What You Need to Know about New York Employment Separation Agreements

When it’s time to terminate a position, the company may opt to have an employee sign a separation agreement. While this tool is used to primarily to protect the employer, whether you’re the employee or the employer, the agreement sets out the terms of the separation, ideally in a way that is satisfying to both parties. Read on to find out what you need to know about New York employment separation agreements.

What is an Employment Separation Agreement?

A separation agreement (also known as a termination agreement, release of employment claims, or severance agreement) isn’t required by any means, but an employer may want to use it when they want to keep company information confidential and to shield the company from possible future legal issues. 

What are Common Provisions in a Separation Agreement?

The parties can make a separation agreement very specific and unique to their situation, however, certain provisions are typically included:

  • Release of claims: This provision says that the terminated employee waives their claims they can bring against their former employer. This just means that they give up their right to initiate a lawsuit, such as filing a wrongful termination suit or compensation claim. 
  • Separation details: This includes basic terms, like the names of the parties, final date of employment, and reason for termination.
  • Severance clause: Severance describes various benefits (stock options, on-going health insurance for a while, additional compensation). Additionally, some agreements include a general fee offered to the employee to sign the agreement. However, this isn’t typical. 
  • Non-compete clause: A non-compete clause keeps the employee from working in a specific industry or in a specific role for a certain amount of time and within a certain geographical region. 
  • Confidentiality clause: This prohibits the former employee from revealing proprietary information and intellectual property such as trade secrets or client lists. 
  • Non-disclosure clause: This clause, similar to a confidentiality clause, deals with not disclosing information, but it refers to the contents of the separation agreement itself. 
  • Non-disparagement clause: A non-disparagement clause can forbid employees from badmouthing the employer and vice versa.  
  • Employer’s remedies: The agreement should mention the employer’s rights to recover attorneys’ fees and litigation costs from the employee in case there’s a lawsuit.

Why Use a Separation Agreement?

The main purpose of the separation agreement is to protect the employer. This includes concerns about former employees’ legal claims or their behavior that can cause damage to the business. It may be especially desirable if some issues weren’t addressed in an employee’s offer letter. For example, non-compete language which would apply post termination. From the employee’s perspective, they may be eager to sign away their rights to sue in exchange for severance pay and generous benefits. 

Talk to an Experienced Attorney about Separation Agreements

Separation agreements provide crucial advantages to employers and employees alike. However, you want to get the most value out of this document. That’s where an experienced attorney comes in who can assist with negotiating and drafting your agreement. Contact a skilled MOWK employment law attorney today to get started.