Hi Reader,

We've seen many layoffs at top companies across our circles recently, and wanted to use today's newsletter to discuss negotiating severance agreements.

One caveat upfront: severance is harder to negotiate than a job offer. When it's a new job offer, both sides want the deal done. In a severance situation, the company holds more control and has less incentive to move.

But this doesn't mean that it's not worth trying to negotiate. If you're being laid off, at this point you don't have much to lose anyway, so why not try?

Below are some things to keep in mind, but first:

PSA: Free Q&A with Employment Lawyer, Alexander Daniels (Tomorrow, Tue May 26)

We're offering a free Q&A session tomorrow at 12pm PT / 3pm ET on how to effectively navigate the layoff process and negotiate severance agreements. We'll also be joined by our friend and employment lawyer, Alexander Daniels, to help us answer all your questions. RSVP here and/or send this link to anyone you know who may benefit: https://luma.com/2plqj1ur​

An example of what's negotiable in severance

A quick case study from a past client we worked with (note: for privacy reasons, we changed some details about the client and his situation, but the following example still illustrates the broader takeaways on negotiating severance):

• He lived in and worked remotely from a West Coast state that has a state law making non-competes unenforceable against employees who are laid off or terminated without cause.
• Our client was laid off through a reduction in force (RIF) from a large company headquartered in the East Coast (i.e. he was terminated without cause).

His severance agreement included anyway a reference to a non-compete clause he'd signed when he started the role: he's prohibited for 12 months from working for a competitor in any capacity involving the same type of work. It’s reasonable to assume this was boilerplate language included in all offers regardless of the states that employees live in.

So these were the cards our client had in hand:

• First, the non-compete was unenforceable by our client's state law. He could use this to his advantage.
• Second, his original employment agreement said that if the company decides to enforce the non-compete clause against him, they would pay him 50% of his base salary for the 12 months he's restricted by the non-compete (this is often referred to as "garden leave"). The garden leave equates to 26 weeks of pay, but his severance only offered 17 weeks of pay. So enforcing the non-compete clause against him would cost the company more than the severance pay they were offering.

Though our client was hoping to apply to new companies in the same industry as his outgoing employer (which they could interpret as violating the non-compete), he was planning to take some time off before applying to jobs and didn't feel that a non-compete scenario would significantly apply in his situation. And at end of day, he was protected by his state law anyway.

So, we helped our client ask for additional severance pay and extending COBRA health care coverage in exchange for keeping the non-compete clause in his severance agreement. With our guidance, our client politely pointed out to the company that the state law made a non-compete unenforceable, but that he'd be happy to abide by the clause in exchange for added severance pay and COBRA extension coverages.

We also gently noted to the company that enforcing the non-compete would result in them owing our client 9 additional weeks of pay than the pay they offered in the original severance agreement, so why not agree on avoiding that scenario altogether in exchange for increasing his severance pay and extending health care upfront.

This was a great example of a win-win solution even in a layoff situation: we found leverage via the state law that protected our client, and he used that to get more pay and health insurance in exchange for maintaining the non-compete, which was what the company cared more about and was something that our client was happy to agree to.

Your leverage points when being laid off

Severance packages aren't one-size-fits-all. They depend on your role, seniority, and the company's situation.

In a mass layoff, leverage is generally low. It's still worth exploring getting a better deal, especially if you've been at the company for a long time or have great relationships with your leadership who could potentially backchannel and advocate on your behalf.

In a one-off termination, especially if you're part of a protected class and believe discrimination may have been a factor, it's worth consulting a qualified attorney before signing anything.

As we've said before: the two times you have the most leverage are when you're getting hired and when you're leaving. A layoff doesn't cancel out your leverage, but what you can negotiate largely depends on the specifics of your situation.

Whatever the circumstances, don't sign anything you don't fully understand. If a clause seems overly broad or unclear, ask questions before signing. Look into local laws that might apply to your situation. And if something feels off, it's always worth a second opinion. If you'd like to chat through your situation one-on-one with us, we have several spots for free consultations. Grab time with us here (Calendly link), or reach us directly by replying back to this newsletter.

Warmly,

Gerta & Alex​
​Founders, YourNegotiations.com

P.S. Know someone interested in negotiations?

Send them our way and we’ll thank you with $250 for each person who becomes a client. No cap.

A quick intro or an email to alex@yournegotiations.com works.