Five Things to Know Before You Sign a Severance Agreement in Texas
Being served with a severance offer from your employer can bring mixed feelings. On one hand, a financial safety net can be helpful after losing your job. On the other hand, legal documents are often filled with confusing language that might put you at a disadvantage. Before you sign an offer, it's important to seek guidance from an experienced attorney who can help you understand what you are giving up and what you gain in return.
At The Parzivand Law Firm, PLLC, Attorney Hessam Parzivand is committed to helping you understand your severance package and the impacts it can have. With a strong background in human resources, he understands how companies operate behind the scenes and offers cost-effective, tailored legal solutions for your specific situation.
With offices in Stafford and Houston, Texas, the firm serves clients throughout Sugar Land and Fort Bend County. Reach out to The Parzivand Law Firm today to explore your options before you sign a severance agreement.
Texas Laws Governing Severance Agreements
Texas is an "at-will" employment state. This means an employer can let you go at any time, for almost any legal reason, without giving you a warning. Similarly, you have the right to leave your job at any time. However, under Texas law, employers are not obligated to offer severance pay.
The state does not mandate severance packages for terminated employees unless a previous contract, union agreement, or company policy specifically promises one. Because companies do not have to offer you anything, they usually ask for something in return when they do hand you a severance package. This exchange forms a legally binding contract. Texas law dictates that these contracts must be fair, clearly written, and entered into willingly by both parties.
What to Know Before You Sign
If your Texas employer has provided you with a severance offer, it's wise to take some time to read and understand the agreement. Engaging an experienced employment law attorney can often help you break down the offer. The primary items you should note upon receipt of a severance offer include the following.
1. You Do Not Have to Sign Right Away
Employers often hand you a severance package and ask for a quick signature. They might even give you a tight deadline, pressuring you to accept the terms immediately. However, you should never rush this process.
You have the right to take the document home, read it thoroughly, and consult with an attorney. If you are 40 years of age or older, federal rules require your employer to give you a minimum of 21 days to review the agreement and seven days to revoke your signature after signing. Even if you are younger than 40, your employer should give you a reasonable amount of time to think it over. If a company tries to force a fast decision, you should view that as a warning sign.
2. Severance Pay Is Usually Conditional
When you look at the dollar amount offered, it might seem generous. However, that money will often come with strings attached. Companies may offer severance packages to protect themselves, not to reward you for your service.
In exchange for the payout, the agreement will likely ask you to release the company from any future legal claims. It might also include clauses that dictate what you can and cannot say about the company. Read these conditions closely. Think about whether the amount of money offered fairly compensates you for the rights and freedoms you will give up.
3. Watch Out for Non-Compete Clauses
Many severance agreements contain non-compete clauses. These sections attempt to limit where you can work and who you can work for after leaving the company. While Texas courts enforce non-compete agreements, they must meet specific standards to be valid.
A non-compete clause must place reasonable limits on time, geography, and the scope of restricted activities. For example, a clause that prevents you from working in your industry anywhere in the United States for five years is likely unenforceable.
However, a clause stopping you from contacting your employer's direct clients in Fort Bend County for six months might hold up in court. Have a legal professional review these restrictions to avoid accidentally locking yourself out of your career field.
4. You Might Give Up Your Right to Sue
The primary reason employers offer severance is to avoid lawsuits. Your agreement will almost certainly contain a "release of claims." By signing this, you agree not to sue the company for wrongful termination, discrimination, unpaid wages, or any other workplace grievance.
Before signing away your right to file a lawsuit, evaluate your time at the company. Did you face harassment? Were you denied overtime pay? Do you suspect you were fired due to your race, gender, or age? If you have a valid legal claim against your employer, that claim could be worth significantly more than the severance package they placed on the table. Once you sign the release, you cannot change your mind and sue them later.
5. Everything Is Negotiable
Many people assume a severance offer is a "take it or leave it" situation. In reality, you can often negotiate the terms of your departure. A push by your company to sign the release of claims gives you bargaining power.
You may be able to ask for a higher payout, extended health insurance benefits, or compensation for unused vacation days. You can also negotiate non-financial terms. For instance, you might ask the company to agree to provide a positive letter of recommendation or alter a strict non-compete clause. An attorney can help handle these discussions for you and advocate for a better overall package.
Contact an Experienced Texas Employment Law Attorney for Guidance Today
If you are facing an employment dispute or a difficult workplace transition, having the right legal support can make a considerable difference. The Parzivand Law Firm, PLLC, strives to provide more than just basic legal representation. Backed by years of human resources experience, Attorney Hessam Parzivand has the knowledge and resources to help you advocate for a fair severance offer from your employer.
With offices in Stafford and Houston, Texas, the firm serves clients throughout Sugar Land and Fort Bend County. Reach out to The Parzivand Law Firm today in person, by phone, or by email to schedule a consultation.