What Should Be Included in a Layoff Package?

Employers offer layoff packages to their former employees for different reasons. These reasons include and are not limited to:

A Gesture of Goodwill

An employer might offer a layoff package as a sign of goodwill. This mostly happens when the reason for terminating the employment relationship is beyond the employer's control. In that case, they may feel inclined to ensure that their former workers have a smoother experience transitioning into a new job.

To Beat Competition

With the increasing competition in the business world, employers might decide to offer layoff packages to their employees when it's time to part ways. Such a gesture will likely improve the company's image, making it popular among clients, workers, shareholders, and the general public. And when businesses have a good reputation, especially for treating their workers with respect, it increases their popularity among the masses.

To Avoid Lawsuits

A severance package can help an employer avoid expensive lawsuits from former employers. This usually happens when the employer violates labor and employment laws with regard to that particular employee. For example, suppose you were fired unlawfully. In that case, your former employer might offer an enticing layoff package.

In exchange, you agree to waive your right to take legal action against the employer. In addition, you also agree to avoid discussing or revealing anything negative about the employer.

To Protect the Employer's Best Interests

Some employers offer layoff packages to their best employees when they decide to part ways. In most cases, the main purpose of offering these packages to their best (former) employees is to serve the company's best interests.

For example, let's say you're the best marketing manager the company has ever had. When they decide to part ways with you for any reason, as long as it is not illegal, they may want you to sign a layoff package that includes a 'non-compete clause.'

This means you cannot seek employment from another company in your field, usually a direct competitor. Employers do this because they know losing their best workers to rival businesses could weaken the employer.

It's also important to note that employers might use different terms to describe a non-compete agreement. Therefore, employees should understand these terms, including what they represent. Examples of terms that describe non-compete agreements include non-compete clauses or restrictive covenants. 

Although layoff packages are usually offered as a sign of goodwill, most of these packages come with a lot of strings attached. For this reason, you should never be in a rush to sign them.

Instead, do the following:

Read and Understand the Package

Before signing (or deciding not to sign) the package, it's important that you read and understand its contents. Don't let your employer explain to you what the package contains without letting you read and understand it. Although your employer might not have ill intentions, it's always better to be safe than sorry.

Earlier, we discussed that some employers might offer this package to cover up for various labor and employment law violations. For this reason, you need to understand why exactly they're offering this package to you. Specifically, think about how the employer has been treating you over the past few months.

Was the employer mean to you? Did they make any discriminatory remarks? Did you participate in any protected activities that would have attracted your employer's wrath?

In short, don't assume that the only reason your employer is offering this package is that they care about you. Half of the time, it's because they care more about themselves and the company.

Remember You Have Time

You shouldn't accept (or reject) the package right away after receiving it. Rather, you should always bear in mind that time is on your side. In most cases, you have up to 21 days to respond to the package. Therefore, it's okay to request more time to review the package before responding.

Some employers may not want you to take the time to review the package. This is because they know anything could happen within the 21 days or the specific timeframe you have to respond.

Therefore, they'll try to make it look like it's extremely urgent. The truth is, you don't need to respond immediately when you receive the package. Remember, time is on your side even if your employer says otherwise.

It's always advisable to consult a seasoned labor and employment attorney. This is especially important if you don't understand the terms of the agreement. In some cases, employees might use technical terms throughout the agreement. This tactic is meant to discourage the reader from reading through the entire document or trying to discover what these terms mean. As a result, chances are they'll sign an agreement they don't understand.

An experienced attorney will review the specific circumstances of your case and compare it with the layoff package offered by your employer. Throughout the time, the question of whether the package is worth it will surface. Your attorney will want to find out whether your former employer offers this package out of goodwill or to hide something even bigger.

But what could they possibly be hiding from?

Suppose your employer decides to terminate your employment contract because of your race. This is illegal. According to labor and employment laws both at the federal and state level, employers cannot terminate their employers based on various protected characteristics.

These characteristics include but are not limited to:

• Race
• Nationality
• Religion
• Sexual orientation
• Disability
• Certain health conditions such as pregnancy

In addition, your employer cannot terminate you for participating in certain protected activities. These activities include but are not limited to:

• Refusing to participate in illegal activities in the workplace, such as misclassification of employees
• Agreeing to cooperate with investigators probing your employer's conduct
• Raising the alarm over certain violations in the workplace
• Defending or speaking up on behalf of certain employees whose rights have been violated
• Agreeing to join a labor union

Remember, most employers understand how labor and employment law work. Some even have attorneys to advise them on how to proceed with such issues.

For example, if your employer fires you because you participated in a particular protected activity, their attorneys might advise them to cover up this violation by offering a layoff package. Remember, as we discussed earlier, most of these packages require the employee to waive their right to pursue legal action against the employer.

Therefore, when you agree to sign the package and later discover that your employer violated your rights, you cannot take legal action against them. This would be a violation of the contract between you and the employer. In most cases, it won't matter even if the court finds out that your employer broke the law. The presence of this agreement, coupled with the fact that you agreed to sign it, releases your former employer from any responsibility.

One of the reasons your employer might want you to sign the package immediately is because they don't want to give you enough time to hire an attorney. They know that if you get the chance to hire an attorney, you will discover that your case is more valuable than the layoff package.

This is because experienced labor and employment attorneys are good at evaluating these cases. By listening to your side of the story and reviewing the available evidence, they may be able to help you take legal action against your employer. This only works if you haven't yet signed the layoff agreement.

A seasoned attorney can also help maximize your claim. You'll be surprised to learn that you are entitled to damages you didn't even know about. The whole point of having an attorney is to understand your legal rights and get help pursuing justice.

Morgan and Morgan has some of the best employment and labor attorneys in the country. In fact, our attorneys file the most employment litigation cases in the country.

If you've been offered a layoff package and you feel there's a hidden motive, fill out our free consultation form. Our legal representatives will review your case and let you know if you have a valid claim and how to proceed.