Understanding Massachusetts Severance Agreements: Part II

Sep 30, 2011

severance agreementsWhen employers present employees in Massachusetts with severance agreements, they are typically looking to accomplish certain goals, such as: (1) assisting the employee in transitioning to a new job, (2) having the employee waive certain legal claims such as the right to file a complaint for age discrimination;  or (3) reinforcing agreements the employee previously signed, such as a confidentiality agreement or non-solicitation agreement.    What about the employee’s goals?  The severance agreement presented to employees in Massachusetts is typically drafted in favor of the company and often the terms of it may be negotiated.  It is important for an employee to think about what he or she might want to accomplish through a severance agreement.

I have learned over time that the goals of individual employees vary greatly when presented with a severance agreement.  Some employees are concerned first and foremost with the ability to get unemployment benefits.  This is particularly true for older employees who are either close to retirement or know it will take a long time to find a similar job.  This is also true for employees in certain industries where similar jobs aren’t readily available.  While it is ultimately up to the Massachusetts Department of Unemployment Assistance (“DUA”) to determine eligibility for unemployment benefits, severance agreements can be worded to to increase the likelihood that an employer will not contest the employee’s application for benefits.

Other employees who know they have a strong network and can get another job in their industry may be more concerned with restrictive agreements they signed along the way, such as non-compete agreements, non-solicitation agreements or confidentiality agreements.  Their main concern is being able to start another job without restrictions.  It is important for the employee to pull together any documents signed at work, and if the employee doesn’t understand them, to go over them with an employment attorney.  Severance agreements in Massachusetts can be drafted to deal with issues such as non-solicitation of a company’s clients or employees.

Some employees who are confident that they can get another job with the right references are very concerned with what their employer may say to a prospective employer.  While many Massachusetts companies have a policy that they only give out title and dates of employment, some companies are more liberal with what they say when asked about a former employee.  In this instance employees may want to negotiate the language of a reference or at least have an agreement that that the employer will give a neutral reference.

Some employees are concerned largely with the amount of severance offered, or need the cost of continuing health insurance payments under COBRA.  These employees are thinking about the possibility of being unemployed for months and about how they will pay their rent or mortgage and other bills.  Unless the employee has a contract that provides for severance, the employer is not required by Massachusetts law to give the employee severance.  It is typically a provision that is negotiated.  Likewise, the date that health insurance ends is also a provision that may be negotiated.

Some employees are working in a small industry where everyone knows everyone else, and they are concerned because of the way they have been treated, that their employer will make disparaging remarks about them and hurt their reputation.  Severance agreements usually have a non-disparagement provision worded in the company’s favor, and this can often be negotiated.

Some employees have stock options and are concerned about losing stock options that haven’t yet vested.  This is an issue that can be dealt with in a severance agreement.

In summary, the goals of an employee may be as individual as that employee, and may reflect the employee’s years in an industry, compensation package and ability to find another job.

While we can’t give individual advice through this blog, if you have any questions about the information posted here, please call employment attorney Maura Greene, Law Office of Maura Greene, LLC, Six Beacon Street, Suite 205, Boston, MA 02108 at 617-936-1580 or maura@mauragreenelaw.com.  In 2016, 2015, 2014 and 2013, the Boston Globe named Maura Greene as one of Boston’s top-rated employment lawyers.  Maura Greene has been named to the list of Super Lawyers in employment for the past five years.  She is AV-rated, which is a peer review rating, and the highest rating an individual attorney may achieve.

 

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