Losing your job can be a frustrating and nerve-wracking experience, especially when it seemingly comes out of nowhere. You’ll likely be wondering what went wrong and what you’re going to do next. Your employer may offer you a severance agreement as part of your termination. And while it may seem obvious that you should take the money they offer you, is it really the smart thing to do?
What is a severance agreement?
When your employer either fires you or lays you off, they are required to compensate you for any income they still owe you – this would be for things like back pay or holiday and sick pay. A severance agreement is when the employer offers you additional pay on top of what they must give you.
Typically, New York does not require employers to offer severance pay. So why do they? Often, it’s simply the case of a smart employer attempting to prevent future problems. A severance agreement is a contract between you and the employer. In it, they are promising to give you money they don’t have to. You, on the other hand, will likely be required to make certain promises about what you will or will not do in the future.
How can a severance agreement hurt you?
The key here is what you will be required to promise and how that can affect you moving forward. Did you experience harassment or discrimination in your job? Did you have problems with your pay, so that you were not adequately compensated for your work? The chances are that, if you sign the severance agreement, you’re giving up your right to sue your employer. And that may not be in your best interest.
Severance agreements also often include restrictive covenants, such as non-compete and non-disclosure clauses, which can impact your options for future employment. In the end, if you’re offered a severance agreement, it’s a good idea to sit down with someone who is experienced in New York employment law. They can help you understand the agreement’s true impact and determine whether it makes sense for you to sign it.