required to sign a severance agreement. If you decide not to sign it, you will be forgoing your legal entitlement to the severance package offered. You should never rush into signing a severance agreement, especially if you’re unsure. Speaking with an experienced employment attorney can provide invaluable insight for your decision.
How Long Do You Have to Sign a Severance Agreement in Colorado?
There is no statutory timeframe within which an employee must sign or decline a severance agreement. However, some agreements include a clause with instructions for signing within a certain time. Companies typically allow at least enough time to have the agreement reviewed by an employment attorney. Some severance contracts also offer a revocation period during which an employee can rescind their prior consent to the agreement terms.
What Are the Red Flags in a Severance Agreement?
Red flags in a severance agreement include very vague language that leaves interpretation open to a broad array of definitions of terms or a non-complete clause that is not in compliance with Colorado employment laws.
Other red flags include unreasonable deadlines to sign that leave no time for a legal professional to review the agreement, as well as agreements that strip you of your rights to future claims or prohibit you from reporting illegal activity to law enforcement.
Why Does My Employer Want Me to Sign a Separation Agreement?
Your employer likely wants you to sign a severance agreement to protect their legal interests. This may prevent you from filing future legal claims against them and prevent litigation costs. More practical uses of a separation agreement include maintaining company confidentiality and protecting business interests from competitors after your employment ends.
Hire an Employment Lawyer Who Knows Colorado Employment Laws
King Employment Law provides aggressive representation for victims of employment law violations in Colorado. We have helped countless clients obtain compensation for damages they incurred due to their employers’ lack of compliance with employment laws. Our attorneys are prepared to take on your employment case and provide the same level of representation as we have to clients in the past. Contact our office to schedule a meeting with one of our attorneys.
