What Every Employee Should Know About Severance Agreements

Jan 02, 2024
By admin
What Every Employee Should Know About Severance Agreements

Ohio, like many other states, operates employment as “at-will.” This means that in most cases, an employer or an employee can end employment at any time for any reason, so long as the reason is not illegal or unlawful. Some employees may not have any kind of employment agreement in place, including a severance agreement.

However, when considering that employment is at-will and either party can decide to terminate employment, it is important for employee’s based in Ohio to have a deeper understanding more about the details of Ohio severance agreement requirements and benefits.

Employers are not legally obligated to provide severance agreements to employees upon termination. However, many choose to do so voluntarily. The absence of a legal mandate can lead to uncertainty about the contents of such agreements. Here, we delve into the specifics of severance agreements and pertinent Ohio statutes that might affect you.

Ohio Statutes on Severance Agreements

It’s vital to understand that Ohio’s statutes on severance agreements do not mandate employers to furnish a severance package or pay. The same holds true at the federal level, as per the Fair Labor Standards Act (FLSA). While the FLSA ensures several protections and benefits for eligible employees, it doesn’t necessitate that employers offer outgoing employees severance agreements.

If you receive a severance offer, it’s a discretionary gesture from your employer. Such agreements might be part of the initial employment contract, or they could be extended upon termination.

We strongly advise seeking a legal consultation from a severance negotiation attorney before finalizing any severance agreement. The legal team at The Friedmann Firm have in-depth knowledge of both state and federal regulations concerning severance agreements.

Ohio Severance Agreement Requirements

While there is no formal obligation for employers to offer severance agreements, it’s worth noting the commonly seen clauses in such contractual agreements. These provisions encompass:

  • Severance pay: Typically, the amount provided is influenced by the position held and the duration of employment. The method of disbursement, either as a lump sum or spread out over time, is usually outlined within the agreement.
  • Health insurance: Continuation of health insurance coverage is often provided under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
  • Job-search assistance: Some agreements offer support in finding a new job.
  • Noncompete clause: This prevents the departing employee from joining or partnering with competing businesses.

There might be additional provisions such as liability releases that protect employers from potential lawsuits or complaints by the departing employee.  In essence, this means that means that an employee will not be able to file a lawsuit against that employer. Given that these clauses involve waiving certain rights, navigating them can be complex. This is why speaking to a severance agreement lawyer can be beneficial before signing a severance agreement, especially as the laws around severance agreements can be complicated.

For example, one recent change to federal laws surrounding severance agreements came in January 2023 from the National Labor Relations Board. They returned to a longstanding precedent that “employers may not offer employees severance agreements that require employees to broadly waive their rights under the National Labor Relations Act.” This type of recent change can impact a severance agreement that you may be asked to consider if you have been terminated.

How an Ohio Severance Agreement Affects Unemployment Benefits

Generally, signing a severance agreement doesn’t negate your eligibility for unemployment benefits. However, it’s pivotal to note that in certain situations, severance pay might be deemed deductible income.

Severance pay is subject to the same taxation as your normal income would be. So if your employer allocates the severance pay to a specific week or period of time following your termination, the severance pay may be deducted from your unemployment benefits.

Contact a Trusted Employment Lawyer Today

Understanding Ohio severance agreements, especially the nuances of their provisions, can be daunting. Their implications on severance pay, future employment prospects, and unemployment benefits further complicate matters. Whether you are about to sign a severance agreement or merely want to consider negotiations, seeking outside assistance is your right.

The Friedmann Firm team is ready to help guide you through this process. Our Columbus employment lawyers handle all manner of employment and labor law cases, including those involving severance agreements. We aim to provide our clients with clarity and knowledge surrounding their employment rights.

You can call us at 614-610-9755 or connect with us online today to schedule a free and confidential consultation.