FAQ's - Severance Pay
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1. Is severance obligated by law in Colorado?
No. In Colorado, as in most states, unless there is an enforceable agreement between the employer and employee that severance is due at the time of termination, the employee has no right to severance and the employer is not obligated to offer severance. Severance is usually paid at the employer's discretion, and it is not unusual for the employer to require a release of claims to be signed as consideration for the payment.
2. My employer has given me a release agreement that promises severance payments, but says that I have 21 days to consider signing and, even after I sign, I have another 7 days to rescind the agreement. My employer is obligated to keep the offer open for that time period, correct?
Not necessarily. Almost all severance agreements contain the 21 day period for the employee to sign, along with the 7 day rescission period, because a federal law, the Older Workers Benefit Protection Act (OWBPA), contains a provision that invalidates waivers that are signed without the benefit of the waiting period, and employers are advised that the waiting period may extend to civil rights claims brought under other laws as well. But some state courts have permitted an employer to withdraw the offer before that period, if the employee has not delivered the executed release.
3. I have been handed a termination notice and a release of claims in exchange for severance. What do I do now?
You may wish to consult an attorney to determine if you have a potential claim against the employer that you will be waiving when you sign the agreement. Many times a decision by an employer to terminate employment appears unjust or based upon a mistake in judgment, but the decision may or may not give rise to an action for wrongful termination of employment. Moreover, the scope of most release agreements is extremely broad and most releases are upheld by the courts, so once an employee has signed, there is little chance that a lawsuit will arise.
4. If I sign a severance agreement, do I give up my right to sue under the False Claims Act?
In almost all cases, if you sign a release agreement, you give up your right to sue individually, that is, you give up your right to sue for lost back, front pay or other individual damages. However, there is still the possibility that you may still be able to sue on behalf of the government and recover a share of the proceeds from a qui tam suit. Courts generally do not permit an individual to waive the right of the government to sue on its own behalf. In a decision handed down recently, the United States Supreme Court determined that an individual's waiver of claims did not effectively block the Equal Employment Opportunity Commission from bringing suit against the corporate employer for discrimination.
