What Are the Limitations of a Severance Agreement in Ohio?

Severance agreements are complex documents that outline the terms under which an employee will leave a company. These agreements often include financial compensation and other benefits in exchange for the employee agreeing to certain terms and conditions. While employers are not legally required to offer severance packages in Ohio, many choose to do so for a smooth transition and to mitigate potential legal disputes. Understanding what can and cannot be included in a severance agreement is crucial for employees. Consulting with an experienced attorney, such as ours at Marshall Forman & Schlein LLC, can provide the guidance needed to navigate these complexities.

Overview of Severance Agreements

Severance agreements serve as a form of contract between an employer and an employee outlining the terms of their separation from the company. These contracts typically offer financial incentives and other benefits in exchange for the employee agreeing to specific conditions. While these provisions intend to protect the employer, it is equally important to understand the limitations and restrictions imposed by law to ensure fairness and legality.

Understanding Limitations on Severance Agreements

Overly Broad Non-Disparagement Agreements

Non-disparagement clauses are common in severance agreements, aiming to prevent former employees from making negative statements about the employer. However, if these provisions are too broad, they can be deemed unenforceable. Recent legal decisions, particularly from the National Labor Relations Board (NLRB), have significantly impacted the enforceability of non-disparagement clauses.

In a 2023 decision, the NLRB ruled that non-disparagement and confidentiality provisions must not interfere with employees’ rights under the National Labor Relations Act (NLRA). Clauses that broadly prohibit any negative statements about the employer or restrict employees from discussing labor issues, disputes or employment conditions are considered invalid. Therefore, non-disparagement agreements must be narrowly tailored, focusing on prohibiting defamatory statements and protecting trade secrets rather than broadly restricting free speech.

Provisions for Older Workers

Special rules apply when severance agreements involve older workers, particularly those aged 40 and above. The Older Workers Benefit Protection Act (OWBPA) outlines specific requirements to ensure that waivers of age discrimination claims are made knowingly and voluntarily. To comply with the OWBPA, severance agreements for older workers must:

• Be written in clear, understandable language.
• Specifically reference the Age Discrimination in Employment Act (ADEA).
• Advise the employee to consult with an attorney before signing.
• Provide the employee with at least 21 days to consider the agreement.
• Offer a seven-day period after signing to revoke the agreement.
• Exclude rights and claims that may arise after the agreement’s execution.

Employers must also ensure that the waiver is supported by adequate consideration, meaning the employee receives something of value that they are not already entitled to. Adhering to these requirements is essential to ensure the enforceability of severance agreements involving older workers.

The Importance of Legal Review

Signing a severance agreement without consulting an experienced employment lawyer can be a risky move. The terms of these agreements can be complex, and understanding the legal implications requires professional assistance. 

It’s important to note that employers typically offer severance packages to avoid potential lawsuits, so signing such an agreement would essentially mean relinquishing your right to legal recourse. An attorney can review the agreement to determine whether the severance package is fair and help you understand the rights you are waiving. Legal representation is crucial to making an informed decision.

Contact Our Firm to Review Your Severance Package

It is crucial to fully comprehend every term and condition outlined in the severance agreement. Misunderstanding or overlooking critical provisions can lead to future disputes or legal issues. At Marshall Forman & Schlein LLC, we have extensive experience in reviewing and negotiating severance agreements. Our team of seasoned attorneys can provide you with tailored advice and a step-by-step plan to ensure you receive a fair deal. If you have been offered a severance agreement, contact us for a consultation to review the terms and safeguard your rights.