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Unmasking the Hidden Agenda: How to Recognize When a Severance Offer is Really a Cover-Up

Sep 15, 2023 | Written by: Sharon M. Flynn, Esq. |

A severance package, or severance agreement, is a compensation and benefits offer that an employer provides to an employee who is leaving the company due to reasons such as layoffs, downsizing or termination.  It is important to keep in mind that a severance package is typically drafted by the employer, so the terms and clauses contained within same will likely favor the employer.  

Severance packages usually include a waiver stating that the employee cannot file a wrongful termination suit against the employer, and almost always include other terms and conditions that affect the employee’s rights.  Severance packages can vary significantly, and while many are fair and generous, it is crucial to recognize when a severance offer might be a cover-up for something less benevolent. In this blog, we'll discuss how to spot the signs that your severance offer may be concealing a hidden agenda.

One of the first indicators that your severance offer might be a cover-up is the timing. If your employer presents you with a severance package out of the blue, especially when there's been no prior discussion of layoffs or downsizing, it's worth examining the offer more closely. This abruptness could suggest that your employer is trying to avoid potential legal issues or bad publicity.

Another significant red flag is when your employer urges you to sign the severance agreement quickly, often with the promise of a higher payout if you do so. While some companies genuinely want to expedite the process for your benefit, others may be pushing you to sign before you have a chance to seek legal counsel or fully understand the terms. Be cautious if you feel rushed.

Another telltale sign of a cover-up is the inclusion of non-disclosure agreements (NDA) in the severance package. While NDAs are standard in many cases, they can also be used to prevent employees from speaking out about unethical or illegal behavior within the company. If you're asked to sign an NDA, consider seeking legal advice to ensure your rights are protected.

Further, if the severance offer is vague or lacks transparency about the reasons for your termination, it's a cause for concern. If you are offered a legitimate severance package, your employer should clearly communicate the reason for your termination, either verbally or in writing.  A lack of transparency may indicate an attempt to hide the real motives behind your departure.  For example, if you have been harassed by a superior or coworker — whether you have filed an official complaint or not — and are being let go with a generous benefits package, this could indicate that your employer is worried about a lawsuit.

It is also important that you evaluate the severance package carefully. Does it seem fair and in line with industry standards? If you find that the compensation being offered is significantly less than what you might reasonably expect, it's essential to question why.  A sub-par offer may indicate an attempt to get you to leave quickly without due compensation.

It is always wise to research your company's history regarding layoffs and severance offers, to determine if there have been previous cases where employees felt they were offered a severance package as a cover-up for other issues.  Learning from others' experiences can provide valuable insights into your situation.  Further, when in doubt, consult with an employment attorney.  An attorney can review the severance offer, assess its fairness, and advise you on the best course of action.  He or she can help you navigate the complex terrain of employment law and ensure your rights are protected.

While severance offers can be a lifeline during unexpected career transitions, it's crucial to remain vigilant and recognize when they might be concealing a hidden agenda.  By being aware of the signs discussed in this blog and seeking legal guidance when necessary, you can ensure that you make informed decisions about your employment future. Remember, your rights and financial well-being deserve protection, even in the face of a seemingly generous severance offer.

Sharon M. Flynn


Sharon M. Flynn, Esq. is a partner with Gebhardt & Kiefer, P.C., and practices primarily in the areas of general litigation, employment law, and insurance defense.

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Any statements made herein are solely for informational purposes only and should not be relied upon or construed as legal advice.