Exit Offer Basics
Being laid off is one of the worst feelings in the world. Unfortunately, in the wake of the COVID-19 pandemic and the recent economic downturn, layoffs are becoming a widespread issue many Californians face. When someone is laid off, they are frequently presented with a severance package, also referred to as an exit offer. A severance package is a collection of benefits and pay. However, in most cases, to receive an offered severance package, the employee must sign a severance agreement.
A severance package may include the following:
- A lump sum of money based on the amount of time the employee worked at the company
- Payment for remaining PTO and sick days
- Payment for outstanding business expenses
- Health insurance benefits
- Life insurance benefits
- Stock options
- Assistance in acquiring a new job
Below we review three steps you can take to negotiate a severance package that puts your best interest first, not the company that is laying you off.
Step 1: Consult an Attorney Before Negotiating
While many companies have a severance policy in their employee handbook, many people do not realize that severance packages are also negotiable. In the aftermath of a layoff, you may be feeling overwhelmed and scared. Frequently, this causes people to sign severance agreements without first negotiating their contents or discussing their terms with an attorney. This can be a mistake and can result in you not getting the best severance package possible.
Another major issue with accepting a severance package without reviewing it with a lawyer is that some severance agreements have terms that bar the employee from filing a wrongful termination suit or may limit the employee’s ability to file for unemployment benefits. Furthermore, it is not uncommon for severance packages to feature clauses that limit where the laid-off employee may go to find new employment (such as a non-compete clause or a nondisclosure agreement).
For these reasons (and more), you should never accept your company’s first offer without first reviewing your severance offer with an experienced attorney.
Step 2: Understand What Is Being Offered vs. Your Needs
By working with an attorney, you can get a clear understanding of not only what your company is offering you in the package but also how their terms and conditions may affect you over time. For example, if your company has a non-compete clause, you may initially think it isn’t a big deal. However, this clause may be more limiting than you realize, such as barring you from working for companies in adjacent industries and not just direct competitors. A skilled attorney can use their experience to help you understand the long-term consequences of signing the initial exit offer.
Relatedly, you also want to consider your personal needs in the days ahead, the financial and job-hunting resources at your disposal, and whether the severance package offered is sufficient. Your attorney can go through these things with you and help you prioritize your requests to help you develop a counter that has a better chance of being accepted when you go into negotiations.
Step 3: Remember & Leverage Your Successes
When companies make layoffs in reaction to recessions and economic downturns, many great employees end up being laid off. It’s a difficult situation, but you must take the time to remember how much you value you brought to the company. Leveraging your success over the years and reminding your employer of your accomplishments can make a major difference when negotiating your severance package.
Spend some time itemizing key accomplishments and wins you had over the years, and be prepared to discuss them when negotiating. Emphasize your loyalty, hard work, and dedication. All of these can be used to help illustrate why you deserve an improved severance package and can go a long way in convincing your employer to accept your counteroffer.
Don’t Be Afraid to Ask for Help
Negotiating a severance package is more than just asking for more money. It can involve asking for improved benefits, adjusting the terms of a non-compete clause, or keeping company-provided equipment, such as a laptop, cellphone, or company car. Negotiating a strong severance package is incredibly important. That said, we also know that it can be daunting if you have never done this before.
Polaris Law Group has extensive experience helping employees from all industries negotiate lucrative severance packages. Our goal is to provide clients with legal advice that allows them to move forward from their termination in a more positive direction. We know how difficult this time is, and we are here for you.
Contact us online to schedule a consultation with one of our attorneys.