If you are still employed or just on your way out the door, you may want to consider the following tools.
Report Discrimination
If you are the victim of discrimination or if you suspect wrongdoing, let your boss know it. Telling your boss about discrimination or wrongdoing at the company may buy you more time. Courts may presume that your employer is retaliating against you if it fires you right after you complain about mistreatment. So, speak up!
Get a Severance Agreement
Employers are not required to offer you a settlement agreement, but they often will. If you have experienced or can point to discrimination or other wrongdoing at work, you have leverage to ask for severance. Your employer will want you to sign a waiver in which you give up your right to sue. Your employer should pay for it. In addition, or in the alternative, if you have been with your employer for a long time and have built up goodwill, your employer will have an incentive to treat you well on the way out the door.
How much is reasonable? One to two weeks per year of employment is standard. If you have been the victim of wrongdoing, you may be able to get more. When negotiating your severance agreement, keep the following points in mind:
Money
The obvious reason for negotiating a severance agreement is to obtain money. There is no hard-and-fast rule about how much you could get. Except for very high-level positions, the general rule is one to two weeks of salary for every year of service. You can get more if your company believes it is avoiding a lawsuit.
Release
All severance agreements include a broad release of any claims you might have against your employer. This, in essence, is what the employer is “buying” with the severance agreement. If you have a potential claim against the company, the value of the release increases. Of course, raising a potential claim is a delicate issue. It could get you a higher severance agreement, but it may also burn bridges with your former employer. This is another time when bringing a lawyer to the table can help. If you assert that you have claims against the company, it is more likely to take you seriously if you have counsel.
Be a Consultant
Some companies are reluctant to characterize any money paid to you as a “severance” agreement. One way around this is to offer to be a “consultant” to the company, essentially doing your same job, for a period corresponding to the amount of severance. In most cases, the company will not actually want you to do any work, so the payment will in effect be a settlement agreement. Of course, consider the tax consequences of any such agreement. Payments pursuant to this sort of agreement will almost certainly be considered wages, and you will have to pay taxes on them.
Taxes
Watch for any provision that will require you to indemnify the company for any tax consequences of the settlement. What this means is that the company will want you to pay its lawyers if the IRS comes after it claiming that a settlement should have been characterized as wages and taxes should have been withheld. There are limited circumstances in which it may be advisable to agree to such a provision, but as a general rule, these are not a good idea and could result in a legal bill from the company that exceeds the amount of the settlement.
Tip
Consult with a tax attorney or an accountant about the tax consequences of any settlement agreement. Tax law in this area is complicated and can result in your severance putting much less in your pocket than you expected.
File for Unemployment
Ask your employer not to oppose an application for unemployment. Some employers, even if they are not willing to offer a monetary settlement, may agree not to oppose unemployment benefits.
Go to the EEOC or State Civil Rights Agency
This applies even if you have been shown the door without a severance package. Employment and civil rights statutes often have short deadlines for filing a claim. For instance, you usually have no more than 300 days (and 180 days in many states) to file a claim of race discrimination or you lose the right to bring even slam-dunk claims. Don’t forgo the right to bring a claim. With all that goes on after you lose a job, take a few hours to visit the EEOC or your state or local government agency.
See a Lawyer
I am a bit biased in this respect, but I think it’s time (and perhaps money) well spent to talk to a lawyer about any employment matter. In Virginia, you will want a lawyer with federal court experience, as that’s where most employment law cases in the Commonwealth end up. Your boss wants you to sign a severance agreement? Take an hour and see a lawyer. You may have a great claim that your boss wants you to give up for pennies. But only a trained employment lawyer may be able to spot it. The same holds true for your trip to the EEOC. Visit a lawyer first. Even if you don’t ultimately hire the lawyer, he or she can help you maximize the value of the claim and explain the process. I often get questions from clients about whether they should hire a lawyer. Here are two of the most common.
“Do I need a lawyer to negotiate a new employment contract or an exit from my job?”
The short answer is no. You don’t need a lawyer for any of this. You can negotiate a severance agreement or a new employment contract without a lawyer. However, having an attorney can help, and the earlier in the process you get one, the better. Employment law is complicated, and you may be able to negotiate more advantageous agreements if you have an attorney.
Remember, your employer has an attorney—or at least a human resources department—to advise it on any agreement, and the company doesn’t have your best interests at heart. Also, it is possible that your employer could pay your legal fees, particularly if you are negotiating a new employment contract.
“Won’t it make matters worse if I get an attorney involved in the process?”
Yes, it could, but your attorney need not announce that he or she is involved. That is a strategy call for you to make in consultation with your lawyer. Your lawyer can provide you with advice to help you in negotiations; she does not have to participate in the actual negotiation.
