Employee Rights: Severance Agreement Mistakes to Avoid in New Jersey
A severance agreement is a contract between an employer and (former) employee. Typically, severance agreements will include some form of benefit to the worker in exchange for signing a release of potential claims against the business or organization.
Are you reviewing your options for severance? Too many employees make mistakes that undermine their best interests. In this article, our New Jersey severance agreement attorney highlights the mistakes that employees need to avoid.
Mistake #1: Signing a Severance Agreement Without Truly Understanding the Terms
The most common mistake is the most straightforward one: Signing the agreement without a full understanding of the implications. One of the biggest mistakes an employee can make is signing a severance agreement before understanding the scope of the release. Most severance agreements require the employee to waive existing legal claims against the employer. That may include claims under the New Jersey Law Against Discrimination, the Conscientious Employee Protection Act, wage and hour laws, family and medical leave laws, disability accommodation laws, and federal employment statutes. A release may also cover unknown claims arising before the signing date. Employees should not treat the agreement as a simple payment document. It is a legal surrender of rights. If the release includes age discrimination claims under the ADEA, special federal rules may apply, including time to consider the agreement and a post-signature revocation period.
Mistake #2: Failing to Clearly Separate Severance for Any Pay/Benefits Already Due
A severance payment is not the same thing as wages, commissions, bonuses, expense reimbursements, accrued contractual PTO, or other compensation the employee has already earned. In New Jersey, earned wages must generally be paid after separation according to the applicable payday rules. An employer should not use a severance agreement to make the employee give up compensation that is already legally owed. Employees should carefully compare the severance offer against final pay, unpaid commissions, earned bonuses, accrued vacation under company policy, unreimbursed expenses, and any written employment agreement.
Mistake #3: Overlooking Confidentiality, Non-Disparagement, and Cooperation Clauses
Severance agreements often contain restrictions that matter long after the payment is made. Confidentiality clauses, non-disparagement provisions, return-of-property language, cooperation obligations, reference provisions, and post-employment restrictive covenants can all create future risk. In New Jersey, employees should pay especially close attention to clauses that restrict discussion of discrimination, retaliation, or harassment claims. New Jersey law places important limits on confidentiality provisions in certain employment-related discrimination settlements, and overly broad non-disparagement language may be unenforceable when it prevents an employee from discussing protected claim-related facts. Still, employees should not assume every restriction is invalid. A clause may remain enforceable as to trade secrets, confidential business information, customer data, personal information, or unrelated disparaging statements.
Consult With Our New Jersey Severance Agreement Lawyer Today
At Poulos LoPiccolo PC, our New Jersey employment attorney is well-versed in severance negotiations. If you have any questions about your options, please do not hesitate to contact us today to set up a strictly confidential consultation. With an office in Monmouth County, we handle severance agreement negotiations throughout New Jersey.
