Being presented with a severance agreement can bring mixed emotions as you transition out of
your current company to a new venture. Whether you anticipated this change or it came as a
surprise, understanding how to navigate this situation is crucial as you decide on your next best
step.
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Companies are not required to offer you a severance unless you have an employment
agreement that says otherwise. However, companies often will offer former employees a
severance package and, in return, the former employee releases any claims they may have
against the company. The law surrounding severance agreements is contract law: the company
has presented you with an offer and you can do one of three things: accept, reject, or counter.
Note that a “counter-offer” operates as a rejection of the original offer, so once you counter, that is the only “offer” on the table. Here are eight practical considerations and tips if you find
yourself in this situation.
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1. Look at the date you need to respond by. It is critical that you know how much time
you have to provide a response. Finding an attorney to review the agreement for you
takes time, and you will want to give yourself a buffer if you want to negotiate the
severance.
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2. Do not rush into signing the agreement until you speak with your attorney. Too
many times, clients reach out to me after they’ve signed the agreement and want me to
negotiate terms on their behalf. There isn’t much your attorney can do once you’ve
signed the agreement. Make an informed decision and speak with an attorney before
signing any agreement.
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3. Make sure the attorney you hire will negotiate on your behalf. I view the severance
review and negotiation as two separate steps. First, the review is to help you understand
the terms of the agreement as is. Second, and only if you choose to negotiate, the
negotiation is where your attorney comes in and works with the company to change the
terms of the agreement. You will want to find an attorney who is skilled in doing both.
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4. Make an appointment with your CPA. CPAs are not attorneys and cannot offer legal
advice, but if you are getting a significant payout, you will want to speak to your CPA on
the financial implications of a payout. This is especially important if you have stock
options or equity in the company.
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5. Evaluate any claims you may have. While I hope you have not faced any instances of
discrimination or harassment in the workplace, if you have, take detailed notes and
create a timeline including dates, names, and facts of the situation. Your attorney can
help you evaluate your specific situation and decide whether you would be waiving any
claims if you sign the agreement or how to use the facts as leverage in negotiation your
severance.
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6. Determine if there is a noncompete or nonsolicitation provision. If so, these provisions
may limit your options for employment and whether or not you can take your team with
you. Begin thinking about what you want to do next career wise and what is important to
you moving forward. You may already be bound by noncompete or nonsolicitation
restrictions under prior agreements between you and the company, but sometimes these
are renegotiated in the terms of a severance agreement.

7. Determine if there is a nondisclosure agreement or if the agreement is
confidential. Until you speak with your attorney, it’s best practice to keep the terms of
the agreement confidential. Don’t talk to your former coworkers about what has been
offered to you or post about it on social media.
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8. Think about what else you want to negotiate. While there are the obvious items like
severance payment and stock/equity options, there are other things your attorney can
negotiate for you as well, like payout terms, health insurance, references for future
employment, non-disparagement terms, attorneys’ fee provisions, rehire eligibility, and
responses for applications for unemployment.
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No matter your situation, it is invaluable to have an advocate for you and only you in this
process. There is value in hiring an attorney to help you understand the terms of the agreement
and to negotiate on your behalf. If you find yourself being presented with a severance
agreement, Morgan Hartgrove or JK Simms can help you make the next best step for you and
your career.

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