The seemingly simple decision to terminate an employee is often fraught with peril for employers. Business owners must be extremely careful to approach the situation sensitively, acting in a way that minimizes the company’s risk of exposing itself to a wrongful termination lawsuit in the future. Not only is wrongful termination litigation damaging to your company’s reputation and highly disruptive to efficient daily operations, it can also result in the imposition of enormously expensive fines. Offering severance packages to your employees can be a simple but effective method of protecting your business from legal and financial harm.
The skilled and knowledgeable employment attorneys of Bellatrix PC have extensive experience working with all types of businesses. We will help your organization calculate and prepare cost-effective offers, advise you of your legal rights and responsibilities as an employer, and aggressively defend your interests should litigation become necessary. Our goal as a law firm is to empower your company with the tools it needs to avoid or minimize financial damage, while maximizing your productivity and guarding your bottom line.
To start discussing your situation in a private legal consultation, call our business attorneys at (800) 889-8376 today.
Reasons to Offer Severance Agreements
Many people are surprised to learn that there are currently no state or federal laws explicitly stating that an employer must present an employee with a severance offer upon termination. The only exception would be if the employer and employee negotiated such an agreement as part of the employee’s offer package. This occurs most often with high-level executives, and in those circumstances tends to deserve the “golden parachute” appellation.
Where rank and file employees are concerned, a severance package is typically offered because employers realize that no termination is guaranteed to be resolved without incident. That is to say, even in situations where the employer is completely justified in terminating an employee, failure to “dot i’s and cross t’s” can lead to lawsuits the employer has little chance of successfully defending.
Consider the following questions: did you document every instance of the employee’s misconduct? Did you promptly bring your concerns to the employee’s attention? Did you give him or her an opportunity to rectify his behavior? Even minor omissions and missteps on the part of the employer, such as failure to document individual instances of employee misconduct, can expose any business to a dramatically increased risk of costly, damaging, and disruptive litigation. Our comprehensive business risk review service will help your organization target and improve vulnerable areas in its employment contracts and workplace policies.
In addition to minimizing the chance of a lawsuit, other common reasons businesses make severance offers include:
- Avoiding Disruptions — For the comparatively small price of making an offer to a terminated employee, an employer will almost always recover their losses in significantly reduced stress and a more tranquil, efficient workplace and workforce.
- Fairness and Goodwill — An employer may make an offer so that the affected employee retains a positive association with the business. This will help counteract the “bad taste” left by being terminated, and when others ask what it was like to work for the employer, they will more likely respond positively. It is often more advantageous for business owners to preserve bridges than burn them unnecessarily.
- Years of Service — Some employers believe that rewarding a long-term employee for loyalty is a good way to invest in the productivity of the current workforce. In the past, it was customary to award one week of severance per year of service. Our attorneys will help you make financially sound calculations.
- Executive-Level Employees — High-level executives will usually negotiate a deal with an employer up front during the offer stage. Since these employees typically handle the most stress and have access to the business’ trade secrets, they often receive some of the largest offers.
- Release of Claims — The single most important legal benefit for employers is arguably the release of claims. In simple terms, this release protects the business from the employee filing any lawsuits in the future, including wrongful termination lawsuits and discrimination claims. Discrimination claims may stem from allegations of racial discrimination, sex or gender discrimination, religious discrimination, or other allegedly discriminatory practices.
Remember, well-crafted offers not only provide businesses with “peace of mind” — they are also legally binding.
Put Our Employment Lawyers to Work for Your Business
Bellatrix PC is here to assist if your business needs severance agreements drafted or reviewed, or requires legal representation during negotiations with an employee. Our experienced severance agreement lawyers will meet with you to create a personalized action plan that meets your objectives — and your bottom line.
In addition to assisting with severance package matters, Bellatrix PC can also handle your business’ daily legal needs. By establishing an ongoing relationship with our firm, we can act as an outsourced general counsel for all of your company’s legal questions and regulatory concerns. Establishing a relationship with experienced counsel can ensure that when a question or lawsuit arises, your company will know where to turn for dependable legal advice.
To set up a confidential consultation, call our law offices at (800) 889-8376. We serve organizations and individuals nationwide, with offices located in St. Louis, San Diego, and Riverside, CA.
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