I've been offered a separation agreement...should I sign it?
1. It depends. In most cases, the basic idea of a separation agreement (also known as a severance agreement) is that you will give up any legal claims in return for payment of some money. If you don't have any possible legal claims, then you generally don't have any leverage to ask for more money. Remember: an employer typically does not have to pay you any severance, so even if the employer is offering only one week of severance pay, that might be more money than the employer has to pay you. If you do have some possible legal claims, then you might want to ask for more money.
2. There's no easy answer to the question of how much severance is appropriate. Many employers do not offer any severance. Some employers that offer severance to all departing employees have standard formulas. For example, a company might offer one week of severance for every year of employment. So, if you worked at that company for five years, you would be offered five weeks of severance.
3. If you obtain severance pay only after signing a release of any legal claims, you should still file for unemployment as soon as your employment ends. Severance pay that you receive in return for signing a release of claims does not count in terms of your eligibility for unemployment benefits. (If you get severance pay without signing a release, the severance pay will count in terms of your eligibility for unemployment benefits.) For more information about severance pay and unemployment, click here.
4. If at all possible, you should consult with an employment attorney to help evaluate whether you should sign a severance agreement. If you think you might have a discrimination claim, contact the Fair Employment Project (617-902-0192). Otherwise, for help finding an attorney, contact the Boston Bar Association Lawyer Referral Service (617-742-0625) or the Massachusetts Bar Association Lawyer Referral Service (617-654-0400).
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