New Limits For Employee Severance Agreements

Severance agreements benefit employers and employees in reducing the prevalence and cost of litigation arising out of an employee's separation. These agreements have traditionally limited an employer's risk when terminating an employee by providing some legal consideration (like extra money) to the former employee in exchange for avoiding legal disputes arising out of their employment, including the termination. Severance agreements also routinely include "confidentiality" and "non-disparagement" provisions—clauses that prohibit an employee from publicly disparaging the employer and sharing the terms of the agreement. Naturally, employers do not want to pay money they don't have to only for the former employee to bad-mouth them and tell remaining employees what they received.