Issues You Should Address When Negotiating Severance Agreements in Illinois

 Posted on June 10, 2021 in Employment Law

Being laid off or fired is disappointing and may even be confusing - Was it something that you did? Was it something that you did not do? Especially in cases when an employee has done nothing wrong, employers often opt to have the employee sign a severance agreement before they sever ties. A severance agreement is a legal contract that employers use to maintain some sort of post-employment control and to prevent the employee from suing. Because Illinois is an at-will state - meaning as an employer, you can fire an employee at any time, and an employee can quit at any time - severance agreements are most commonly used when a contract was signed prior to employment. Before you give the agreement to your employee, you should have an experienced attorney look over the contract and pay special attention to specific clauses.

Severance Pay or Money the Employer Owes

Sometimes, due to an existing employment contract or company policy, your employee is already entitled to severance pay, so a clause included in the severance agreement is not necessary. If you owe your employee any money, such as for unreimbursed job expenses, it should be noted in the agreement, along with a date by which you will pay.

Employee Benefits

Your agreement should outline which benefits your employee is entitled to following termination, like medical benefits or stock options. Your employee has the option to stay on health insurance through your company’s insurer for up to 18 months after termination, thanks to the Consolidated Omnibus Budget Reconciliation Act of 1995 (COBRA). You should also include who is responsible for insurance premiums if the employee does choose to remain on the company’s health insurance plan.

Release of Liability

One of the main reasons employers use severance agreements is to prevent any lawsuits from being brought against them. In the severance agreement, you should include a clause that removes the employee’s right to sue the company for anything. This can help prevent the employee from filing a lawsuit against you or the company at any time in the future.

Non-Compete and Non-Solicit Agreements

If deemed necessary, your severance agreement can also include non-compete or non-solicitation clauses. Non-solicitation clauses usually state that the employee is not permitted to solicit other employees from leaving the company. Non-compete clauses are used to prohibit the employee from working with a competitor for a specific period of time - usually a year. If a non-compete clause is part of your agreement, you should make sure that the names of a few companies are specifically outlined to provide examples.

Hire a Skilled DuPage County Severance Agreements Attorney

It is never fun having to play the “bad guy” and fire an employee. However, if you are planning to terminate an employee, you should understand and appreciate the importance of using a severance agreement. Having a second set of eyes on your severance agreement before you give it to your employee is never a bad idea. When you need legal guidance for business issues, Stock, Carlson & Duff, LLC is here to help you make sure all of your bases are covered. Contact our Wheaton, IL business lawyers today by calling our office at 630-665-2500 to schedule a consultation.

Sources:

https://www.forbes.com/sites/susanadams/2011/12/01/the-top-ten-reasons-to-hire-a-lawyer-to-review-your-severance-agreement/#414e0e14419b

https://www.forbes.com/sites/allbusiness/2018/04/14/16-key-issues-in-negotiating-an-employment-severance-package/#51cf55e576b2