Although Oklahoma law does not require it, many in-state companies have some form of severance pay as a form of goodwill toward their employees and protection against future lawsuits from them.
If you are thinking of drafting a severance package, or are applying for jobs that include one, it is important to know the difference between a satisfying and unsatisfying severance package.
Severance pay benefits fall under the protection of the federal Employee Retirement Income Security Act (ERISA) which mean that they must be detailed in writing, signed by both parties and failure to deliver can result in a lawsuit.
The benefits are often crucial to keeping a family afloat after an unexpected layoff. A satisfying deal can also change an employee’s feelings about the company. It may affect whether you recommend the business to others or choose a competitor.
Most severance packages contain fine print stating that the terminated employee will receive benefits only after they sign a “release of rights.” Whether you are an employer or employee, it is important to know how signing this document can affect you.
What you sign
Before you sign any legal document, it is within your right to seek legal counsel. An attorney may be able to explain the nuances of a contract with you, especially if it contains multiple unfamiliar terms. It is very important that this document walks a fine line to avoid violating your federal rights as detailed in federal labor laws such as:
- Oklahoma Personal Act
- Oklahoma Anti-Discrimination Act
- American with Disabilities Act
- Rehabilitation Act of 1973
By signing a release of rights on or after your last day of employment, you are waiving various rights to hold the company liable for certain legal claims. (Note: this usually does not include future workers’ compensation claims.)
Finally, carefully read over any claims for “future mutual protection” regarding reputation, non-competing or non-disclosure. These clauses could restrict future employment but they could protect both parties from disparagement if the situation was unfriendly.
Be sure that all financial and health insurance matters are settled to your satisfaction before you sign a severance agreement. Walking away unsatisfied could leave both parties vulnerable to lawsuits.