I’m an employment lawyer. I sue companies on behalf of terminated employees. My office gets thousands of calls a year from employees. I talk to other lawyers everyday who do what I do. And I’ve realized that human resources does a terrible job helping their employees. Why? Here is why:
This video dives deep into HR and why, even if they want to help you, they largely can’t. I spend a lot of time detailing the five reasons HR sucks. I hope you like it!
This is a very common question. At-will employment does not mean that the company can fire you for any reason they want. That is incorrect. In this video, employment attorney Branigan Robertson explains the at-will doctrine and how it actually works.
How do you know if your severance package is fair or not? Did they offer you enough money? Are you getting ripped off? What does all that legal mumbo-jumbo in the agreement actually mean? This article and video will answer most of your severance questions and explain your options.
Severance deals in California come in all shapes and sizes, and most people find the contract terms to be very confusing. The only way to properly determine if you’re getting a good deal is to have an employment lawyer do three things:
Review the actual contract,
Carefully examine the facts and circumstances surrounding your termination and employment, and
Explain which of the four options (more on those below) is best for your situation.
Unfortunately, lots of people call me after they’ve signed a severance agreement for a few thousand dollars, only to discover that they had a case worth hundreds of thousands of dollars. Don’t be one of these people. Before you sign, have an employment lawyer like me do a severance review.
This article and video will go into extraordinary detail on severance agreements, negotiation, and lawsuits. I highly recommend that you watch the below video and read this article in full before you decide to sign a severance agreement.
If you’re in California and you already know you need a lawyer to review your severance package, contact us here.
Watch this Detailed Video on Severance Value, Fairness, Negotiation, and Strategy
You Have Four Ways to Respond When Presented with a Severance Agreement
As I explain in the video, when you’re terminated and then presented with a severance offer, you have four options how to respond:
You can ignore the offer, find a new job, and move on with your life.
You can accept the severance package as it was offered, sign it, and collect your money.
You can try to negotiate for more money or better contractual terms.
You can reject the severance offer and file a lawsuit against the company (assuming you have a good case).
How do you choose which one is best for you? Just like any difficult decision in life, you need to weigh the options against something. If you don’t have anything to compare these choices against, you can’t possibly make an educated decision. Keep reading to learn how to compare these options.
To Pick The Right Option, You Need to Answer These Two Questions
You need to figure out what you are giving up if you sign the severance agreement. While there are a lot of important terms and conditions in the severance agreement (more on those below), I’m going to focus on the main one here.
When you sign the severance agreement, you give up your right to sue the company for employment violations. Therefore, before you sign, you should have an answer to these two questions:
Did the company violate the law when they terminated you or during your employment?
If the company did violate the law, how much money could you recover by taking legal action?
The only way to get an honest idea of the answer to these two questions is to have an actual lawyer examine the facts surrounding your termination and review the terms of your severance agreement. Once you have an idea of how much money is at stake and the strength of your legal claims, you can compare it to the severance offer and make an educated decision.
You Must Also Examine the Risks Associated With Each Option
While this might seem obvious in theory, reality is far more complicated. It is almost impossible for a non-lawyer to come up with educated answers to the below questions. Regardless, here are questions that should be circling around in your head:
How much money is my case worth?
How strong (or weak) are my legal claims?
Will they pull the current offer off the table if I try to negotiate?
Will I make a mistake during negotiations and torpedo my case?
Do I actually understand what is in the contract?
What are the chances they will respond to my counter offer with something fair?
How much stress is this going to put on me and my family?
Will this hurt my chances to get a good reference?
If I make a mistake in my negotiation, will I get sued for extortion?
If I sign this agreement, am I inadvertently putting myself in legal jeopardy?
Unfortunately, most individuals tend to underestimate the risks they face. Since every case is drastically different, and employment law is so vast and complicated, the only way to get a genuine picture of the risks that you face is to have a professional analyze and explain them to you.
What Terms are Contained in Your Severance Agreement?
While most severance agreements contain these basic building blocks, every single one is different. So read your contract carefully! If you do not understand parts of your agreement, I strongly recommend that you have it reviewed by a lawyer. But for purposes of this article, here are some of the major terms:
You agree not to say anything bad about your former employer (a.k.a. the non-disparagement clause). This provision is especially dangerous if it contains a liquidated damages clause (this is a monetary penalty that you incur for each violation of the provision).
You cannot tell anyone about how much money the company paid you in severance (a.k.a. the confidentiality clause).
You lose the right to sue for violations of law that you don’t even know about yet. This isn’t 100%, however, as you cannot legally waive some claims (like a workers compensation claim).
You usually re-affirm and agree not to discuss the employers trade secrets, secret business practices, and customer lists. This can cause serious problems down the road if you plan to continue working in the same industry or for a competitor.
You usually agree to “cooperate” with the employer down the road if they need assistance with things that arose out of your employment. This usually means you agree to assist the employer if they get sued by someone else. Yikes!
You usually also have to agree that, by accepting the money, the contract does not amount to an admission of wrongdoing by the employer.
Obviously, there is more to the agreement and each agreement is different. But most of the agreements that I’ve reviewed have these terms.
Why is Your Employer Pressuring You to Take the Severance Deal?
Simple, they want to avoid a lawsuit. In today’s litigious world, employers offer money to “problematic” employees at termination in an effort to buy their way out of a lawsuit.
Employers are not required to offer severance. It is not a legal right. Just because your company offered severance to one employee, doesn’t mean they have to offer it to you.
But therein lies the rub. Why is the employer offering money to you? Why didn’t they just fire you? Here are some common reasons:
They are worried that you have good legal grounds to sue them, and they are hoping you’ll take the quick cash and move on.
They have a company policy that they offer severance to everyone, and you’re just the latest person to get laid off.
The employer specifically thinks you are a problematic employee, and they want you to go away. The severance payment is a just a carrot to get rid of you.
You may have witnessed something unlawful at work and they want to buy your silence.
We often hear stories about employers terminating a worker, and pressuring them to sign the severance deal right there in the termination room. Don’t do it!
We recommend that you say to them, “Thank you, but I’m going to take this home and read it fully before I sign it. If there is anything I don’t understand, can I email you questions?” Then, once you get home, contact a lawyer for a severance review.
If you’re a California employee and you have decided to have a lawyer look at your severance agreement, I hope you’ll consider hiring my office. You can contact us here.
If you have decided to negotiate on your own for more money (we don’t usually advise this), we have an entire webpage on this. Please watch the video on this page carefully before you decide to take this route.
You don’t have to be a legal expert to know that non-compete clauses are largely unenforceable in California. The law nullifying this type of clause, in which an employer tries to prevent terminated employees from working for competing businesses, has been on the books for years. And if you’re an advocate of employee rights, the law is a bright spot in California’s Business and Professions Code.
Over the years, California employers have tried to test the strength of California’s non-compete law, with little success. However, in July of 2018, an employee turned the tables and sought to test the law’s strength in a case that didn’t specifically involve a non-compete clause.
The United States Court of Appeals for the Ninth District ruled on the case, which involved a doctor whose former employer wanted him to sign a non-rehire agreement. The federal court looked to California’s non-compete law to rule in favor of the doctor. Continue reading to learn more about the court’s decision, non-compete clauses and related areas of employment law.
If you have questions about your own employment situation, don’t hesitate to contact our officeto learn how we can help.
“Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
Golden vs. California Emergency Physicians Medical Group
Physician Donald Golden was an emergency room surgeon employed by California Emergency Physicians Medical Group (CEP) at its Seton Coastside Medical Facility. He was fired in May 2008, and filed a discrimination suit against the company.
The case ended up in Federal District Court in 2010, but before the trial had a chance to begin, CEP offered to settle the case. In return for a large settlement, the company wanted Golden to waive any rights to future employment with the company.
This meant that Dr. Golden wouldn’t be rehired at any facility owned by the company, as well as any facility CEP might own in the future. Dr. Golden refused to sign the printed agreement. The court ruled that Dr. Golden should be compelled to sign the agreement, but the doctor appealed the decision, and the case moved to the appellate court.
During his appeal, Dr. Golden argued that the non-rehire provision of the settlement violated California’s law against non-compete clauses.
In its ruling, the Federal Court noted that California’s no compete law has been broadly interpreted over the years. The court further argued that the lower court had abused its discretion in narrowly interpreting the law.
The appellate court argued that the simple question at hand was whether or not the settlement agreement in Dr. Golden’s case restrained anyone from engaging in a lawful profession, trade, or business of any kind.
“We have no reason to believe that the State has drawn section 16600 simply to prohibit ‘covenants not to compete’ and not also other contractual restraints on professional practice,’” the court wrote in its decision.
Accordingly, the appellate court reversed the lower court’s judgment and remanded the case “for further proceedings not inconsistent with this opinion.”
What This Means for California Workers
This case once again reinforces the strength of California’s non-compete law and actually demonstrates that the law goes beyond non-compete clauses in protecting an employee’s right to earn a living.
To be clear, this doesn’t mean every employee who’s been unlawfully compelled to signed a non-compete clause has a shot at a million-dollar judgment. But it does mean that non-compete clauses, with few exceptions, are unenforceable.
Unfortunately, this doesn’t stop employers from asking workers to sign these agreements. In 2016, the Office of Economic Policy, a division of the US Treasury Department issued a report on the prevalence of non-compete contracts. According to the report, California workers were found to have signed these agreements at 19 percent higher than the national average. Acknowledging that such agreements are largely unenforceable in court, the report noted that the trend suggests “firms may be relying on a lack of worker knowledge.”
Employers and employees often sign non-compete clauses that include trade secret language. Employers are very much allowed to prohibit the theft/taking of valid trade secrets, and employers frequently sue former employees who steal customer lists or valuable and secretive manufacturing plans. When you have a mixed clause like this, contact a lawyer especially if you think your employer may try to enforce the provision.
When an Employee Blows the Whistle on Non-Compete Contracts
If an employee realizes that a company he or she works for is violating the law by requiring other workers to sign non-compete contracts, and that employee notifies the authorities (a state agency, the District Attorney, the police), it’s possible the company will retaliate against that employee (fire, demote, harass, etc.). It’s important to note that the employee in this situation is a whistleblower, and whistleblowing activities are protected by law. A worker who experiences retaliation as the result of whistleblowing activities could be entitled to monetary damages. For more information on whistleblowing, contact our office or visit our whistleblowing page.
When to Contact an Employment Attorney
If you work in California, and have been asked to sign a non-compete clause, chances are good your employer has violated state law. It could be worth your time and effort to discuss your situation with an employment attorney. Additionally, if you’ve received notice of legal action from a former employer stating you have violated the company’s non-compete clause, you’ll want to contact an attorney right away.
If you have questions about anything discussed in this article, or another employment law related question, contract the office of Branigan Robertson to learn more about your rights under the law.
Comments Off on California Continues to Reject Non-Compete Clauses
This whiteboard video is how people can increase their leverage and negotiate for more severance money after a termination.
Let me first say that you should absolutely have a lawyer review your severance agreement. My office does severance reviews all the time for people. But when the severance package is extremely small, or you’re 99.9% sure the company hasn’t broken any laws, you can try to negotiate your own agreement.
Second, you should watch the above video before you read the rest of this page. The video provides an excellent backdrop and the rest of this post will make a lot more sense if you learn the fundamentals.
There was more I wanted to include in the video (but I had to get back to work). So, I’ve added some information in this blog post to further flush out the bargaining chips. Employees can use these bargaining chips to negotiate for more money with their employer.
Offered Severance? Beware!
While it’s practically a taboo subject in our modern, work-driven world to admit to being fired by an employer, there’s something to be said about knowing the right way to be fired. This is particularly true if there’s a severance package being offered as part of the termination. What you do at the moment a severance check is slid across the desk toward you along with legal documents to sign could turn calamity into financial opportunity — depending on how you play your cards.
That said, there are those of us in the employment law business who probably wouldn’t object to schools teaching a class on how to get fired correctly. But barring that, the video attached to this post might just be the next best thing.
The truth of the matter is, whether we’re talking about sports, personal relationships or career, there are going to be days when we win, and days when we lose. What matters most when we lose is how we handle the situation. If it all possible, the goal should be to turn a negative into a positive.
While an employer might offer a severance package as a means of buying cooperation from a difficult employee, if you’re that employee the goal shouldn’t be to act like a big jerk in the hopes of getting a bigger severance.
The following is a list of things an employee should consider before signing a termination agreement.
More Severance Negotiation Tips
Remember, You Don’t Have to Sign
When an employee is terminated and they are given legal documents to sign, the company is looking to cover its rear and avoid a lawsuit. There could be any number of reasons an employee is fired. In an “at-will” state like California, it could be for no reason at all.
But employers know that lawsuits, even if they can be won, are expensive. So they often ask terminated employees to sign legal documents giving up their right to sue before leaving the premises. This can seem demeaning and dehumanizing. The good news is, you are not legally required to sign. You can refuse if you want.
But as mentioned earlier, the termination process should be seen as an opportunity to turn a negative into a positive. If you don’t sign, you’re basically closing the door on any severance pay – but you can pursue legal action. So if you plan to sign, be prepared to negotiate.
Don’t Rush It
There are times when companies will tell an employee he or she is fired, and place a severance check in front of them and pressure them to sign the termination contract immediately. If at all possible, tell them you’d like to take a day or two, or even a week to consider the terms. If necessary, if you find something fishy with your firing, you should take this time to discuss the terms with friends and family and have the severance agreement reviewed by a lawyer.
Those who follow silicon valley news might remember in 2011 when Yahoo fired then CEO Carol Bartz. She was granted a large severance package—around $14 million. Not surprisingly, there was a non-disparagement clause in Bart’z termination contract.
Now, this was an incredibly risky move on Bartz’s part. and, the company was probably within its rights to withhold her severance. It doesn’t look like that happened, but with that kind of money on the line, was it really worth it to risk the loss just to take a couple parting shots at the company?
Another thing you might consider negotiating for is outplacement services. Outplacement companies, which are located all over, help employees with career transitions. These companies often help employees who have had a difficult time at a previous employer articulate the reason for their departure so that they can find more success when interviewing with the next company. They also provide resume and other coaching services. If your former employer can help you move on with your life, why not take advantage of that.
Before you continue reading, sign up for our free monthly employment law newsletter! We will email you useful employment information that will help you protect yourself from workplace abuse.
Cell Phones and Laptops
Often times terminated employees don’t see the company laptop or cell phone as something to be bargained for. But as anyone who’s purchased these items knows, they can be expensive. Companies will often let these gadgets go with the terminated employee. Depending on your specific situation, it could be something worth taking a look at.
If your employer does agree to give you a glowing reference, you’ll definitely want to get that in writing in some form. Whether the employer agrees to offer a positive reference as part of the severance contract, or just provides you with a signed letter of recommendation. Whatever the case, it’s important to get it in writing. A reference is the kind of thing that can be agreed to in a casual conversation, but when the time comes to actually provide that reference, days weeks, months down the road, it’s easy for an employer to brush it aside.
What is the law regarding mass layoffs? The federal Worker Adjustment and Retraining Notification Act (WARN Act) requires most employers planning a plant closing or a mass layoff to provide affected employees and certain state and local government officials at least 60 days’ written notice. California has an equivalent law that can be found in the Labor Code § 1401(a). If this law is not followed employment lawyers and attorneys may file a class action to recoup lost wages for the employees.
The purpose of these laws is threefold:
To assure the most rapid possible readjustment and retraining of displaced workers and to ease the personal and financial difficulties for workers who must make these transitions.
To provide workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market.
to provide a wage worker’s equivalent of business interruption insurance (that) protects a worker from being told on payday that the plant is closing that afternoon and his stream of income is shut off.
Aggrieved employees or their “representative” may also sue on behalf of other persons similarly situated. WARN claims are “particularly amenable to class litigation.” Finnan v. L.F. Rothschild & Co., Inc. (SD NY 1989) 726 F.Supp. 460, 465.
The California statute applies to any person or business entity that owns and operates a covered establishment, which is any industrial or commercial facility that employs at least 75 persons. Labor Code § 1400(a),(b).
An employer who fails to give the requisite notice before ordering a mass layoff, relocation or termination is liable to each affected employee for:
Back pay at the average regular rate of compensation received by the employee during the last three years of his or her employment, or the employee’s final rate of pay, whichever is higher.
The value of the cost of any benefits to which the employee would have been entitled had his or her employment continued. This includes any medical expenses incurred by the employee that would have been covered under an employee benefit plan.
The court may award reasonable attorney fees as part of costs to any plaintiff who prevails in such an action. Labor Code. § 1404. An employer who fails to give the requisite notice is also subject to a civil penalty (payable to the state) of not more than $500 for each day of the violation (no matter how many employees are involved).
Please note that nothing presented on this website is legal advice. Every situation and every client's legal matter is different and this website is merely meant to provide information to the public. Nor does this website create an attorney-client relationship - such a relationship has not been formed until a signed fee agreement has been made. If you want legal advice or want to know if you have suffered a legal wrong in the workplace, contact our office.