What should you do?
1. Timing. Find out how much time you have to consider the agreement. If you're over 40 years old, your employer will likely give you 21 days to consider the agreement (because of the Older Workers Benefit Protection Act), and then you'll have 7 days after you sign to revoke the agreement if you change your mind.
If you're under 40, your employer can set an arbitrary deadline for you to return the agreement (whether you decide to sign it or not). We have seen deadlines as long as 30 days and as short as 7 days (normal days -- not business days). If you need more time, ask for it.
2. Severance Benefits. Is your employer offering you something in addition to your last paycheck? If so, how was that amount calculated? If you're being laid off as part of a reduction-in-force, your employer is likely using a formula to calculate severance benefits, but if you are the only employee facing termination, your employer is likely picking a number out of the air.
3. Claims. Do you have any potential claims against your employer? Without a doubt, any severance agreement will contain a release of any claims you may have arising out of pretty much any aspect of your employment. Ask yourself if you're possibly releasing a claim that you may want to assert in the future, like discrimination or retaliation. Some employers have also written releases so broad that the release may affect your ability to assert a claim against the employer's insurance carrier. In light of this, it's best if you get an attorney to review the agreement. Even if you're not ready to file suit against your employer, you may be able to use your potential claim in your severance negotiations.
4. Fringe Benefits. Do you have a 401K with your employer? Stock options? Paid vacation or sick leave? Ask what will happen to these benefits in light of your termination.
5. COBRA. Your severance package should contain information regarding your right to continue insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1995 ("COBRA"). Typically, COBRA allows you to continue medical coverage under your employer's plan for up to 18 months after your termination. But if you're paying the entire premium out of your pocket, that can get pricey. Consider asking your employer if it will cover all or a portion of your continuation premiums.
6. New Obligations. Check to see if the severance agreement contains any provisions addressing non-solicitation, non-competition, or non-interference. Depending on where your career takes you next, these new obligations can be a hindrance and you need to be aware of what you're promising by signing the agreement.
7. Contact a Lawyer. As you can see, there are a number of considerations when you are faced with a severance package. We are experienced in reviewing these types of documents, so contact us to discuss your options.