Severance Agreements

The idea behind a severance agreement is that the employee agrees to take something of value to which he is not otherwise entitled — additional compensation, benefits, or other “in kind” consideration — in exchange for agreeing not to sue you. Unfortunately, even a totally justified, squeaky-clean termination isn’t bulletproof 100% of the time. An employee determined enough to sue you will do so, and you’ll end up spending a good chunk of change defending even a borderline meritless claim. That’s where the severance agreement comes in. A severance agreement that includes a full release of claims is the only way you can be reasonably sure you won’t be dealing with the individual again. Of course, peace of mind has a price.

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