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Texas Severance Agreements Attorneys

Leichter Law Firm PC represents people who have been terminated from their employment and have been offered a severance agreement. You do not have to immediately accept an agreement offered to you, nor do you have to accept an agreement whose terms are unfair. When you need help and experienced counsel on your side, turn to the team that has helped countless others in this same situation.

The Texas Workforce Commission (TWC) states that for the purposes of Texas Labor Code § 61.001(7)(B), severance pay is defined as “payment by an employer to an employee beyond the employee’s wages on t’ of employment, based on the employee’s prior service.”

Severance pay does not include other types of post-termination payments such as:

  • Liquidated damages- a penalty if the employer terminates the employment contract early
  • Payments in exchange for a release of claims- payments made in exchange for the employee’s promise  not to sue an employer for termination or anything that happened during the employee’s term of employment
  • Payments made because of a lack of notice of separation

Employers do not owe all employees severance pay unless such a package was promised in a written policy or agreement at some time prior to the employee’s termination.  Many initial severance offers can seem fairly substantial and generous to most employees, but there could be important considerations to signing a severance agreement because of the possible impact that the agreement has on your ability to seek new employment or collect unemployment benefits.

Has your employer given you a severance agreement to review and sign? You should know that you can negotiate for a better severance agreement. Retaining legal counsel for assistance is your best bet in making sure that you receive the most favorable agreement possible.

Leichter Law Firm PC has office locations in McAllen, Austin, Houston, and represents clients all over Texas. Call (956) 205-0884 or fill out an online contact form to have our Texas severance agreement attorneys review your case and help you understand all of your legal options during a free consultation.

Do I Need A Severance Agreements Lawyer?

Under the Texas Payday Law, only a written severance pay obligation is enforceable. Most people who are presented with severance agreements understandably focus on the money. In many cases, they wonder why they are only receiving a certain number of weeks of severance pay, or perhaps they are surprised by the number of weeks being offered.

While money is important, it may only be one part of a severance agreement. Some agreements provide job placement or continued medical insurance for a period of time.

Contractual language can often be difficult for many people to decipher, so the actual effects of certain aspects of severance agreements are either ignored or not understood. A very important consideration to many severance agreements is the inclusion of possible non-compete clauses that could prevent you from continuing to work in your professional field within a certain geographic range for a period of time. It’s important that if you have any severance agreement or employee handbook or policy that contains a severance agreement reviewed by an attorney so you can fully understand what rights you might be giving up.

A severance agreement will often involve you waiving several rights.  According to the Texas Workforce Commission, certain types of severance agreements can have an impact on post-termination benefits that you may be entitled to such as unemployment benefits.  According to the TWC “severance pay that is unilaterally offered (for example, in a policy or in a job offer letter) would generally be disqualifying, while a negotiated severance payment would likely not affect benefit eligibility.” It is crucial that you know which rights you could be giving up. With the help of an experienced lawyer, you may be able to negotiate an agreement that protects those rights.

Why Choose Leichter Law Firm PC To Handle My Case?

Founder Louis Leichter received an AV Preeminent rating from Martindale-Hubbell in 2018, a peer rating denoting the highest level of professional excellence, and is a member of the State Bar of Texas, the National Association of Addiction Professionals (NAADAC), and the Texas Association of Addiction Professionals (TAAP). David Langenfeld is Board Certified as a Specialist in Labor and Employment Law, a distinction that fewer than 10% of attorneys in any practice area in Texas can claim.

Leichter Law Firm PC has a complete understanding of federal and state employment laws in Texas. We assist individuals in claims against current and former employers, but we also assist groups of employees who may have class action claims.

Our firm also has a friendly and dedicated support staff, so you can be confident that you will always have your phone call answered and you will get answers to all of your questions. Many cases are impacted by sensitive time limits, so you should not delay in seeking legal representation.

Types of Severance Agreements Cases We Handle

When a person is being laid off or terminated and is offered a severance agreement, that individual could be able to negotiate a more favorable agreement because of a number of different factors or circumstance. You could generally be in a position to negotiate a better severance package if you:

  • were highly compensated
  • maintained long-term employment with the company
  • are over 40 years of age
  • are being asked to sign a non-disclosure, non-compete, or non-disparagement agreement
  • are having an employment contract terminated early
  • are being asked to take early retirement
  • recently filed a “whistleblower” complaint
  • recently filed any kind of complaint with the United States Equal Employment Opportunity Commission (EEOC)
  • recently took time off under the Family Medical Leave Act (FMLA)

Some people feel that they have to accept settlement agreements that are offered out of fear that the employer will not offer any severance if they refuse the initial offer. You are always within your rights to have an attorney review any severance agreement.

Frequently Asked Questions

How much severance am I entitled to receive?

Texas does not legally require employers to pay severance, so any amount you are entitled to receive will depend on the particular agreement you had with your employer. A severance agreement may have been stipulated in certain employment contracts. Some companies may have specific severance policies in which severance pay is determined by a formula that takes into account numerous factors, such as years of service to the company. Some companies may offer fixed amounts for all cases.

Will I still have health insurance after signing a severance agreement?

An employer may offer health insurance benefits under a group policy for a period of time until coverage begins under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Employees need to understand how accepting COBRA coverage could impact their ability to seek coverage in the individual marketplace. COBRA premiums are usually paid by an employer, but a severance agreement should specify if the employer is paying these costs directly or reimbursing the employee. Most severance agreements need to at least offer COBRA coverage.

Is severance pay taxed?

Of course. The Internal Revenue Service (IRS) states that severance pay is taxable in the same year that you receive it. An employer includes the amount on a person’s Form W-2 and withholds the appropriate federal and state taxes. The tax burden is an important consideration in severance agreements involving significant sums of money, as accepting a single lump sum payment could push a person into a higher tax bracket. It can be beneficial in some cases for people to have these payments spread out over multiple years to reduce the potential tax burden.

Severance Agreements Statistics

According to the 2017-2018 Lee Hecht Harrison Severance & Separation Benefits Benchmark Study:

  • 47% of companies in 2017 reviewed their severance policy within the past year,
  • 20% reviewed it within the last two years,
  • 11% reviewed it within the last three years,
  • 2% reviewed it within the last four years,
  • 8% reviewed it more than four years ago, and
  • 12% did not know when they last reviewed the policy.

The Severance & Separation Benefits Benchmark Study reported that:

  • 59% of companies do not define severance in their employment agreements,
  • 18% define it for top executives, and
  • 23% define it for top executives and others covered by employment agreements.

In regards to how the severance plans of companies are documented:

  • 36% have a written plan document,
  • 28% have general written guidelines,
  • 30% have no written guidelines, and
  • 6% have something other.

The Severance & Separation Benefits Benchmark Study also reported that in terms of eligibility for severance:

  • 89 % of C-Suite,
  • 95 % of senior management,
  • 91 % of directors,
  • 93 % of managers,
  • 91 % of supervisors,
  • 92 % of professional or technical,
  • 90 % of exempt, and
  • 86 % of non-exempt employees are eligible.

Companies provide severance to:

  • 88% of termination due to a reduction in force or corporate restructuring,
  • 62% of involuntary termination,
  • 17% of double trigger change in control,
  • 16% of single trigger change in control,
  • 13% of termination for cause,
  • 11% of voluntary termination,
  • 6% of retirement,
  • 3% of death,
  • 3 % of disability, and
  • 7 % of other cases.

According to the Severance & Separation Benefits Benchmark Study, 52% of companies in 2017 had minimum or maximum severance amounts. The average numbers of weeks by position level were:

  • 22.9 weeks minimum and 44.7 weeks maximum for C-Suite,
  • 16.1 weeks minimum and 39.0 weeks maximum for senior management,
  • 8.9 weeks minimum and 32.2 weeks maximum for directors,
  • 6.0 weeks minimum and 29.3 weeks maximum for managers,
  • 5.2 weeks minimum and 27.4 weeks maximum for supervisors,
  • 4.9 weeks minimum and 27.3 weeks maximum for professional or technical,
  • 5.0 weeks minimum and 27.1 weeks maximum for exempt, and
  • 4.2 weeks minimum and 25.3 weeks maximum for non-exempt employees.

Of companies that have maximum and minimum severance amounts,

  • 92% require a release in exchange for severance,
  • 54% require a release for outplacement,
  • 24% have a process by which employees can appeal or negotiate a severance package,
  • 15% have enhanced severance for employees who sign releases, and
  • 10% stop severance as soon as the individual finds new employment.

As far as how severance policies are communicated to employees:

  • 21% of companies use the employee handbook
  • 20% use an online resource,
  • 18% use a supervisor or manager,
  • 15%say it is not communicated,
  • 6% use a company meeting,
  • 1% use an outside consultant,
  • 9% use human resources, and
  • 25% use some other method.

Contact a Texas Severance Agreements Attorney Today

If your employer has presented you with a severance agreement, do not think that you are obligated to automatically sign it. You have the opportunity to negotiate the terms of your exit. By retaining legal counsel, you can preserve your rights and ensure that you are satisfied with your severance package.

Leichter Law Firm PC helps people throughout Texas with complex employment law issues, including severance agreements. You can have our lawyers provide a complete evaluation of your case when you call (956) 205-0884 or contact us online to schedule a free consultation.