Last week, more than 300 Twitter employees received the distressing news that their employment was being terminated. In a memo to staff, Twitter’s CEO Jack Dorsey promised that “Twitter will go to great lengths to take care of each individual by providing generous exit packages and help finding a new job.”
While the details of the Twitter severance packages have not been released, companies conducting mass layoffs tend to determine severance amounts on a formulaic basis. For example, each affected employee may be offered a cash payment equal to a half week’s salary for every year of service, or employees at a particular organizational level within the company may be offered a certain number of weeks’ pay, with a greater number of weeks offered to employees at the next level, and so forth.
So, what is a terminated employee in receipt of a severance offer to do?
First of all, she should not sign the agreement on the spot, even if pressured to do so. A severance agreement almost always contains a release of claims, pursuant to which the employee waives all legal claims she may have against the employer up through that date, and it may also contain addition al restrictions on the employee’s future activities. An employee who is 40 years old or over and who is asked to waive age-based discrimination claims is entitled to a 21-day period in which to consider the offer. Employees outside this category should ask the employer how long they have to consider the offer if the agreement does not specify a time frame.
The offer on the table may or may not be the company’s final offer. Certain aspects of the agreement may be negotiable, including the amount of severance. Although, particularly in a mass layoff setting, the company may be resistant to deviating from the formulaic basis for the packages, There may be room for exceptions based on specific circumstances. For example, if the company has reason to believe that an employee has a potential legal claim against the company, neither in connection with the termination or in relation to a prior event, the company’s desire to secure a release may motivate it to negotiate with the employee on the severance amount.
In addition to the amount of the severance package, There terms may also be negotiable. For example, the company may be willing to assist the employee with COBRA expenses, or provide outplacement services (the latter may be what Dorsey was referring to in stating that the company would help employees find new jobs).
Further, the company may be willing to reduce or even eliminate restrictions on the employee’s future conduct. For example, if the proposed agreement contains a non compete clause, the company may be willing to reduce the time length or the scope of the restriction. If the non compete is not negotiable, and if the employee does not have a pre-existing non compete restriction (such as in an employment agreement or restrictive covenant agreement signed at the outset of or during employment), then the employee may want to consider whether the amount of severance being offered is worth being subject to the restriction. Some terminated employees in this situation decide not to sign the separation agreement at all, forgoing the severance in order to be able to work for a competitor.
The above suggestions are by no means an exhaustive list of do’s and don’ts with regard to severance offers. Indeed, any terminated employee considering signing a severance agreement should strongly consider consulting with an experienced employment law attorney. Although the prospect of incurring legal fees may be a deterrent to some, those fees might ultimately be offset by an increased severance package or There terms more favorable to the employee, particularly if the attorney is able to identify a source of leverage the employee did not know she had. Even if the offer remains unchanged, however, the employee will at least have the peace of mind of knowing that she understands exactly what she is signing and the extent, if any, to which the agreement restricts her future conduct.
While losing one’s job is never good news, some companies are willing to provide a soft landing for employees who are being let go. Exploring just how soft a landing is possible is worth the effort.