Over the past few years, I have reviewed more and more employment severance agreements. Perhaps that is a sign of a flagging economy, perhaps not. Whatever the reason, many people call me and want to know if they actually should have a lawyer review their severance agreement. The person usually calls because the separation agreement contains some language in it that says that the person has the right to consult with an attorney and may even say that they have already done so.
Understand What You are Signing
The simple answer is that it is very important, as with any document of legal significance, that you read and understand what you are signing. This is especially true when you are signing a document that may affect your ability to work and generate income in the future.
Severance, or separation agreements, are an employer’s way of asking an employee to release them from legal harm and liability in the future. The employer wants to know that once you leave them, and once you sign the agreement, that you will never come back to harm them in any legal way again . . . ever.
Of course, employers may seek to insert provisions or language which are far more limiting than either the law or fair dealing would allow. For example, some severance agreements ask the employee to give up their rights to unemployment compensation benefits. In Pennsylvania, that is simply illegal. However, if the employee believes it is legal, they may never seek benefits to which they may otherwise be entitled.
So too, some severance agreements seek to bind the employee to a non-competition agreement which seeks to prohibit the departing employee from working in a similar type of job over a specific geographic area.
How and when these non-compete agreements are entered into, whether at the time of separation or otherwise, can make all the difference in the world in terms of whether they are even enforceable. But again, if the departing employee thinks they are enforceable, then the effect can be devastating, even if the law would never enforce such an agreement.
Seek Legal Counsel
The bottom line is that when an employer asks an employee to sign a severance agreement in Pennsylvania, an attorney should absolutely look at the document to be sure that what is stated in the separation agreement is both fair and legal.
When asked to sign a severance agreement, the employee typically has a limited amount of time to review and sign any agreement; this time should be used by consulting with an attorney who can explain the effects of the agreement and even assist in negotiating with the employer, if needed, to make the arrangement more fair and equitable.