![]() How will unemployment claims be handled?.Employers may want to consider having the employee re-affirm their understanding of the contracts the employee signed at the outset of employment. Is the employee allowed to talk with other employees about the terms of the agreement? Will the employer give the employee a reference to new prospective employers? In the event another employee has a claim against the employer in the future, will the employee be permitted to provide information or assistance? This is also a good time to consider the impact of any non-compete, non-solicitation, or other confidentiality clauses that were previously agreed to at the commencement of the employment relationship. If the employment relationship ended as a result of misconduct, the employee will likely want to be sure that the employer also waives any claims against the employee that could be brought in the future. The nature of any potential claims an employee has against an employer should be considered carefully before a severance agreement is signed. Some claims cannot be waived in a severance agreement. The employee must also be allowed a certain period of time to consider signing the waiver, and a period of time to revoke the waiver after it is signed. What claims does the agreement require the employee to waive?įor example, if the employee is over 40 years old certain requirements must be met in the severance agreement to allow the employee to voluntarily waive claims for age discrimination.The severance compensation should comply with any promises made by the employer in the employment contract or policy handbook. An employer may also be willing to agree to pay the premium for health insurance under COBRA for a specific period of time. The agreement should clearly state how the compensation will be taxed, and if the employee will be required to offset the compensation in the event they are provided unemployment benefits. ![]() The monetary payment must also be reasonable in comparison to the claims being released by the employee. Typically, the longer an employee has worked for an employer, the greater amount the severance payment should be. Some other value must be included such as a monetary payment of the employee’s salary for a specified period of time. It is not enough for an employer to condition a waiver of rights on simply paying out vacation benefits or previously earned retirement funds.
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