Do I need a lawyer to negotiate a severance package?

Understanding Severance Packages: Should You Hire a Lawyer?

Imagine this: You’ve just been called into a meeting with HR. Your position is being eliminated, and they slide a severance package across the table. You have a mix of emotions—shock, frustration, maybe even relief. But as you skim the document, one big question looms: Should I get a lawyer to review this?

Severance agreements can be complex, and while some employees feel confident negotiating on their own, others wonder if legal guidance is necessary. Let’s break it down so you can make the right decision.

What Is a Severance Package?

A severance package is a financial and benefits offer that employers may provide when an employee is let go. It typically includes:

• A lump sum or continuation of salary (e.g., weeks or months of pay)
• Extended benefits (such as health insurance for a limited time)
• Payout for unused vacation or PTO
• Stock options or retirement benefits
• Non-compete or confidentiality clauses

While severance isn’t legally required in most cases, many companies offer it as a goodwill gesture or to prevent legal disputes.

Can You Negotiate a Severance Package Without a Lawyer?

Yes, you can negotiate a severance package on your own. However, you’ll need to carefully review the terms and be comfortable advocating for yourself. If you decide to go solo, keep these key points in mind:

1. Understand Your Leverage

Companies don’t offer severance out of charity. They often want to avoid wrongful termination claims or maintain a positive reputation. If you have a strong case for wrongful termination, long tenure, or key contributions, you might be in a good position to negotiate.

2. Read the Fine Print

Severance agreements often include legal clauses that could impact your future, such as:

• Non-compete agreements (restricting where you can work next)
• Non-disparagement clauses (preventing you from speaking negatively about the company)
• Release of claims (waiving your right to sue the company)

Make sure you fully understand these before signing.

3. Request More Than Just Money

Beyond salary, consider negotiating for:

• Extended health insurance benefits
• A positive reference or letter of recommendation
• Payout for unused vacation days
• Adjustments to restrictive clauses (e.g., non-compete agreements)

4. Take Your Time

Most companies give you time to review the severance agreement. The Older Workers Benefit Protection Act (OWBPA) mandates that employees over 40 get at least 21 days to consider the offer and 7 days to revoke it after signing. Even if you’re younger, ask for time to review.

When Should You Hire a Lawyer?

While you can negotiate on your own, there are situations where hiring a lawyer is highly recommended:

1. You Suspect Wrongful Termination

If you were fired due to discrimination, retaliation, or a violation of your employment contract, an attorney can assess whether you have a legal claim and potentially negotiate a better severance.

2. The Agreement Contains Complex Legal Terms

If your severance includes clauses like non-compete agreements, broad confidentiality terms, or liability waivers, a lawyer can help ensure you’re not giving up important rights.

3. Your Package Seems Unfair

If your severance offer seems low compared to industry standards or your length of service, a lawyer may be able to negotiate a better deal.

4. You’re a Senior Executive

Executives often have complicated compensation structures, including stock options, bonuses, and deferred compensation. A lawyer can help maximize what you receive.

5. You Feel Pressured to Sign Quickly

If your employer is pushing you to sign immediately, it’s a red flag. A lawyer can ensure you get the time you need to make an informed decision.

How a Lawyer Can Help Negotiate Your Severance

If you decide to hire an attorney, here’s what they can do for you:

• Review and explain the agreement in plain English
• Identify potential legal claims (such as discrimination or wrongful termination)
• Negotiate for a higher payout or better terms
• Ensure restrictive clauses (like non-competes) are fair
• Advise on tax implications

Many employment lawyers offer free consultations, so even if you’re unsure, it’s worth seeking advice.

What Does It Cost to Hire a Severance Lawyer?

Legal fees vary based on the complexity of your case. Some lawyers charge:

• Hourly fees (ranging from $200 to $500 per hour)
• Flat fees (for a simple review, typically $500–$1,500)
• Contingency fees (a percentage of what they win for you, if applicable)

If your severance offer is substantial, investing in legal guidance may pay off in a better deal.

Final Thoughts: Should You Get a Lawyer?

The decision to hire a lawyer depends on the complexity of your severance agreement and your confidence in negotiating. If you’re dealing with wrongful termination, restrictive clauses, or a lowball offer, consulting an attorney could be a smart move.

Not sure? Many employment lawyers offer free initial consultations—so getting an expert opinion won’t cost you anything upfront.

FAQs

1. Can I negotiate a severance package on my own?

Yes, if you’re comfortable reviewing legal terms and advocating for yourself. However, if the agreement is complex, hiring a lawyer may be beneficial.

2. What should I look for in a severance agreement?

Watch out for non-compete clauses, non-disparagement agreements, and liability waivers that could limit your future employment options.

3. Is severance pay taxable?

Yes, severance pay is subject to income tax and payroll taxes like regular wages. Consult a tax professional for guidance on reducing the tax impact.

4. How long do I have to decide on a severance offer?

Employees over 40 must receive at least 21 days to review the offer and 7 days to revoke it. Others should ask for similar timeframes.

5. Can a lawyer increase my severance payout?

Potentially, yes. Lawyers can negotiate for higher pay, extended benefits, or the removal of restrictive clauses that could harm your future job prospects.