Raleigh, Durham, and Charlotte are among the top tech hubs in the country. Recently, major companies in Research Triangle Park announced layoffs, job cuts, and workforce reductions, all part of a national downturn trend in tech.
The widespread use of severance agreements in the tech industry may blunt the initial effects of job loss. Severance agreements include not only financial compensation after the layoff but health insurance and other benefits.
Remember that you do not have to accept your employer’s first severance package offer after a layoff. Before signing anything, consult a North Carolina employment law attorney specializing in severance agreements in tech.
Severance Agreements in Tech
While severance agreements are not required by federal law and many industries do not offer them as a matter of course, that is not generally true in tech. Many large tech companies provide generous benefits for laid-off employees, or at least they announce that they do.
After laying off thousands of people in late 2022, approximately 13 percent of the total workforce, Meta CEO Mark Zuckerberg said those employees would receive 16 weeks of severance along with two additional weeks for each year of service. Along with health insurance coverage for a specific period, restricted share units would become vested.
While that is a comfortable cushion, some former Meta employees claim they received just eight weeks of severance and their COBRA health insurance coverage was limited to three months.
At Twitter, owner Elon Musk famously said that laid-off employees would receive three months’ severance pay, but some employees allege they received just one month’s severance.
Google, which laid off 12,000 people, or 6 percent of its workforce, is paying at least 16 weeks’ salary in severance pay, and two weeks for every additional year at the company. Ex-employees will also receive all unused vacation time, health insurance for six months, and payment for 2022 bonuses.
Problems Employees Face With Severance Agreements
Mass layoffs in tech mean that even the most talented employees may have challenges finding new jobs in an extremely competitive job market. What might have traditionally been a reasonable amount of severance pay in tech in normal times may not prove sufficient in the current environment, when it may take far longer than usual to find a new position.
As is standard with layoffs in other industries, severance agreements in tech usually include the employee releasing the employer from any liability. That includes the filing of wrongful termination lawsuits. For this reason, it is recommended that employees consult with an employment law attorney first before signing a severance agreement, to ensure their legal rights are fully protected.
Employment Rights in a Tech Layoff
North Carolina and South Carolina are at-will states for employment, so employers can lay off workers for virtually any reason. However, if you are in a protected class, you may have a wrongful discrimination case. Protected classes involve:
- Race
- Gender
- Age
- Religion
Mass layoffs make protected class arguments more difficult. A North Carolina wrongful termination lawyer at The Noble Law will evaluate your situation and determine whether pursuing a wrongful termination lawsuit is feasible.
How to Prepare for a Possible Layoff
Keep in mind that layoffs are common in the tech industry. Maybe your job and your company have not yet been affected, but the rumor mill is buzzing that layoffs are coming.
Prepare for a possible layoff by examining your employment contract. Familiarize yourself with what you are and are not entitled to according to this document. If the contract includes a non-compete or non-disclosure clause, it’s wise to seek legal advice as there is the real possibility that such clauses can impede your job search. In some circumstances, you may be better off if you don’t accept your severance package but have the freedom to work for competitors.
Think about how you might negotiate a severance agreement if you are laid off. Forewarned is forearmed. Perhaps your company will not give you additional financial compensation, but it might extend the length of time you and your family have health insurance coverage.
Educational reimbursements to help you upgrade your skills as you seek new career opportunities may also be on the table. Employers want to get these negotiations over as quickly as possible, so they may acquiesce to reasonable demands.
What to Look for in a Severance Agreement From a Tech Company
Your severance agreement from a tech company should include the amount of financial compensation you can expect, as well as whether it is paid in installments or a lump sum.
The agreement must state your effective date of termination, as that can affect certain benefits. Eligibility for all benefits, such as health insurance or unemployment compensation, should be spelled out.
Identify every aspect of the severance agreement and make sure no key benefits are omitted. Remember that severance agreements are legally binding contracts, so the minute your real or digital signature is on the bottom line, you are committed to the agreement.
Go over the document carefully to make sure there are no errors. If there is anything you do not understand or wording that appears ambiguous, consult an employment attorney.
Contact an Employment Lawyer at The Noble Law
If you are dealing with an issue with your severance agreement after a tech layoff, you need the services of an experienced North Carolina employment attorney at The Noble Law. Contact us today to schedule a confidential consultation. After reviewing your severance agreement, we will advise you of your options.