Understanding Severance Agreements in Utah: A Guide to Protecting Your Rights

A severance agreement is a legal contract between an employer and an employee that outlines the terms of the employee’s separation from the company. In Utah, severance agreements are common in many industries, especially when an employee is being terminated or laid off. In this blog, we will provide an overview of severance agreements in Utah to help you better understand your rights and obligations.

What is a Severance Agreement? A severance agreement is a contract between an employer and an employee that outlines the terms of the employee’s separation from the company. It typically includes a severance package, which may include severance pay, benefits, and other compensation. The severance agreement may also include restrictions on the employee’s ability to compete with the company, to disclose confidential information, or to solicit employees or customers.
Who is Eligible for a Severance Agreement? Not all employees are eligible for a severance agreement. Typically, severance agreements are offered to employees who are being terminated or laid off, or to employees who are resigning in exchange for a severance package. The eligibility for a severance agreement is usually set forth in the employee handbook or in the employment contract.
What is Included in a Severance Agreement? The terms of a severance agreement will vary depending on the circumstances of each case. Some common terms that are typically included in a severance agreement include:

Severance pay: A lump sum payment to the employee based on their length of service and salary.
Benefits: Continuation of benefits, such as health insurance, for a specified period of time.
Non-compete clause: A restriction on the employee’s ability to compete with the company for a specified period of time.
Confidentiality clause: A restriction on the employee’s ability to disclose confidential information about the company.
Non-solicitation clause: A restriction on the employee’s ability to solicit employees or customers of the company.

Benefits of a Severance Agreement There are several benefits to a severance agreement, including:

Financial stability: A severance package can provide the employee with financial stability during the transition period.
Benefits continuation: The continuation of benefits, such as health insurance, can help ease the financial burden during the transition period.
Protection of confidential information: The confidentiality clause can protect the company’s confidential information and trade secrets.

Risks of a Severance Agreement While there are benefits to a severance agreement, there are also risks that should be considered, including:

Waiving of legal rights: By signing a severance agreement, the employee may be waiving their legal rights, such as the right to sue the company for discrimination or wrongful termination.
Restrictions on future employment: The non-compete clause and non-solicitation clause can restrict the employee’s ability to find future employment.
Financial burden: The severance package may not be enough to support the employee during the transition period.