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Signed, Sealed… Negotiated?


Hi, it’s Stuart Rudner here with another Rudner Law video employment law update.

Would you buy a car and then try to negotiate the price later? That is effectively what you’re doing when you sign a severance package and then try to go back later on and get more money. And for whatever reason, we’ve seen an increase in the number of calls we’re getting from people that have already signed their severance package and now want to meet with us and have us assess it.

Those offers always include a full and final release, which they’ve also signed, and what that full and final release means is that you are effectively agreeing that you’ve received or have been fully compensated for everything that has happened up to that date and you’re agreeing not to bring a claim against the company. So at that point, the company has no reason to engage in negotiations with you and the typical threat of a wrongful dismissal claim is almost entirely meaningless. It’s extremely difficult to get around a signed release unless you can show that you’ve incurred duress or there was some sort of fraud. Otherwise your legal claim is basically at an end and you’ve never taken the time to ensure that you get everything you’re entitled to.

Sign first and assess later strategies are really a bad idea, and I’m surprised we’re seeing it more and more often. Sometimes people get the idea in their head that the offer they received must be fair, or they assume the company must know what they’re doing, and therefore there’s really no point in taking the time or spending the money to get legal advice. And that, frankly, is a critical mistake. If the company knows what they’re doing, as you suspect, what they’re doing is protecting themselves, and doing what is best for them, not for you. So don’t assume that the first offer is fair or in line with your legal entitlements. Some companies are fair, some companies treat their employers and their former employees quite fairly; others don’t, and others see that initial severance package as a first offer, and they are thrilled when you sign it back and accept it without asking for anything more. Even if you think that it sounds fair, don’t assume, because you might be leaving tens of thousands of dollars on the table.

I’ll give you an example from several years ago now where I was at a wedding, talking to somebody over cocktails, when I mentioned that I was an employment lawyer, he commented that he could have used my advice about six or seven months earlier, but then when I pressed for a little bit more detail, he explained that he actually got a very fair package. Why? Well because he’d only been there for a couple of months, and they gave him four months of severance, which in his mind was fantastic. I have to admit I was curious, so I asked for a bit more detail. He was in sales, and about half or two thirds of his compensation was based upon commission, so even though they gave him I think it was four months of pay, what they actually gave him was four months of base salary, which was less than two months of entire pay. So even though on its face, it sounded great, he actually left a lot of money on the table. And now, of course, it was way too late because he’d signed a full and final release, he’d walked away, and there was no way he was going to be able to go back. Critical mistake.

And frankly, I get it. Getting legal advice at a time when you’ve just lost your job seems like an unnecessary expense. It’s really a worthwhile investment. Think about how you would feel a few months later if you realized that while you may have saved a few hundred dollars by not going to see a lawyer, you left ten twenty thirty a hundred thousand dollars on the table.

We see this way too often, so don’t accept what the company wants to pay you, make sure you understand your rights, make sure you get what you’re entitled to, and as we always say, if you think you might need an employment lawyer, you probably do.

That’s all for today, take care, stay safe.

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Stuart and others on the team at Rudner Law are frequent contributors to the following sites: 

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