Law Offices of Mitchell Schley, LLC

New York and New Jersey Labor and Employment Lawyer

197 Route 18 South
South Tower – Suite 3000
East Brunswick, NJ 08816
Phone: (732) 325-0318
Fax: (732) 325-0317

245 Park Avenue, 39th Floor,
New York, NY 10167
Phone: (212) 672-1848
Fax: (212) 372-8798

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(732) 325-0318

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About Mitchell Schley, ESQ

Severance Agreements

Today’s topic concerns employer severance agreements that are often given to employees by an employer when it terminates or lays off an employee. A severance agreement is an agreement between an employer and employee that outlines the benefits such as severance pay the employer is offering you. An employer is not obligated to offer a severance agreement to an employee, but if it does, it is important to read the severance agreement carefully and consider the following points.

Although a severance agreement may offer you compensation, it also will include a general release agreement, which prevents you from suing the company about your termination. Therefore, if you think you may have a claim against the company, you should not sign the agreement without talking to a lawyer.

A common mistake that employees make is that they fail to recognize the implications of a non-compete agreement that they may have signed at the beginning or during their employment with the company. A non-compete agreement prevents an employee from working for a competing company for a certain period of time within a specific geographic area. If an employee signs a non-compete agreement and is later presented with a severance agreement, the employee should consider whether the benefits offered to him or her in the severance agreement make sense in light of their non-compete agreement. For example, if your non-compete agreement restricts you from working for a competitor company for one year, but the company is only offering you a few weeks of severance pay, then perhaps this is a basis for negotiating a higher severance pay.

Sometimes, companies purposely try and get rid of older workers by including them in a company-wide lay off or reduction in force. Federal law requires employers to provide employees with information about the ages of those workers being laid off and also of those being retained. An older worker is considered to be 40 years old or older. If this information is not provided, you can request that it be given to you. This information is important because if there are a lot of older workers being laid off, then this may serve as evidence of age discrimination, which is illegal.

Lastly, it is important to make sure that in a severance agreement the company agrees not to make negative comments about you to other employers who call for references.

Severance agreements require many factors to be considered before signing and can be complicated. Therefore, it is a good idea to consult with an attorney who specializes in labor law to review the document, explain your rights and obligations and perhaps negotiate a better severance package for you.

Mitchell Schley is an attorney who practices labor law at the Law Offices of Mitchell Schley, LLC, in East Brunswick and New York City. Feel free to contact him if you have a question about this article or any other labor law issue. He can be reached at (732) 325-0318 or at

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Law Offices of Mitchell Schley, LLC
197 Route 18 South, South Tower – Suite 3000, East Brunswick, NJ 08816 • Phone: (732) 325-0318 • Fax: (732) 325-0317
245 Park Avenue, 39th Floor, New York, NY 10167 • Phone: (212) 672-1848 • Fax: (212) 372-8798
Contact us today »