In Virginia, most employees are considered “at will,” which generally means they can be terminated or resign at any time. Even if they are “at will,” when an employee’s employment ends, an employer may offer severance to an employee in exchange for the employee’s waiver of his / her rights, including the right to file suit for any work-related issues. In Virginia, in the absence of an employment contract, an employer usually has no obligation to provide an employee severance pay. If severance pay is offered, an employer will almost always provide the employee with a severance agreement. It is important to obtain legal advice before signing such an agreement.
This article discusses severance agreements in the Commonwealth of Virginia and some issues associated with them for employees.
What is a Severance Agreement?
In Virginia, a severance agreement is a contract between an employee and an employer that specifies the terms of an employment departure. Severance agreements can be offered in cases of terminations, resignations, layoffs and/or retirement. They may be available in other types of situations as well. In order for a severance agreement to be valid, it must usually provide something of value to the employee to which the employee is not already entitled. For example, in most cases, a certain financial sum is provided to the departing employee by an employer in exchange for a waiver of rights, usually referred to as a general release, by the employee.
Additionally, in Virginia and many other states, employers are generally required to provide an employee time to consider a severance agreement before signing. The Older Workers Benefit Protection Act (OWBPA), in part, requires that an employer provide employees over 40 years of age with a 21-day consideration period, or a 45-day consideration period in the case of a large reduction-in-force (RIF), and at least a 7-day revocation period. Often, employers rush employees to sign a severance agreement and do not adhere to the procedures for severance agreements. The terms of a severance agreement are generally negotiable between the employer and employee. However, an employee will not necessarily be told this when the employer offers the severance agreement.
Considerations in Negotiating Severance Agreements
Some of the issues to consider in advance of signing a severance agreement may include, but are not limited to, the following:
Financial terms and timing of severance payments
Re-employment/re-hiring possibilities for departing employee
Continuation of employment benefits (i.e. health)
Unemployment compensation issues
Which claims are waived
Scope of non-competition after leaving employment
Preservation of trade secrets
References and points of contact for prospective employers
Consequences of violating the severance agreement
Severance cases must be dealt with quickly and appropriately, with the assistance of counsel. Each severance case is different and an employee may need legal representation in negotiating a severance agreement. Before an employee signs a severance agreement, he or she should consult with an attorney to discuss the rights that he or she may be waiving and the terms of the severance agreement.
If you need assistance with negotiating a severance agreement in Virginia, please contact our office at 703-668-0070 or at www.berrylegal.com to schedule a consultation. Please also like and visit us on Facebook at www.facebook.com/BerryBerryPllc or follow us on Twitter.
Employees in Virginia are generally considered “at will,” which means they can resign
and/or be terminated at any time. When employment ends, an employer may offer a severance package to an employee in exchange for the employee’s waiver of rights. However, employers, in the absence of an agreement or severance policy, generally have no obligation to provide employees severance pay. If severance pay is offered, an employer will offer the employee a Severance Agreement.
What are Severance Agreements?
A Severance Agreement is a contract between the employee and an employer that provides the terms of the end of employment between the employer and the employee. Severance Agreements may also be offered to employees who are laid off or facing retirement. In addition, depending on the circumstances, a Severance Agreement may be offered to an employee who resigns or is terminated. The Severance Agreement must have something of value (also referred to as consideration) to which the employee is not already entitled. Employers are generally required to provide an employee time to consider the Severance Agreement before signing.
An employee usually has a 21-day consideration period to accept and at least a 7-day revocation period to revoke an employer’s Severance Agreement if the employee is over 40 years of age. For a group or class of employees (i.e., two or more employees) age 40 or over, employers must provide a 45-day consideration period and at least a 7-day revocation period.
Commonly Considered Terms
Items and/or terms that the employer and employee may place in these agreements include:
• Financial terms, tax issues and timing of severance payments
• Continuation of employment benefits (i.e. health, etc.)
• Issues related to unemployment compensation
• References (positive, neutral)
• Claims to be waived (i.e. discrimination, etc.)
• Re-hiring potential
• Scope of possible non-competition
• Preservation of trade secrets
• Recommendation letters
• Consequences of violating the agreement
Severance Agreements will also usually include a general release or waiver that requires that the employee cannot sue his or her employer for wrongful termination or attempt to seek unemployment benefits upon the effective date of a fully executed Severance Agreement.
Before an employee signs a Severance Agreement, he or she should consult with an attorney to discuss the rights that he or she may be waiving and the terms of the Severance Agreement. If you need assistance with a Severance Agreement or other employment matter, please contact our office at (703) 668-0070 or at www.berrylegal.com to schedule a consultation. Please also visit and like us on Facebook.