In the state of Texas, according to applicable Texas Payday Law rules, an employer is not obligated to offer severance pay and other severance-related benefits (nor is the employee obligated to accept severance) unless such obligation has been contracted for in the original employment agreement. Still, despite the fact that Texas employers are not generally compelled to offer severance pay, there are a number of legitimate reasons to offer severance packages.
If you are an employee who has been offered a severance package, or an employer who is interested in making a severance offer, it’s important that you consult with a qualified Texas employment attorney who has experience negotiating severance agreements. Here at Berg Plummer Johnson & Raval, LLP, our Houston employment attorneys have helped both employers and employees successfully navigate severance agreements for decades.
Severance Agreement Provisions
Generally speaking, employers offer severance as consideration for the employee’s agreement to refrain from certain activities post-employment. In a severance agreement, the employer may request that the employee:
Release All Claims Against the Employer
Severance is often offered as a means through which the employer can minimize the risk of potential litigation (for discrimination, harassment, and other workplace claims that the former employee might be willing to pursue). In many cases, an employee may be much more willing to litigate a claim after they no longer work with the employer. As such, an employer — even if they do not believe that they are liable — may offer severance, and in return, the employee agrees to release any and all claims they might have against the employer.
Severance in such circumstances is often on the low-end, as the employer may not believe that the employee has a strong claim. Some releases may be broadly written to waive all claims against the employer and insurance company responsible for short-term and long-term disability benefits. It’s therefore critical that the involved parties separately consult with qualified severance attorneys who can accurately assess the likelihood of success in the event litigation.
Agree to a Non-Compete Clause
Sometimes, a severance agreement may include a non-compete clause. Non-compete agreements are enforceable in Texas so long as they meet certain requirements (i.e., if they are ancillary to another agreement, such as a severance agreement, and if the scope and length of the restriction is reasonably limited).
Avoid Communicating Confidential Information
An employer may use an offer of severance as consideration for confidentiality. A confidentiality restriction may not only affect an employee’s ability to interfere with the business of their former employer, but may also influence their ability to litigate a claim against their former employer.
The attorneys here at Berg Plummer Johnson & Raval, LLP, include AV-rated and 10 year-plus Super Lawyers who have been recognized as some of the best in America. Our Houston employment attorneys have several decades of experience litigating various employment law claims, including those involving severance agreements.
The firm recognizes that our clients each have unique circumstances, needs, and budgets, and to that end, we offer a range of fee arrangements that are customized to suit each client and the facts of their case. We work closely with clients to develop a fee arrangement that will help them obtain favorable results while keeping the budget reasonable.