Losing a job is never easy, but if you’re offered severance pay, you might wonder: “Can you negotiate severance pay?” The short answer is yes—severance pay is often negotiable. However, approaching negotiations strategically is crucial for securing fair compensation and protecting your career. A well-negotiated severance package can protect your long-term interests by addressing issues like references, future employment opportunities, and your ability to continue working within your industry.
At Rissmiller PLLC, we understand the unique challenges employees face during severance negotiations, especially those who’ve experienced workplace discrimination, harassment, or retaliation. We’re here to guide you through the process and help you achieve the best possible outcome.
Keep reading for actionable advice on negotiating severance pay as well as understanding its tax implications and payment timelines. Then, reach out to us, and let us evaluate your severance offer to determine the best path forward.
What Is Severance Pay?
Severance pay is a financial package employers offer to departing employees, often in exchange for signing a release of claims against the company. Many employers offer severance to maintain goodwill or mitigate potential legal risks. However, severance pay isn’t legally required unless specified by an employment contract or employer severance plan.
Can You Negotiate Severance Pay?
Yes, severance pay can often be negotiated higher. The success of that negotiation will usually depend on the strength of any potential legal claims, such as discrimination, harassment, or wrongful termination, you have against your employer. This is because the severance pay is being offered in exchange for your agreement not to sue. That agreement is more valuable if you have a strong legal claim, and your employer may be willing to pay a premium to not have to defend it. An experienced employment attorney can evaluate your legal claims and leverage them during negotiations.
It’s also important to keep in mind that severance pay encompasses more than financial compensation. Along with your promise not to sue, employers will often include confidentiality, non-compete, non-solicitation, and many other restrictions within the agreement. These restrictions can impact your career going forward and are crucial to understand before you sign off. For this reason, consulting with an experienced severance lawyer who can cut through the legal jargon and help you determine the best course of action is essential. With an understanding of exactly what the agreement requires of you as well as the strength of your potential legal claims, you will be empowered to make an informed decision to accept or negotiate the agreement.
Can You Negotiate a Severance Package?
One of the most common questions we receive is, “Can you negotiate a severance package?” You now know that you don’t have to limit your focus to a monetary amount. Severance agreements often include additional clauses that could impact your future, such as:
- Confidentiality clauses—negotiating these clauses can help you retain the freedom to share information about your experience when it benefits your future job search or legal pursuits;
- Non-compete agreements—negotiating less restrictive terms can help ensure you remain employable and able to advance your career without unnecessary barriers; and
- Non-solicitation clauses—adjusting these terms can help you maintain critical professional relationships and ensure your new role is not unduly limited.
It’s also worth negotiating extensions to benefits such as health insurance or retirement contributions. These additional perks can provide significant peace of mind as you transition to a new opportunity.
Consulting a severance lawyer at Rissmiller PLLC can help you navigate the fine print and negotiate terms that protect your career. With the right guidance, you’ll ensure the agreement aligns with your future goals.
Is Severance Pay Taxable?
Many employees also ask, “Is severance pay taxable?” The simple answer is yes. The IRS considers severance pay supplemental income, meaning it’s subject to federal, state, and local taxes. Employers typically withhold taxes before issuing severance payments. These withholdings can also affect your tax bracket. It’s therefore a good idea to consult a tax professional to minimize your tax burden.
How Long Does It Take to Get Severance Pay?
Another common question is, “How long does it take to get severance pay?” The answer varies depending on the terms outlined in your agreement. Payments are often made as lump sums or installments and are typically disbursed between two to four weeks after signing the agreement.
However, under the Older Workers Benefit Protection Act (OWBPA), employers must provide a review and revocation period for employees over 40. Specifically, you’ll have 21 days to review the agreement and an additional 7 days to revoke it after signing. This built-in timeline can postpone when you receive payment. Acting quickly but strategically during negotiations is essential to avoid unnecessary delays.
Can You Explain How to Negotiate Severance Pay?
Approaching severance negotiations requires preparation and a clear understanding of your legal rights. Here’s a step-by-step guide:
- Identify deadlines. Employers often impose tight deadlines for signing severance agreements. For those over 40, the federal review period adds a layer of complexity.
- Evaluate your legal claims. Assess whether your termination involved legal violations, such as discrimination or retaliation. Strong claims can serve as leverage in negotiations.
- Consult an attorney. A severance attorney can help you understand your leverage, craft a strategy, and negotiate favorable terms.
- Negotiate beyond pay. Advocate for favorable terms on confidentiality, non-compete, and other clauses that may impact your career.
- Document everything. Keep detailed records of all communications and revisions to the agreement to ensure transparency.
Negotiating effectively goes beyond requesting higher severance pay. A skilled attorney at Rissmiller PLLC can help ensure you obtain financial and non-financial terms that benefit you.
Contact Rissmiller PLLC Today
At Rissmiller PLLC, we bring unparalleled expertise to employment law and severance negotiations. The following are just a few of the many advantages of working with us:
- Knowledge in employment law—we exclusively handle employment cases, ensuring an in-depth understanding of your rights;
- Acclaimed representation—our attorneys have won accolades such as Super Lawyers Rising Star, a distinction awarded to only 2.5% of New York lawyers;
- Client-centered approach—we offer free consultations and transparent communication throughout your case;
- Tailored legal strategies—we craft personalized solutions to meet your unique needs; and
- Aggressive advocacy—from initial negotiations to litigation, we fight vigorously for your desired outcome.
Whether you’re wondering if you can negotiate severance pay or need help understanding your legal rights, Rissmiller PLLC can help. Contact us today to schedule your free consultation and take the first step toward negotiating a favorable severance agreement.