Posted On: April 21, 2008

Why Do Employers Ask Employees to Sign Severance Agreements?

With tough economic times upon us, I have been meeting with more and more employees and executives who have been asked to sign severance agreements. I am often asked, why is my employer so adamant that I sign such an agreement? Is is because I have a strong potential lawsuit against them? Are they required to do so under Maryland law? Are they just being nice to me?

It's never easy to answer that question, but one thing is for sure -- there is no legal requirement, under Maryland law or federal law, that an employer provide an employee with a severance agreement. In fact, many employers provide severance agreements because they want to buy peace with the employee and not have to worry about a potential discrimination charge or lawsuit in the future. That does not mean that the employee actually has a valid legal action -- it just means that the employer does not want to have to worry about any such lawsuit in the future.

Finally, some employers provide severance agreements because they want to maintain a strong reputation in the community and among their employees for treating their employees with respect, even when they fire employees. To that extent, some employers do want to do the right thing, and some employers do genuinely care about their employees and want to soften the blow from an unexpected termination.

Posted On: April 20, 2008

Severance Agreements Under Maryland Law

What's going on in Maryland? From Salisbury to Hagerstown, from Baltimore to Columbia, I have been receiving more and more telephone calls and emails from employees, often executives or managers, who are being fired or laid off from their jobs. This is not surprising in light of the growing weakness in the economy. So what can an attorney, such as myself, do for you if your employer gives you a severance agreement and asks you to sign it?

When I am contacted by an employee who has just been handed a severance agreement, I have three goals. First, I want to determine if the employee would be giving up a potential legal claim or lawsuit by signing the severance agreement. Have you been paid all commissions and bonuses that you are due? Have you been subjected to discrimination? Second, I want to explain to the employee the pros and cons of signing the agreement, and the legal and practical consequences of each provision in the agreement. Is there a non-compete or confidentiality provision? Are the provisions mutual? Finally, I want to see if there are any points that may be negotiable with the employer that might benefit the employee. Can we negotiate for a larger severance amount? Any additional benefits?

Ultimately, after I consult with you concerning your proposed severance agreement, you may not be able to obtain additional benefits, but you will certainly understand the pros and cons of signing the severance agreement, and you will understand the practical and legal consequences of your decision.

So much do lawyers charge for analyzing proposed severance agreements and consulting with employees about such agreements? I cannot speak for other attorneys, but I usually charge hourly, and I typically will spend between one and three hours reviewing the proposed agreement and consulting with my client, depending upon the complexity of the agreement and whether there are significant negotiations with the employer. Ultimately, such review and consultation usually costs between $225 and $350, although a complicated negotiation may be more expensive.

Posted On: April 3, 2008

The Perfect Maryland Age Discrimination Case?

Sometimes I'll get a call from somebody from Baltimore or Westminster or Easton telling me that they have a great age discrimination case, but those promises rarely come true. Yesterday, I interviewed a gentleman who really did have what appears to be a strong age discrimination case. What made it such a good case? First, he was terminated by a much younger manager. Second, he was replaced by a much younger person -- nearly thirty years younger than him. Third, his manager made a number of age-related comments in the weeks leading up to his termination, such as, "we need a more aggressive, younger team" and "why don't you wear your hearing aid" and "when are you going to retire." Finally, the gentleman was terminated because his performance was supposedly "not up to standards" -- even though he had recently been praised for his work and had a stellar performance history. Such facts help to prove that the reason for his termination was pretextual -- in other words, he was fired because of his age, not because of any performance problems. When a client presents with all of these facts, their case may not be perfect, but it is likely strong enough to get to a jury, which is a key consideration in pursuing an age discrimination case.

Posted On: April 1, 2008

Analyzing Severance Agreements Under Maryland Law

With the economy struggling, especially in Western Maryland, the Eastern Shore and in Baltimore, corporate managers and executives are increasingly facing lay-offs and firings. In many circumstances, employers want to protect themselves against any possible future lawsuit, so they offer severance agreements to employees in return for a release and a promise not to sue the corporation in the future. While these severance agreements may seem straightforward, it is usually in an employee's best interest to have an attorney review the proposed agreement, even if only to explain what you are receiving and what you are giving up by signing such an agreement. In addition, such agreements sometimes contain confidentiality and non-compete agreements that may have a significant effect on your future employment. If presented with such an agreement, it is nearly always worth paying an attorney for an hour or two of his or her time to make sure you don't get bamboozled by your employer.