While job loss is a catastrophic reality for many people, some are fortunate enough to receive a severance package. Unfortunately, severance agreements are not always the benefit you would expect.
It is important to note that the District of Columbia labor laws do not require an employer to pay a severance package to an employee. However, if the severance pay is part of the employment contract, then it must comply with the terms agreed upon in the contract.
While it is ideal for a severance agreement to financially cushion the departing employee’s unemployment, it is not uncommon for some employers to try to take advantage of employees who do not fully understand their rights during cases like these. Therefore, employees need to know what they should expect in case of termination.
Severance pay inclusions
So, what does a severance package usually include? Typically, the terminated employee should look for the following in the offer:
- Severance pay
- Unpaid wages
- Any unused paid time off and leave
- Workplace retirement plan (401k) contributions
- Health insurance plan
- Other accrued benefits
If the package offered to you lacks one or more of these, the employer might be trying to cut costs and is offering you a disadvantageous agreement.
What other clauses should I investigate?
There are often clauses within the agreement that might put the departing employee in an unfavorable position. These clauses may include the following:
- Non-disclosure and non-compete agreements which should not be overly broad and should not apply to your immediate family or attorneys
- Dispute resolutions which should clearly state how disputes regarding severance agreements will be decided
- Arbitration clauses, if any, which should be reasonable and fair
Before you sign any agreement, it is best to review the inclusions and clauses as thoroughly as you can. If necessary, negotiate with the company to get the most advantageous package possible.