Separation, Severance and Release Agreements

Question: What terms are typically included in an employment Separation Agreement?

Answer: Every Separation Agreement must be tailored to the particular employer and employee, but issues that typically require negotiation include: (1) employee compensation and benefits upon termination; (2) release of liability for claims; (3) references and other matters important to the employee's interest in securing future employment; (4) non-compete, non-disclosure agreements and other restrictive covenants important to the employer's interest in protecting business secrets; and 5) confidentiality of the Separation Agreement.

Question: What are employment "release" agreements, and are releases enforceable?

Answer: In the context of employment law, a "release" is an agreement between the employer and employee under which either or both waive the right to sue the other on certain potential claims. Separation agreements that include severance pay or other valuable consideration to the employee often include broad releases in which the employee generally waives the right to sue the employer for employment discrimination or any other claims that may have arisen during the course of employment. Several employment-law statutes govern the terms, conditions and legal scope of employee releases.

Question: Are employers in the District of Columbia or Virginia required to offer severance pay to employees?

Answer: There is no law in the District of Columbia or Virginia requiring a company to pay severance to employees who are fired. laid-off or otherwise leave the job. Severance pay may, however, be required for executives or other workers under employment agreements.

Employers should note that certain severance pay plans are subject to requirements of the Employee Retirement Income Security Act (ERISA).

Question: How much severance pay is typically offered to an executive or other employee?

Answer: Severance pay packages vary widely. Factors that determine the appropriate level of severance include industry standards, the company's ability to pay severance, the potential for offering other benefits to offset severance pay, and the relative strength of the parties' bargaining positions (i.e., whether the employee has a potentially valid claim that is being released).

To schedule a consultation concerning Separation Agreements, Severance, or Releases, contact Searcy Law Offices at 703-644-4122 (Virginia) or 202-393-1443 (District of Columbia).