Are You a Manager Given a Severance Agreement? Learn the Risks of Trying to Manage Negotiations

In my job as an employee rights attorney, I’ve encountered thousands of situations where fired workers contacted me about severance agreements they were presented.  In some situations, I have found such workers had strong potential legal claims and strong leverage to negotiate better severance terms and higher payment.  Generally speaking, fired managerial, executive and professional workers have better opportunities for severance improvements than do non-managerial workers.

There are many common reasons for this.  One reason is that employer companies often believe (often correctly) that manager-level workers have important knowledge, i.e. knowledge about the company’s employment and severance practices, about sensitive factual circumstances that give rise to potential legal claims, etc.  Further, if the fired manager retains an attorney with employment-law know-how (which can then be applied to the factual circumstances at issue), the employer knows it faces a credible threat of legal action and exposure.  The employer thus treats that manager/attorney combo more seriously and reasonably in negotiations as compared to the fired employee who does not have an attorney yet is making statements about how she or she “could” get an attorney and sue for [insert misdiagnosed legal claim], etc.

Surprisingly, I see some managerial- level workers who– despite their general advantages above– make the mistakes I mention above. By attempting, on their own, severance negotiations and related legal diagnoses and communications, they had squandered opportunities for a better severance. It is unfortunately common for such a manager to call me, after he or she has had negotiations go south, and report to me their assessment of the laws and leverage points that apply (with no request for my assessment or whether I agree), and express surprise things didn’t go well. Then I begin the discussion of my evaluation. Almost 100% of the time, the main potential legal claims and leverage points I assess are completely different than what the manager assessed.

The question that has repeatedly come to my mind is this: why do managers who have a lot at stake with a severance try to manage something with which they have no experience (i.e. a discharge situation requiring assessment of hundreds of potential legal issues, litigation rights, legal forums, etc., for which they had no prior education or experience)?  My theory is that managers are used to getting things done, i.e. successful project management, and approach the severance negotiation like any other project that they are qualified to handle.  The problem is that managers — along with every other person who is not an employment-attorney– are not qualified to handle severance negotiations. Even those managers who routinely deal in negotiations do not have the skill set to handle their own severance negotiation.

Why do I say this?  Because knowing your actual leverage for a severance requires diagnosing the correct potential legal claims.  Many managers who initiate severance negotiations assume they have correctly diagnosed the best potential legal claims and leverage points.  But the vast majority have their diagnoses wrong. So long as those wrong diagnoses are not shared with the employer or used in attempted negotiations, they can be corrected. If a worker calls me before he or she attempts negotiations, I have an opportunity to discuss with them the facts and evidence — which are all that I need. Then I can assess those facts under the hundreds of employment laws I am familiar with, correctly identify the best potential legal claims (or lack thereof), and help negotiate a better severance when I feel that’s possible. Along the way, I discuss my thought process with my client, get his or her feedback and questions, and make sure we’re on the same page.

If you are a manager presented a severance agreement, and you are about to attempt negotiations on your own, take pause for a moment.  (Of course, don’t pause beyond any deadline!).  Do you really know the laundry list of potential legal claims to examine? Do you really know what your best potential legal claims and leverage factors are?  Do you really know, if you didn’t reach a reasonable severance, what options (and legal players, forums, risks, etc.) would be in front of you?  Do you really know the potential legal value (damages) of potential legal claims?  It’s okay to admit you don’t know.

We all encounter projects outside our knowledge base to manage.  I myself am incapable of managing a plumbing project (even a minor one), and, knowing that, I find someone to do that, saving myself hundreds of dollars I’d cost myself by botching the job (and creating more expense later).  If a manager botches severance negotiations, he or she could squander thousands of potential dollars, depending on the situation.

So please consider contacting an attorney, whether it’s me (in my admitted self-interest) or another employee rights attorney. If you do, it is exceptionally likely that you will hear evaluations of laws and leverage — maybe good news, maybe bad–  that you had never considered before or that are the polar opposite of something you had believed before. When I have had the opportunity to talk through misunderstandings, the discussion usually ends with everything understood, and me on the same page with the inquiring manager. And in many instances, we have agreed on a great game plan to reach a successful outcome in severance negotiations and/or litigation and in fact accomplished just that.

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