If you’ve ever wondered” can my employer fire me without paying severance pay”, the short answer is yes, without a doubt, unless you have an employment agreement that requires severance pay or are in a labor union which requires it or the equivalent (such as pay for unused sick or vacation time). That being said, don’t panic. There are good reasons why employers prefer to pay severance.
So…CAN my employer fire me without paying severance pay?
Here’s the nitty gritty: First, in exchange for severance pay, the employee is required to provide a general release of all claims the employee could have made against the employer arising from his/her employment. This includes discrimination claims, such as sexual harassment, age discrimination, violations of the ADA, claims based on race, religion, ethnic origin and, in New York, sexual orientation. The general release will prevent the employee from suing the employer for any reason. This means the employee cannot bring a complaint to the Equal Employment Opportunity Commission, or similar agency. Doing so generally costs employers time and money, including legal fees.
Employers will usually give the employee an agreement to sign prior to dismissal that sets for the terms of dismissal in language most favorable to the employer. The monetary offer made in exchange is also frequently less than what can be negotiated. An employee who is in a “protected class” based on race, age, sex, religion, disability or ethnic origin will often have a legal basis to bring an EEOC complaint. Anyone over age 40 is covered by the Age Discrimination in Employment Act, for example. It is prudent to have an experienced employment attorney review the agreement and advise you whether it should be changed and/or whether additional severance can be negotiated.
What about confidentiality?
Included in many separation agreements are confidentiality clauses that prevent the employee from disclosing the terms of the agreement to anyone except attorneys, tax preparers and, sometimes, immediate family members. Such provisions are also valuable to employers because they prevent disclosure of the amount of severance paid. In addition, the employer will usually insist on a non-disparagement clause, which prevents the employee from making derogatory or defamatory comments about the employer. These provisions are more valuable in some cases than in others.
Separation agreements can also contain confidentiality provisions which prevent an employee from disclosing confidential information to others, such as customer lists, formulas, and any “trade secret.” These are obviously quite important to the employer and are frequently also contained in employment agreements signed prior to being hired. In certain situations, there may be non-compete provisions which prevent an employee from taking the same type of job for a set period of time within a specific geographic area. Most often, such restrictions exists for upper-level executives or others with highly specialized knowledge or skills.
All of the above are reasons why employers might want to pay severance, even if there is no legal requirement to do so. You would be wise to confer with a good employment lawyer before you sign a separation agreement.
If you’ve been fire and feel you’ve been wrongfully terminated, or have been fired without a severance package and think you may be owed one, it makes sense to consult a lawyer who specializes in employment law. Call Joe Carbonaro today– he looks out for your rights.