Have you lost your job? Chances are, that leaves you with a lot on your mind. You’re thinking about bills. You’re looking for your next opportunity. You’re trying to figure out what comes next. Then your employer hands you a severance agreement, and suddenly, there’s another thing to deal with.
It might be tempting to sign the paperwork and move on – particularly if you could use the extra money. Before you do, read through the terms. What seems like a straightforward offer could include conditions that affect:
- Your finances,
- Your rights,
- Or your next job.
So, what should you look out for? Keep reading to find out.
Severance Pay vs. Earned Wages
First things first: ensure you know what money you’re actually getting.
Severance pay is compensation an employer may offer when your job ends. Earned wages are different. That’s money you’ve already earned, such as unpaid salary or commissions. It might sound like a small distinction, but it matters. You don’t want to assume your severance package covers everything your employer owes you.
Take a look at the payment details. Is there any unpaid compensation? What happens to unused vacation time or a bonus you were expecting? The answers depend on your employment agreement and applicable law, so don’t be afraid to ask your employer to explain anything that isn’t clear.
The goal is simply. You need to know what you’re being offered and ensure you understand what – if anything – is owed separately.
Review Time and Deadline
When you’re leaving a job, you probably have enough on your plate without worrying about legal paperwork. And if your employer gives you a deadline to sign, it feels like you need to make a decision right away.
Still, don’t rush it.
Read the agreement from beginning to end. And yes, that includes the parts full of legal jargon. Pay attention to terms that require you to give up legal claims in exchange for the severance payment.
You may also have specific rights to review the offer. Or even, in some cases, revoke your acceptance. This depends on your circumstances. For example, federal law provides additional protections in certain age discrimination waivers for employees aged 40 and over.
If you’re unsure what a specific clause means, get legal advice. And do this well before signing. This will save you trouble later. Milwaukee guidance on severance terms, for instance, is a useful starting point if you want to better understand your options under Wisconsin law.
Future Employment Restrictions
Here’s something people sometimes overlook: a severance agreement affects more than just your current job.
Some agreements include:
- Confidentiality clauses,
- Non-disparagement provisions,
- Or restrictions on competing with your former employer.
Depending on the wording, these terms could eventually become crucial. This is most likely if you begin applying for jobs or working in the same industry.
Before signing, ask yourself some questions. Primarily, you should think about whether any of these restrictions could get in the way of your plans. If something seems unusually broad, have it reviewed. Whether a particular restriction is enforceable depends on the circumstances and applicable law.
To conclude, signing a severance agreement requires some thought. You should not rush into it, either. There are various aspects to look at, including the three listed in this post. Doing so will make the entire process smoother.
