How To Use a Severance Agreement To Avoid a Lawsuit | Mann & Elias
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How To Use a Severance Agreement To Avoid a Lawsuit


While it can be great hiring a new employee, it is anything but that should the time come when an employee is fired. Though the person fired may cooperate and leave the company without creating additional problems, others may choose to pursue a lawsuit against their employer. Rather than risk this possibility, it may be to your advantage as an employer to offer the terminated individual a severance package. While you may be wondering why you should give financial compensation and other benefits to an employee who will be fired, the advantage in doing so is that you can have them sign an agreement upon accepting the severance package stating they relinquish their right to file a lawsuit against you. Since these agreements must be very specific, you should ensure you are protected by meeting with an attorney that is well-versed in compensation cases.

Something for Everyone

If you are planning on using severance pay agreements with an employee you believe may be considering future legal action against you, you should expect to offer them something that will make it well worth it to them not to sue you. In most cases, this will be extra compensation such as a certain amount of money or access to other more specific perks and benefits. If your company is in the habit of providing severance packages to other employees who are not normally asked to sign releases, the employee in question will expect much more from you to pay for their cooperation. Therefore, allow severance pay lawyers in Los Angeles trusts from Mann & Elias to draft your severance agreement and offer input prior to it being presented to the employee.

The Waiving of Rights

Since you are asking the employee to waive their rights in regards to future legal action against you, any agreement you give them must be very clear and extremely specific. Otherwise, you could still find yourself being sued later on for something the employee may claim was not covered by the existing agreement. If you fail to be comprehensive in your efforts, an employee who left your company on very bad terms may try to think of reason after reason to make your life miserable from a legal standpoint. To ensure the severance agreement that is eventually signed will be all-inclusive and protect you and your company from any future legal action, seek legal help.

Time to Make a Decision

When an employee is presented with a severance pay agreement, you should also include in it a time period in which the person can make their decision as to whether they will agree to or reject the terms of the agreement. In most of these situations, employers will give an employee up to two weeks to decide. During this time, you should also expect that the employee may want to negotiate some terms a bit more to their satisfaction, which may be beneficial to you should you believe a lawsuit would be imminent if no agreement is reached. While you should suggest the employee consult with an employment attorney in Los Angeles prior to signing the agreement, you too should rely on legal counsel for expert guidance. Therefore, while the employee is making their decision, your legal team will ensure you know what to do if faced with various situations.

Never Use Threats or Coercion

Even though you will be anxious to have the employee agree to the terms of the severance agreement and sign on the dotted line, never let your emotions get the best of you in these situations. Even if you are not on the best of terms with the individual, never allow yourself to use threats or any other type of coercion to make them sign the agreement. If you do, the person will probably file a lawsuit against you claiming they signed the agreement under duress. While this may or may not have been true, if a judge or jury agrees with them, you could find yourself in far more legal trouble than you anticipated. This will include not only the original severance agreement being thrown out by the court, but also the likelihood of lawsuits alleging discrimination and harassment being filed against you, which may cost you far more in the end than what you would have paid through the severance agreement.

Older Workers and Special Rules

If the employee with whom you are negotiating a severance agreement is at least 40 years of age, they are considered an older worker and thus have additional rules protecting them in the workplace. The most important protection they have will be the Older Workers Benefit Protection Act, a federal law giving them more time to decide whether they wish to accept your agreement. While this law gives them 21 days to make their decision about signing the agreement or perhaps renegotiating better terms before signing, it also allows them up to seven days to change their mind after signing the original agreement. You should be aware of this to ensure everything goes as planned.

Even if you believe there will be few if any complications regarding an employee signing a release in exchange for their severance package, always be prepared to expect the unexpected in these situations. Should an employee feel they have significant leverage over you, they may prolong the situation and make unreasonable demands. To make sure you have the experienced legal team needed for these matters on your side, consult with a trusted legal professional from Mann & Elias.


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