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Elements of a Severance Agreement in Florida

A severance agreement is an arrangement between an employer and employee to protect the parties from issues that may arise when the employee is or will be terminated from a position.  These contracts may also be termed employee separation agreements.  For the employer, the advantages include a waiver of liability against future claims by the employee; for the employee, there are financial benefits and more clarity in moving forward to a new job. To obtain closure on both sides, a Florida severance agreement must contain certain essential terms under federal and state law.

Severance Benefits

The terms in a separation agreement include the compensation and other benefits that the employee will receive upon properly executing the contract. The employer must offer the employee some consideration beyond what the employee would receive in the normal course of business, such as sick pay, accumulated vacation pay, and similar benefits.  Therefore, the severance package must include an additional payment or benefit, which is usually based upon length of employment, or the employer’s potential liability to the worker.

Release

In exchange for the severance benefit, the employee releases the employer from a all claims or a broad range of claims that he or she might have under federal and/or state law. The effect is that an employee cannot bring a claim against the employer, even under specific employment regulations.

Waivers for Employees Over Age 40

If the departing worker is over age 40, the severance contract must include provisions as required by the Age Discrimination in Employment Act and the Older Worker Benefit Protection Act – both federal laws.  The key term is that the employee must have 21 days to sign the separation agreement and seven (7) days thereafter to revoke it.

Confidentiality

An employee is typically required to keep the terms of the separation agreement confidential.

Future Cooperation

Because an employee will likely seek opportunities elsewhere, the severance agreement should include provisions to address future interactions.  If the employer comes under investigation and the departed employee’s testimony is needed, the agreement should address that situation. Plus, the contract should state the obligations of the employer if the employee needs a reference.

Restrictive Covenants

A separation agreement may also include appropriate restrictive covenants, which are intended to protect the employer. The former employee  may be prohibited from directly competing with the employer or using information obtained during employment for a competitive advantage. However, these restrictive covenants must be reasonable in temporal and geographical scope in order to be enforceable.

A severance agreement is a useful tool in establishing the rights and responsibilities of an employer and employee when the relationship comes to an end.  There are advantages for both parties, but the separation contract must include the essential terms to make it enforceable under federal law and Florida regulations.  No matter which side of the bargain you’re on, it’s wise to consult with an experienced attorney about a severance agreement.  The employment lawyers at Penichet Law can advise you about your options and represent your rights under a separation agreement, so please contact our Miami office for more information.

Resource:

dol.gov/general/topic/wages/severancepay