You are a CEO, senior vice president or managing director in finance, media, industry or academia.
You have been asked to meet with HR with your immediate supervisor in attendance and told that the company is “going in a different direction.” You are given a sheaf of papers and you may be told that you should contact an executive employment attorney. HR reminds you that the papers you have been given contain important deadlines which must be followed. You are then escorted to your office to retrieve your personal effects before being walked out of the building. You no longer have access to your firm email account. You may or may not have been given a short opportunity to say goodbye to the employees who report to you. As you carry out your belongings in a large cardboard box, you realize that for the first time since you were 21, you are no longer gainfully employed.
If, like most of the clients we represent in our executive employment law practice, your career has followed a fairly steady trajectory upwards since your first job out of college or business school, you are unlikely to be prepared for being laid off, your employment terminated (in these pandemic days, being laid off — as opposed to furloughed — is the same as being fired).
The feelings of hurt, loss and outrage are intense. For many executives, it is as bad as a death in the family. The shock is even greater if you have been employed by only one or two employers over a substantial career.
What do you do now?
Of course, the HR professionals have a “playbook,” developed over several decades, for terminating even senior employees: Don’t tell them until it is time to show them (literally) to the door. Don’t engage in any substantive discussion of why the executive was terminated. Cut off their email, and, of course, have the IT department search it immediately to see if the executive has downloaded any confidential information of the employer to his or her personal devices.
By contrast, even sophisticated executives are usually confused about how to respond to being fired. For many of them, this may be the first time in their lives that they have confronted what seems like devastating adversity. They have no playbook at all.
So here is what to do.
After assuring yourself that you will get through this situation and be fine — and you will — immediately contact an attorney who is knowledgeable and experienced in executive employment matters and the law which governs these matters.
Most importantly, although we recognize that this experience is traumatic for most high achieving executives, don’t let a week or even several days go by before you reach out to an executive employment attorney. Time is not on your side and there are many things to be considered before you can figure out what you should do.
The packet of papers which HR gave you ordinarily contains an offer of some amount of severance pay in exchange for a comprehensive release of any claims you may have against the employer (and if it does not contain any severance offer at all, that, too, is important).
If you are over 40 years of age, Federal law requires that in order for the release to be binding and effective (which is what the employer wants), you must be given at least 21 days to consider the offer and consult with a lawyer. Then, even if you sign the agreement within the prescribed period, the document does not become effective until seven days later. This, too, is dictated by Federal law. During that seven-day period, you are allowed to have “buyer’s remorse” and to revoke your agreement by doing so in writing. How to do so is set forth in the document and those directions must be followed precisely.
Accordingly, getting this document, as well as the other documents you have been given by HR, immediately into the hands of an executive employment lawyer is the beginning of what you must do to protect yourself and your family.
Frequently Asked Questions
1. Q: “I am too upset right now. Why do I need a lawyer, who will cost me money when I am already lying awake at night worrying about having money when my paycheck stops?”
A: This one is easy. You need a lawyer because you are upset and may make an irrational decision, such as giving up all the rights you have in return for the employer’s first offer without making the proper analysis of your rights, let alone engaging in any negotiation. It is precisely because you are upset that you should not sign such an important agreement without taking counsel.
2. Q: “In the document I have been given, which contains the proposed separation agreement, are there obligations involved other than the exchange of money for a release?”
A: There certainly are. Each employer’s termination document is different, but customarily these documents contain important non-monetary obligations regarding continuing confidentiality, continuing cooperation with the company in litigation or otherwise, non-disparagement of the company, and maybe even restrictions on competition. These obligations need to be analyzed by an experienced executive employment law attorney who can discuss them with you and fully educate you as to their meaning and implications. An obligation which may be meaningless to one executive may be crucial to another executive. Something that looks like it has nothing to do with money may wind up being very costly. We have seen hundreds, probably thousands of these documents, and each one is different. Everything depends on the particular facts of your situation and the particular documents involved. Nothing is “cookie cutter.”
3. Q: “What if I ignore the time periods set forth in my proposed separation and severance agreement?”
A: You do so at your peril. The employer (and its HR department) does not want this matter to linger and remain open indefinitely. Our experience, however, is that if your employer is contacted by us on your behalf well before the expiration of the 21 days (or whatever other time period is set forth in the particular proposed agreement), by way of a letter or call from us to the employer’s HR department, and we are then put in touch with company counsel to indicate that you are legally represented and prepared to have us discuss the agreement on your behalf, we are usually able to get additional time for you to think through and respond to the offer. And, the more time we have, the more likely it is that we can negotiate meaningful changes to the proposed agreement.