Whether you’re affected by layoffs or cutbacks, whether you saw it coming or not, getting let go or laid off from your job can feel like falling off a cliff, emotionally and financially. Unfortunately, this can become a reality for many workers – June 2023 saw 1.5 million workers lose their jobs in layoffs and discharges, a number that has held steady in the first half of the year.
While a severance agreement is not generally required in New York City, companies offer severance packages as a way to soften your financial landing after a layoff, especially if your termination was not based on a lack of performance.
Severance packages can be offered to employees of all levels, from entry-level associates up to and including executives. However, severance benefits are not usually extended to employees who quit voluntarily.
Your company may be required to give you a severance package if doing so is part of your employment contract or collectively bargained union terms. You may also be entitled to a severance if your company has a severance policy in place.
Like other types of employment agreements, severance agreements are a type of employment contract. The terms can vary depending on what your employer is willing to offer and what you’re willing to accept. You may feel like you don’t have a lot of negotiation power, but you do not have to accept the severance agreement offered to you as-is. It’s actually in your best interests to negotiate the terms of your severance, ideally with the help of a lawyer who is experienced in handling employment contracts according to New York law.
Can You Negotiate Your Severance Agreement in New York?
You do not have to accept the first severance offer you get from your employer. You have the power to negotiate the terms of your severance. A successful severance negotiation can get you additional cash, benefits, and resources that would otherwise only be offered to employees, including healthcare benefits and even outplacement services.
An experienced employment attorney can analyze your situation to determine the full package that you deserve, taking into account your years of service to the company, the seniority of your job role, and industry standards for comparative roles.
What Is the Standard Severance Package in New York?
When it comes to severance packages, there is no standard or set formula. Similar to other types of contracts, the terms depend on what your company is willing to offer. That may include:
- Severance pay in the form of cash, determined by your position and seniority at the company. Your company may offer severance pay as a lump sum or as periodic payments over time. The amount you receive could vary from a portion of a single paycheck to a total of multiple years of pay.
- Health insurance on your company’s policy, paid by your company for a certain period of time. This can help alleviate worries about getting access to medical care during your job search. Your company must also offer you the option under COBRA to pay for your health insurance at your company’s rate for up to 36 months.
- Stock options in the company or the ability to sell your options for their current value.
- Vacation pays for the value of any unused vacation time you have left over.
Every little bit counts when you’re negotiating a severance agreement. You should be compensated fully for the value you’ve brought to the company during your tenure.
What Makes a Generous Severance Package?
The purpose of a good severance package is to provide a safety net while you transition to new opportunities. Financial compensation is an important part of a strong severance package, but a comprehensive offering could also provide:
- Outplacement services that assist in helping you find your next role, with resume review, interview coaching, and networking support. If you prefer to decline these services, you could ask for their cash value equivalent instead.
- Continuation of bonuses to be paid out even after your employment ends. After all, bonuses are meant to reward your work performance. Bonuses scheduled to be paid out months or years down the line are often based on work you’ve already accomplished.
- Non-disparagement clauses that ensure your former employer won’t make negative statements about you and your employment performance – so you know that you have a positive reference when applying for new positions.
Your severance package should be tailored to your needs and your contributions. The longer you’ve worked with your company and the more responsibilities you’ve carried in your role, the more your contributions should be recognized with a generous severance.
How Do You Ask for a Better Severance Package?
Negotiating for a better severance package with your employer can be daunting, but an experienced lawyer can make all the difference in the process. Severance negotiation is an essential step in securing your financial stability during your transition period.
Your attorney can help you prepare for your negotiation by first identifying your value.
You may not want to brag about yourself, but you deserve to be recognized for the value you’ve created. To make sure your severance package properly reflects your worth, you must highlight your contributions to the company and the skill and dedication you’ve brought to your role.
Second, your lawyer can help you draft a counteroffer that addresses your concerns and better aligns with your expectations. This could involve a greater amount of severance pay, extended health benefits, or negotiating the limits of non-compete clauses.
Throughout this process, you should consider:
- Whether you want outplacement services or if you can get their cash value if you don’t
- Whether your severance payments can be offset by mitigation – in other words, will you have to pay back or forfeit your severance benefits if you get a job within the timeframe?
- Whether the terms of any non-compete agreement are too restrictive.
- Do you have any outstanding expense reimbursements or bonuses not yet paid?
- Can you get health benefits continuation for as long as your severance period?
- Will your former employer give you a positive reference letter?
- Does the severance agreement require you to waive any legal claims?
- Could you delay your separation date from the company?
A good employment lawyer will know all the things to watch out for considering your circumstances, your position at the company, and the true value you deserve in a severance.
At Mirza Law, we help New York City employees negotiate severance agreements that set them up for a successful transition to new opportunities. Contact us now to get started with a free case consultation with an experienced NY employment lawyer.