A Guide to Maryland Severance Agreements

 Posted on November 12, 2024 in Employment Law

When an employee leaves a place of employment, the employer may have the employee sign a severance agreement outlining the terms of their termination, including any severance pay and other compensation. In return, an employee will also agree to certain provisions, such as not to compete under certain geographic and time circumstances. An experienced Howard County, MD employment attorney can advise employees and employers on Maryland severance agreement best practices.

Why are Severance Agreements Important?

A severance agreement can provide an employer and an employee with certainty about their future dealings for a long period of time. It can also avoid disputes by outlining the terms of the parties’ agreement about the employee’s termination. By offering severance agreements, employers can also protect their company’s proprietary information as well as their reputation. Some common severance  agreement components include: 

• Compensation: This is the "severance" aspect of the agreement and is the money that the employer will pay the employee in exchange for agreeing to the terms imposing legal obligations on them. This is an absolutely essential element for the agreement to be legally enforceable.

• General Release of Claims: One of an employer’s main reasons for offering a severance agreement will be to obtain a release of claims, which affords the employer peace of mind that the employee is barred from bringing any future legal claims. The law has certain limitations as to what types of claims may be released, although most legal claims can be waived. A well-drafted release of claims will be general as well as specific, and take into account Maryland law.

• COBRA Benefits: The Consolidated Omnibus Budget Reconciliation Act of 1985 is a federal law that provides employees the opportunity to continue receiving healthcare through their old workplace’s healthcare plan.

• Non-Disparagement: A severance agreement may contain a section that forbids the prior employee from speaking ill of the company, particularly in public settings.

• Cooperation: In some cases, an employer will want to ensure that an employee will cooperate with the company in the event certain issues come up. Some employees with specialized knowledge of the company may be asked to sign such a provision.

• Confidentiality: Whether or not the employee previously signed a confidentiality agreement, a severance agreement is likely to include terms that obligate the employee to keep certain information confidential. In some cases, the confidentiality provision may extend to the severance agreement itself.

• Termination Details: A severance agreement should include details about the terms of the employee’s termination.

Contact a Howard County, MD Severance Agreement Attorney

If you are an employee who has been offered a severance agreement, it is important to take your time and review the terms to ensure you are getting the best possible severance package. Likewise, as an employer drafting a severance agreement, you want to make sure that it protects the interests of your business and that there are no gaps. An Ellicott City, MD Severance Agreement attorney at Freedman Law, LLC can advise you on the best course of action if you are considering signing a severance agreement. Attorney Freeman is supportive and aggressive in protecting his client’s rights. Call 410-290-6232 to review your severance agreement.