Key Takeaways:
- Review the payment terms, benefits, restrictions, and release of claims before signing.
- Support your counteroffer with specific requests and relevant documents.
- Confirm your review deadline and seek legal advice about the rights you would surrender.
A severance offer gives you more to consider than the payment amount, such as the employment restrictions, health insurance costs, and claims that your employer wants you to release. Before negotiating, review those terms and decide which changes matter most to you.
Are You Entitled to Severance Pay?
The Fair Labor Standards Act does not require employers to provide severance pay, though your employment contract or employer severance plan may provide some relevant benefits. Severance is generally a matter of agreement between an employer and employee.
Gather your offer letter, employment agreement, handbook, compensation plans, and any severance policy. Compare what those documents promise with what your employer is offering, and if the amounts or terms differ, ask your employer to explain why.
Determine what compensation you already have a right to receive, versus any additional compensation your employer is offering in exchange for a release. An employer must offer something beyond your existing entitlements if they seek a waiver of rights.
What Should You Review Before Making a Counteroffer?
Check when and how your employer will pay you. Will you receive a lump sum or installments? When is the first payment due? Will payments stop if you accept another position? Request a written breakdown that separates your severance amount from your final wages, bonuses, commissions, and other compensation.
Review the obligations attached to the payment, including provisions addressing the following:
- Confidentiality and statements about the employer
- Competition, customer solicitation, and future employment
- Cooperation with investigations or litigation
- Repayment demands and penalties for alleged breaches
- Return of property and deletion of company information
Your lawyer can assess how broadly each provision applies and whether it is enforceable. If your employer expects you to cooperate with investigations or litigation after you leave, consider requesting reasonable notice, reimbursement of expenses, and limits on the time you must spend assisting.
How Can You Build a Persuasive Counteroffer?
Decide what you want to change before contacting your employer: your priorities might include additional pay, contributions toward health coverage, or removal of a restriction that would interfere with your job search.
Explain the reasons for your requests, and reference your performance evaluations, compensation records, written promises, and correspondence about your separation to support your position. A short timeline of your employment and departure can also help your lawyer evaluate the offer.
Make your proposal specific:
“I am requesting eight weeks of severance and two months of employer-paid health premiums based on my tenure and the transition assistance you have requested.” These figures illustrate how to frame a counteroffer; they are not a legal entitlement or standard formula.
Keep the message professional and avoid unsupported accusations. If you suspect discrimination or retaliation, discuss the evidence privately with your lawyer before raising it in negotiations. Preserve documents you lawfully possess, and consult your lawyer before copying company files or accessing systems after your authorization ends.
What Can You Negotiate Besides Additional Pay?
You might request an agreed reference, confirmation of your job title and employment dates, career placement assistance, or an accurate description of your departure. For references, clarify who will respond to inquiries and whether the agreement can specify what that person will say.
Health coverage can be another significant expense after leaving a job. While COBRA may allow eligible employees and their family members to continue group health coverage after qualifying job loss, you may have to pay the full premium plus an administrative charge. Ask whether your employer will contribute toward those costs and for how long.
If your employer declines a larger payment, the agreement’s improvements to your professional references, benefits, or lack of employment restrictions may still make the package acceptable. Weigh those changes against your original priorities before giving up a request.
What Rights Could You Give Up by Signing?
A release may waive existing discrimination claims and other employment claims covered by its terms. A valid waiver can prevent you from pursuing those claims in court. Your lawyer can explain what the release covers so you can decide whether the compensation justifies giving up those claims.
An agreement cannot prohibit you from filing an Equal Employment Opportunity Commission (EEOC) charge or participating in an EEOC investigation or proceeding. A valid release may, however, affect your ability to recover personally on released claims.
Have your lawyer identify which rights remain and whether the agreement needs revisions. If a provision is unclear, resolve it in the written agreement before signing. An informal explanation from Human Resources may not reflect what the document says.
How Much Time Do You Have to Review the Agreement?
For workers age 40 or older, employers seeking a waiver of Age Discrimination in Employment Act claims in an ordinary severance agreement must generally provide at least 21 days to consider it. Certain group termination or exit incentive programs require at least 45 days and additional written disclosures. These waivers also require at least seven days after signing to revoke acceptance.
Check your deadline as soon as you receive the agreement, and if you need more time, request an extension in writing and obtain written confirmation that your employer has granted it.
Before signing, compare the final draft with the changes you negotiated. Check the payment dates, attachments, and revocation instructions as carefully as you did the payment amount.
Frequently Asked Questions (FAQs):
Before Signing a Severance Agreement, Speak With Our Knowledgeable Philadelphia Employment Lawyers at The Gold Law Firm P.C.
If you have received a severance offer, our Philadelphia employment lawyers at The Gold Law Firm P.C. can review its terms and discuss your options. Call today at 215-569-1999 or fill out our online contact form to schedule a free consultation. With office locations in Philadelphia and Malvern, Pennsylvania, Pennsauken, New Jersey, and New York, New York, we proudly serve clients in the surrounding areas. *NYC, Pennsauken, and Malvern offices are by appointment only.
