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What is a severance agreement?

If you are being terminated or laid off from your job in Dallas, Fort Worth or the Mid-Cities area, your employer may ask you to sign a severance agreement. This is an agreement between you and your company where the employer offers you a certain sum of money in exchange for your release of certain legal rights spelled out in the contract (typically all of them or nearly all of them). Unless your employer agreed to pay you severance pay in an employment contract,, an employer’s offer of this monetary compensation is usually completely voluntary, although occasionally the employer may offer it to avoid claims the employer believes you may have..
 

Terms That Can Be Included in a Severance Agreement

Severance agreements can contain many different terms, depending on the employer. Some terms that might be in yours include:
 

Release of Claims

A release of claims clause will generally be an agreement by you to waive your right to sue your employer for any claim you have (whether you know about it or not), such as for any type of discrimination, retaliation, overtime or wage claims, etc. 

Non-Compete Agreement

This agreement would prevent you from working for a competitor for a certain period of time in a specific geographic area; if you have not already signed a similar non-compete with this employer, you may be giving up significant rights.

Confidentiality Agreement

A confidentiality clause may prevent you from disclosing the specific terms of the severance agreement, or it may prevent you from disclosing certain confidential information of the old employer to a new employer or anyone else.
 

When Is a Severance Agreement Not Valid?

In most cases, a severance agreement signed by a business and its employee is a binding contract between them. However, in certain situations, some or all of the agreement may not be valid. 
 
Here are a few circumstances in which it would likely not be valid:
 
The severance payment is money that you are already owed, such as your last paycheck.
You were coerced into signing the agreement or did so under duress. You must meet certain legal proof requirements to prevail on these claims.
If you are over 40 years old, you cannot waive your rights under the Age Discrimination in Employment Act (ADEA) or the Older Workers Benefit Protection Act (OWBPA).  For example,certain language must be in the agreement, and you must be given a review period after signing it and a short period of time right to revoke it after signing.
The agreement may violate the Worker Adjustment and Retraining Notification Act (WARN), which provides protections to employees when medium to larger employees make large layoffs or close plant locations. 
 
Before you sign a severance agreement, it is important to have it reviewed by an experienced employment law attorney to protect your legal rights and be certain that it is in your best interests. Attorney Walt Taylor will review severance agreements in advance and meet with you to discuss the specific facts of your case, for a reduced flat fee from his normal hourly billing rate. To learn more about these agreements and to get other questions answered, call our office directly at 817.380.4888 to schedule a consultation with Attorney Walt Taylor.
Walter L. Taylor
Employment & Medical Peer Review Lawyer helping workers, doctors, nurses, dentists and pharmacists in Texas.

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