Tips for Crafting Severance Agreements

The prospect of having to tell an employee that they are losing their job is one of the most difficult tasks an employer will face. Employers in Dallas and across Texas often soften the blow by making a severance package part of the termination process. Typically, this will include payment and a severance agreement that the employee must sign.

It is particularly important that Texas business owners create severance agreements that will protect the company and its executives from any future legal action from employees. An experienced Dallas employment law attorney can help your business craft effective severance agreements that can minimize your company’s liability from lawsuits.  Keep the guidelines below in mind when thinking about your business’s severance agreements.

Make Sure You Have Waivers of Liability

It is critical to consider putting waivers of liability in any severance agreement for employees who are being fired or laid off. By including waivers of liability, you can reduce the risk that former employees will bring claims against you for issues that arose during their time at your business. There are many types of claims for which you can include waivers of liability and some for which you cannot.

You can include waivers through which employees release their right to file claims under the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), and other federal laws. You cannot, however, have an employee waive rights to claims under the National Labor Relations Act or rights to compensation through the Texas workers’ compensation system for workplace injuries.

Address Dispute Resolution

It is a good idea to address potential future dispute revolution in a severance agreement. In the event a claim does arise for which there is no waiver of liability, arbitration or mediation may be less damaging to your business than a trial. You may wish to discuss these scenarios with your employment lawyer and consider requiring alternative dispute resolution (ADR) if such a scenario unfolds.

Seek a Return of Business Assets

You can also use a severance agreement to ensure that an employee who is leaving the company returns any property that belongs to your business. There are a variety of business assets that employees may have in their possession, from electronics with protected trade secrets or valuable business information (like laptop computers and phones) to work-from-home assets like desks, office chairs, and other similar objects.

Benefits as Incentives

Sometimes employers want to encourage employees to agree to the terms of a severance agreement. One way to incentivize signing is to agree to provide certain benefits to the employee for an extended period of time, such as medical insurance coverage.

Contact Our Experienced Dallas Employment Law Attorneys

Whether you see layoffs on the horizon or you simply want to be prepared for any future eventualities, our Texas employment law attorneys can speak with you today about crafting effective severance agreements that can also provide protections for your business. Contact Simon Paschal PLLC today for more information about the services we provide to businesses in Dallas and throughout the state of Texas.


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