As layoffs roil tech and other industries, many departing employees face a consequential workplace decision: signing a severance agreement.
Some tech companies appear to be offering fairly generous packages. Google and Meta are providing at least four months pay for those laid off, with veteran employees qualifying for longer payouts.
But exit documents also contain information about health insurance and returning any office equipment, as well as details on seeking unemployment. Once the agreement is finalized, it can be difficult to challenge it later, attorneys said.
Here are five things to consider when signing your severance agreement, according to labor lawyers:
1. Learn if there are WARN act requirements in your state
Companies are often required to let affected workers know ahead of mass layoffs. The federal Worker Adjustment and Retraining Notification Act, or WARN Act, which applies to big employers, calls for a 60-day notice period.
States also have their own versions of the law, which could require employers to offer even more notice. New York’s WARN act, for instance, can require companies to provide a 90-day notice period. New Jersey’s similar rule, which calls for certain employers to provide a 90-day notice period, went into effect on Monday.
When WARN Act rules apply, the notice period can determine the time in which employees being laid off need to be paid. For instance, in December 2021, the online mortgage startup Better increased its severance pay for laid off employees to 60 days, coinciding with the 60-day notice duration outlined by the federal WARN Act.
It’s not clear how state laws would apply to employees working from home, especially if their employers are not located in those states, said Shannon Liss-Riordan of Lichten & Liss-Riordan PC.
“There are issues to be worked out about who is subject to which laws in this day of widespread remote work,” she said. Liss-Riordan is currently representing more than 1,800 former Twitter employees seeking more severance. An attorney for Twitter did not respond to Insider’s emailed requests for comment, and emails Insider sent to Twitter’s press address received poop emoji autoreplies.
“Right now, I would say, if you worked in New Jersey or for a New Jersey employer, I’d highly encourage you to talk to a lawyer before signing anything,” said Liss-Riordan.
2. Take a closer look at confidentiality clauses in the agreement
The National Labor Relations Board, a key federal labor agency, decided in February that employers shouldn’t muzzle workers in exchange for severance. The ruling gives employees room to question language that prevents them from speaking freely about their time at the company, said Nicholas De Blouw, name partner at Blumenthal Nordrehaug Bhowmik De Blouw LLP, a labor law firm that represents workers in employment cases.
The agency’s fairly new decision could still be challenged in court.
“It certainly can give the employees a little more ammunition to break some of these confidentiality clauses, but be very careful,” he said, referring to the NLRB ruling. “The law can evolve on these issues.”
Companies can also dictate certain penalties for violating terms of their severance agreements — including non-disclosure agreements and confidentiality clauses — and employees should make sure they understand them before signing, said De Blouw.
3. Consider what you are willing to give up in exchange for the severance payment
When employees accept a severance package, they’re asked to give up something in exchange — like their ability to sue the company. They may want to consult an attorney to consider the trade-off or explore if they have potential legal claims, attorneys said.
Employees being laid off could explore claims for bias or discrimination, for instance, if they can demonstrate evidence that the layoffs targeted a protected group of workers, Liss-Riordan said.
“We have been receiving a lot of calls from workers laid off by tech companies,” she said.
“Usually people are trying to figure out if they might be entitled to more severance pay,” she added. “There are employees who want to get their job back — that’s difficult to do.”
4. Know your deadline for signing the agreement
Laid-off employees usually have a few weeks to sign severance agreements and often a brief additional window after that to change their minds. Acting early will give employees more time to seek any necessary information from their companies, like any documents they’ve signed, their performance evaluations, and any wage statements, according to De Blouw.
Such documents can help employees determine if and how they can bring legal claims against their employers, if they want to go down that road. If they’ve signed an arbitration agreement, for instance, they’d have to file an arbitration claim rather than a lawsuit.
“If they wait, we, as attorneys, do not have adequate time to review their case file,” De Blouw said.
5. Learn ways to get support after you leave
Departing workers could request other forms of support, like letters of reference or even language in the severance agreement that says the company won’t oppose any decision by a state agency to grant unemployment, said Richard Volin, principal at Volin Employment Law.
“Employees can try to negotiate for non-monetary benefits that an employer may be willing to give,” he said.
Workers can sometimes also try to negotiate with the company on health insurance, even though employers aren’t required to contribute to ongoing health insurance payments, said Liss-Riordan.
“This is a common issue that gets negotiated when an employee seeks counsel from a lawyer after they’ve been laid off,” she said.