Executive Severance Negotiation

Oftentimes executives sign employment agreements that contain clauses that account for the prolonged time period it may take to obtain similar employment. These severance provisions often provide for mechanisms for the executive to obtain a severance if they are terminated “without cause.” The definition of cause in the agreements generally contains some grounds for argument for each side to argue that a termination was with or without cause. The Parzivand Law Firm, PLLC has both negotiated these employment agreements before they are signed and sought severance based on the without cause provisions.

A sample definition of “cause” could be For purposes of this Agreement,“Cause” shall mean, in each case, as reasonably determined by the Board: (i) conviction of, or entry of a pleading of guilty or no contest by, Employee with respect to a felony or any lesser crime of which fraud or dishonesty is a material element, (ii) Employee’s willful and continued failure to perform his duties with Employer, or a failure to follow the lawful direction of the Board after the Board delivers a written demand for performance and Employee neglects to cure such a failure to the reasonable satisfaction of the Board within 15 days after receipt of the demand, (iii) Employee’s failure to comply with applicable laws with respect to the execution of Employer’s business operations or his material breach of Sections 6 or 7 of this Agreement, (iv) Employee’s theft, fraud, embezzlement, dishonesty, or similar conduct which has resulted or is reasonably likely to result in material damage to Employer or any of its affiliates or subsidiaries, or (v) Employee’s habitual intoxication or continued abuse of illegal drugs which interferes with Employee’s ability to perform his assigned duties and responsibilities.

If you need to negotiate your contract or negotiate your severance, you need an employment lawyer who is experienced in handling the unique aspects of severance negotiation.

Severance/Incentive Pay Upon Sale of Company

The Parzivand Law Firm, PLLC has also handled severance cases in the event of a change of control of your company. Sometimes the sale of the company is all that is needed to trigger these provisions and the employee has a contractual right to a percentage of the sale proceeds. In other cases, larger companies may have severance plans in place that pay out severance payments to certain employees upon a change of control if they cannot obtain similar employment. Sadly, it is not uncommon for these types of contracts to not be paid in due course and require negotiation and potentially suit by a lawyer.

Severance Negotiation After Offer of Severance

It is not uncommon for companies to offer a severance to employees who they may perceive as troublemakers or potential liabilities, because of reports of discrimination, requests for disability accommodations, requests for leaves, or due to pregnancy. These severances are typically the most negotiable when only one person is being offered a severance (as opposed to a mass layoff situation). Companies have a tendency to lowball the employee in this situation and try to offer them a minimum severance in exchange for quitting their job. Sometimes companies choose to terminate the employee and then offer them a severance in return for waiving their claims. In either situation, it is worthwhile to call an attorney. The value of consulting this law firm is receiving honest advice on whether the severance in fact is commensurate with the claims an employee may have. To the extent the company is not paying enough, the firm is happy to negotiate on your behalf.

Severance Offers After Mass Layoff

The firm receives many calls from individuals who have been terminated as part of a mass layoff. Severance negotiation can occur in these instances, but it can be much more difficult to bring a case against a company engaged in a mass layoff. The firm will triage your situation and provide you with honest advice about what services have the best cost/benefit analysis for you. If the firm determines that a severance is unlikely to be negotiated, the firm can still find other ways to maximize your financial security. When you call, the firm will also determine if there any ways to maximize your unemployment compensation. Prior clients who have obtained severances have been able to obtain thousands of dollars of potentially extra benefits thanks to the firm’s work.

The Interaction of Severances with Unemployment

Generally speaking, when you collect a severance your unemployment is delayed by the number of weeks of pay you receive in severance. So if you obtain 12 weeks of severance, you wouldn’t be eligible to collect unemployment for 12 weeks. The firm understands the financial vulnerability of losing your job and endeavors to determine if you fall into exceptions that would allow you to collect unemployment immediately. In some cases, the firm has had clients that have received a potential benefit of over $10,000 from these services.