What You Should Know About Severance Agreements

What You Should Know About Severance Agreements

April, 2021

Most workers in Ohio are considered at-will employees, meaning they do not have an employment contract and they can be fired at any time. Still, employees often work for many different employers during their life, and in some cases, their employer may offer them a severance agreement when either party terminates the employment arrangement. Severance agreements are not required under Ohio law, and so, there is no standard these agreements must follow. All employees in Ohio should understand what to expect from a severance agreement and the limitations on them.

Common Provisions in Severance Agreements

Employers can include many different provisions in severance agreements, but there are some that are more common than others. The most common provisions include:

  • Waive the right to sue: Employers often offer severance agreements when they want to shield themselves from legal liability. For example, if an employee was wrongfully terminated, an employer may offer them financial compensation in exchange for the employee agreeing not to sue them.
  • Confidentiality clause: Most severance agreements are confidential, meaning an employee cannot disclose the compensation included or any other terms with anyone. Spouses, attorneys, and financial advisors are exempt from this term of confidentiality.
  • Non-disparagement: To protect their business, an employer may include a provision that prohibits the employee from making disparaging comments about them once the employment has ended. 
  • Non-competes: Severance agreements typically contain non-compete clauses that prohibit employees from working for a competitor within a certain geographical area. Non-compete clauses must be fair and reasonable for the employee.
  • Refusal to rehire: Employers sometimes do not want to rehire an employee, and when that is the case, they may include a provision outlining their right to refuse to rehire the employee.

To ensure the provisions within a severance agreement are fair, employees should always speak to an employment lawyer that can review the contract before they sign it.

What Can Employers Not Include in a Severance Agreement?

Although employers can include many provisions within a severance agreement, there are others that should never be included. Employers cannot force any employee to forfeit their right to vested pension benefits. Additionally, employers cannot force employees to forfeit their right to file a complaint with the U.S. Equal Employment Opportunity Commission. However, severance agreements can require an employee to waive their right to financial compensation after filing such a complaint.

Our Ohio Employment Lawyers Can Review Your Claim

If your employer has offered you a severance agreement, call our Columbus employment lawyers at Marshall & Forman, LLC, before you sign. We will fully review the contract, ensure it is fair, and that you do not forfeit any of your rights to take legal action or claim compensation unless it is reasonable for you to do so. Our skilled attorneys have the necessary experience to protect the rights of employees, and we want to put that experience to work for you. Call us today or fill out our online form to schedule a meeting with one of our attorneys.