Can You Negotiate a Severance Package? What Texas Employees Need to Know
Losing a job often causes immediate stress and a flood of questions about the future. When an employer hands over a severance agreement, the dense legal language can be confusing. However, before you sign any documents, consulting a skilled employment law attorney for severance negotiation can help prevent you from accepting lowball offers, protect you from unfair non-compete clauses, and secure the financial package you need.
At The Parzivand Law Firm, PLLC, attorney Hessam Parzivand provides clear, actionable guidance for severance negotiation. With a strong background in human resources, he understands how employers think and operate during terminations. With offices in Stafford and Houston, Texas, the firm serves clients throughout Sugar Land and Fort Bend County.
If you are facing termination and have been presented with a severance package, reach out today to schedule a consultation. Attorney Parzivand can help you determine whether there is room for negotiation and what you should know before you sign.
The Basics of Severance Agreements
A severance package is an employer's offer of pay and benefits to an employee upon leaving the company. Employers typically offer these packages during layoffs, role eliminations, or mutual separations. The package might include a lump sum payment, continued health insurance through COBRA, outplacement services, or payment for unused vacation time.
However, employers rarely hand out money for nothing. In exchange for the financial benefits, they almost always require the departing employee to sign a release of claims. This legal document prevents you from suing the company for wrongful termination, discrimination, or unpaid wages.
The agreement might also include strict confidentiality clauses, non-disparagement provisions, and non-compete clauses that restrict your ability to find new work in your industry. Because these terms heavily favor the employer, treating the initial offer as a starting point for discussion rather than a final mandate makes good financial sense.
Texas Law Governing Severance Packages
Texas follows an "at-will" employment rule, which means that either the employer or the employee can end the working relationship at any time, for any legal reason, or for no reason at all. Because of this at-will status, Texas law does not require employers to provide severance pay to departing employees. However, there are some exceptions.
If you have a written employment contract, a collective bargaining agreement, or if the company has a clear, established policy of paying severance outlined in the employee handbook, the employer must honor those specific commitments. Under the Texas Payday Law, employers must pay all earned wages, including accrued paid time off if the company policy dictates it, but it does not mandate additional severance pay.
Federal laws like the Worker Adjustment and Retraining Notification (WARN) Act may also apply if a large company conducts a massive layoff without proper notice, which can result in severance-like penalty payments. Ultimately, because severance is largely voluntary in Texas, the terms of a severance agreement are typically negotiable.
Why Employers Often Offer Severance Pay
Companies often offer severance packages to manage risk and protect their interests. By offering you a financial incentive, they buy peace of mind knowing you will not file a lawsuit against them later. They may also use severance agreements to protect their trade secrets and client lists.
By embedding restrictive covenants into the paperwork, they limit your ability to work for their direct competitors. They may also want to protect their public reputation. A non-disparagement clause prevents you from posting negative comments about the company on social media or review websites.
Recognizing what the employer gains from the agreement gives you leverage during the negotiation process. If they want you to sign away your right to sue or your right to speak freely, you have the right to ask for better financial compensation in return.
Effective Strategies for Reviewing Your Offer
When you are handed a severance agreement, do not immediately sign it. Employers must give you a reasonable amount of time to review the paperwork. If you are over the age of 40, the Older Workers Benefit Protection Act (OWBPA) legally grants you at least 21 days to review the offer and seven days to revoke your signature after signing.
Take this time to gather your thoughts and review your contributions to the company. Did you recently close a major account? Are you leaving behind unvested stock options or a pending annual bonus? Make a list of everything you leave on the table. You should also request a copy of your employee file and the most recent employee handbook. Compare the company's standard severance policy to the offer they handed you to see if they are shortchanging you.
How to Ask for Better Terms
Negotiating a severance package involves more than just asking for a larger lump-sum payment. You can request improvements across various parts of the agreement. For instance, you might ask the company to cover your COBRA health insurance premiums for six months instead of three. You can request a pro-rated portion of your annual bonus or ask them to accelerate the vesting of your stock options.
You can also negotiate the non-financial terms of the agreement. For example, if the non-compete clause restricts you from working in the state of Texas for two years, you can ask to narrow the geographic scope to just Fort Bend County for six months. You can ask for a mutually agreed-upon reference letter or request that the company categorize your departure as a mutual resignation rather than a termination.
Contact an Experienced Employment Law Attorney in Stafford, Texas, Today
If you have been handed a severance package from your employer, don't sign it right away. Instead, contact an experienced employment law attorney who can help you understand the limitations and provisions in the agreement and negotiate the contract where appropriate.
At The Parzivand Law Firm, PLLC, Attorney Hessam Parzivand is dedicated to guiding his clients through the stress of employment challenges. Drawing from a deep background in human resources, he strives to provide cost-effective solutions tailored to your situation.
With offices in Stafford and Houston, Texas, the firm serves clients throughout Sugar Land and Fort Bend County. If you need assistance with a severance agreement, contact The Parzivand Law Firm, PLLC, today to review your case.