When faced with the decision of whether to accept a severance package or stay in their current position, employees in New York face an overwhelming set of considerations. A severance package can offer financial relief, but it can also come with strings attached. The decision requires a thorough evaluation of legal, financial, and personal factors. At Levine & Blit, our experienced New York City employment lawyers are here to help you evaluate this major decision, ensuring you make an informed choice that protects your future.
Give us a call today at 646-461-6838 to book a free case evaluation with a seasoned New York employment law attorney.
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What is a Severance Package?
A severance package is an offer made by an employer to an employee who is leaving the company, either voluntarily or involuntarily. The package typically includes compensation (often a lump sum payment) and other benefits, such as health insurance continuation, assistance with job placement, or non-compete clauses. While these packages can provide immediate financial relief, they may also require employees to waive certain rights, such as the ability to file lawsuits or seek additional compensation.
Factors to Consider Before Accepting a Severance Package
Deciding whether to take severance or stay with the company depends on a careful analysis of multiple factors. The decision can have long-term consequences on your career, financial situation, and legal rights. Here’s a detailed breakdown of key considerations:
The Financial Offer: Is the Severance Package Fair?
The first question you should ask is whether the severance offer is fair and adequate. Severance packages often include:
- Severance Pay: Typically calculated based on your length of employment, position, and salary. In New York, the amount is usually negotiable.
- Health Benefits: Employers may offer continued health insurance benefits for a specific period under COBRA (the Consolidated Omnibus Budget Reconciliation Act). Assess whether this is sufficient, particularly if you or your dependents have ongoing medical needs.
- Outplacement Services: Employers sometimes offer services like resume writing and job placement assistance, which could help you transition to new employment.
- Stock Options or Bonuses: If you have stock options or are entitled to bonuses, ensure that the severance package adequately addresses these.
We recommend carefully evaluating whether the severance pay will support you during your transition, especially considering any job prospects, your financial obligations, and the length of unemployment you might face. The issue of unemployment insurance should also be considered. Our New York City severance agreement attorneys will help you compare the offered package to industry standards and your personal financial needs.
Your Career Goals and Future Employment
The answer to the question: “Should I take a severance package or stay with my current employer” should also factor in your long-term career goals:
- Job Prospects: If you have a new job lined up or are confident in your ability to find new employment, you may be more inclined to accept a severance package and move on. However, if you’re unsure about the job market or your career prospects, staying might be a better option, especially if the severance package is not generous.
- The Industry and Company Reputation: Consider how leaving your employer will affect your professional reputation. If you have been in your position for a long time or hold a high-profile role, leaving could impact your future job search, especially if your departure is less than amicable.
- Health and Well-Being: If staying in your current job is causing significant stress, anxiety, or other health issues, accepting a severance package may provide the necessary relief. Your mental and physical well-being are essential, and sometimes leaving a toxic work environment is the best option.
At Levine & Blit, our employment attorneys will help you assess whether the severance package supports your career goals or if staying with your current or former employer offers better growth opportunities.
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Legal Alternatives to Accepting a Severance Package
In some cases, employees may have legal grounds to challenge their termination, negotiate a better severance package, or pursue a claim for wrongful termination or discrimination. These options may include:
- Negotiating a Better Package: If you feel the severance package is inadequate, we can help you negotiate better terms, such as higher severance pay or more generous benefits.
- Filing a Complaint: If you believe your termination was illegal, you can file a complaint with government agencies such as the Equal Employment Opportunity Commission (EEOC) or the New York State Division of Human Rights.
- Lawsuits for Wrongful Termination: If the severance agreement does not resolve your claims, you may be able to pursue legal action for wrongful termination, especially if you were terminated in violation of laws protecting workers from discrimination, retaliation, or breach of contract.
If you’re uncertain about whether to accept a severance package or stay with your employer, our team of New York City employment attorneys at Levine & Blit will help you explore these alternatives and choose the best course of action for your situation.
When Should You Stay?
Sometimes, staying with your current employer may be the best option:
- Job Security: If your severance package is not sufficient to support you in the long term and you have no other job prospects, it may be worth staying and continuing to earn a steady paycheck.
- Opportunities for Advancement: If staying offers the chance for professional growth or promotion, and you feel confident in the company’s future, it may be worthwhile to remain, especially if the workplace environment improves.
- Loyalty or Seniority Benefits: Some employees have long-term benefits (such as retirement savings, pension plans, or accumulated vacation time) that would be better preserved by staying with their employer.
When Should You Accept a Severance Package?
On the other hand, accepting a severance package may be the right choice if:
- The Package is Generous and Fair: If the lump sum severance payment (down payment) or another form of severance offer is substantial enough to cover your living expenses and job search, leaving might give you the flexibility to start fresh without the stress of an unfulfilling job.
- You Are Ready for a Career Change: If you have been unhappy with your position or company for some time and see this as an opportunity to change careers, accepting the package could provide the financial support needed during the transition.
- You Believe Your Termination Was Unlawful: If your termination was based on illegal grounds (e.g., discrimination), challenging the termination might be the best course of action. However, if a legal challenge is not feasible or you are ready to move on, accepting the package may be the most practical option.
👉Also Read: Negotiating Severance Pay in NYC: Tips for Getting the Best Deal When Responding to an Offer
Your Legal Rights: Are You Giving Up Too Much?
When presented with a severance package, it is vital to examine not only the financial aspects but also the legal implications. A separation agreement usually includes provisions that can significantly impact your rights, career, and future legal actions. Understanding the consequences of these terms is essential to making an informed decision. At Levine & Blit, our skilled NYC employment attorneys can ensure that you do not unknowingly waive your rights or make other severance pay mistakes.
Waivers of Claims: What Are You Giving Up?
One of the most common components of severance agreements is a waiver of claims provision. This clause requires you to relinquish the right to pursue legal action against your employer. While these waivers are legal in many cases, they can have far-reaching implications on your ability to seek compensation for wrongful actions taken by your employer.
What Claims Can You Waive?
Under a waiver of claims, you might be asked to waive the right to pursue:
- Wrongful Termination: If you believe the management decided to terminate your services unlawfully, whether it was due to breach of contract, retaliation, sexual harassment, or discrimination, you could be giving up the right to challenge it or successfully negotiate compensation. You should consult with our attorneys as soon as possible, whether or not the termination date has passed.
- Discrimination and Harassment: Severance packages can include waivers of claims related to discrimination or harassment, including claims under federal laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA), as well as New York State and City laws like the New York State Human Rights Law (NYHRL) and New York City Human Rights Law (NYCHRL).
- Unpaid Wages or Overtime: If you have claims related to unpaid wages, overtime pay, or misclassification as an exempt employee under the Fair Labor Standards Act (FLSA), the severance agreement may require you to waive these claims as well.
Do You Have Legal Grounds to Challenge the Waiver?
In some situations, the waiver may be unenforceable, particularly if you were coerced into signing it, or if it violates specific legal protections. At Levine & Blit, we will thoroughly examine the severance agreement to determine whether it includes any unfair terms that might prevent you from pursuing valid claims.
Our New York severance agreement attorneys will help you understand whether you are waiving your right to pursue substantial claims that could have significant monetary or emotional value.
Discrimination and Retaliation: Are You Being Silenced?
Another critical consideration when reviewing a severance package is whether it includes waivers that limit your ability to file claims for discrimination or retaliation. If you believe that your termination or treatment by the company was due to unlawful discrimination, harassment, or retaliation, the terms of the severance package can either hinder or protect your ability to take legal action.
Types of Discrimination and Retaliation
Employees who experience discrimination or retaliation based on race, age, gender, disability, religion, sexual orientation, or whistleblowing are entitled to seek redress under various laws, including:
- Title VII of the Civil Rights Act of 1964 (federal protection against discrimination based on race, color, religion, sex, and national origin)
- The Age Discrimination in Employment Act (ADEA) (protection for employees over 40 years old against age-related discrimination)
- The Americans with Disabilities Act (ADA) (prevents discrimination against employees with disabilities)
- New York State Human Rights Law (NYHRL) and New York City Human Rights Law (NYCHRL) (state and local protections against discrimination and retaliation)
Are You Waiving Your Rights?
A severance agreement might include a broad waiver of your right to pursue discrimination or retaliation claims. Levine & Blit will carefully analyze whether the agreement attempts to limit or eliminate your ability to file these types of claims under state, federal, or city laws. We will also assess whether the waiver was presented to you fairly, without undue pressure or coercion, and whether the terms align with applicable legal requirements for enforceability.
If your termination or treatment was discriminatory, retaliatory, or otherwise unlawful, you should not be forced to waive your right to challenge it. We will help you determine whether pursuing legal action is a viable option, and whether the severance package improperly limits your access to justice.
👉Also Read: New York Severance Agreement Essentials for Executives: What to Know Before Signing
Non-Compete and Non-Solicitation Agreements: How Restrictive Are They?
Severance packages often contain restrictive clauses, such as non-compete and non-solicitation agreements, which can significantly affect your career. These clauses prevent you from working for competitors or soliciting clients or employees for a specified period after leaving your employer.
What Are Non-Compete Agreements?
Non-compete agreements are designed to protect a company’s proprietary information and business interests. However, these clauses can sometimes be overly restrictive and prevent you from seeking future employment in your field. In New York, non-compete agreements must be reasonable in scope, duration, and geographic area. If they are too broad, they may be unenforceable.
What Are Non-Solicitation Agreements?
Non-solicitation agreements typically prevent you from soliciting clients, customers, or even employees from your previous employer for a set period. These agreements can significantly limit your ability to continue working in your industry, especially if you have built strong relationships with clients or co-workers.
Ensuring Fairness
At Levine & Blit, we will scrutinize non-compete and non-solicitation clauses to ensure they are not overly broad or unreasonable. We will assess whether these provisions are necessary for your employer’s legitimate business interests or whether they are simply designed to limit your future employment opportunities. If the terms are too restrictive, we can help you negotiate for more reasonable conditions or even challenge the clauses if they are unlawful.
👉Also Read: Maximizing Your Rights: Why Signing a Severance Agreement Matters in Employment Law Cases
Our New York City Severance Agreement Lawyer Will Protect Your Rights
Accepting a severance package is a significant decision, and it is essential to fully understand what you may be giving up in the process. Severance agreements often contain provisions that limit your ability to take legal action, pursue claims for discrimination or retaliation, and protect your future career prospects through non-compete or non-solicitation clauses.
At Levine & Blit, we are committed to ensuring that you understand every aspect of your severance agreement. Our experienced attorneys will carefully review all terms, identify any problematic provisions, and work with you to negotiate better terms if necessary. If your agreement includes unfair waivers or overly restrictive clauses, we will fight for your rights and pursue the best possible outcome.
Reach out to us today, and let us help you protect your legal rights and career during this critical time. Contact us online to schedule a free and confidential case evaluation.