Oregon is an at-will employment state. In short, absent an employment contract, employers can generally fire or lay off employees without any advance notice for any lawful reason, or even for no reason at all. 

Employment Agreements

An employment contract often gives an employee greater rights than the law provides and can give both the employee and the employer more certainty about the terms of employment. An employment contract is a legally binding agreement between an employee and an employer that contains terms and conditions of the employment relationship. The contract establishes both parties’ rights and obligations and can often serve as a reference point for resolving disputes or conflicts that may arise during the course of employment.

Employment contracts can take many forms, and run the range of extensive legal documents written in complex legalese to being a simple letter. Oral promises can also sometimes be enforceable contracts, if certain conditions are met.

Some key terms often included in an employment agreement are:

1. Job details: Position, job title, duties and responsibilities, etc.

2. Compensation: Wages, salary, benefits, and any other forms of compensation for the payment. This term can also include information pertaining to bonuses, commissions, sick pay, paid time off, health insurance, retirement plans, etc.

3. Work schedule: Working hours, days of the week, etc. This term may also include provisions for breaks, rest periods, and holiday pay.

4. Duration and termination: Start date of employment and whether the employment agreement is for a fixed term of employment or an indefinite duration. This term also often explains the circumstances pertaining to termination, such as notice requirements or severance compensation.

5. Confidentiality: Many employment contracts include terms to protect the employer's confidential and proprietary information, such as trade secrets.

6. Non-compete: Restrictions on the employee from working for competitors or starting a competing business for a certain period of time after the termination of employment.

7. Dispute resolution: The process for resolving disputes between the employer and the employee, such as through mandatory mediation or arbitration, instead of going to court.

Also, in some circumstances, an employee manual or handbook can even be the basis of an enforceable contract. Whatever form a contract may take, individuals deserve to be treated in accordance with their contract. 

Severance Agreements

A severance agreement, also sometimes known as a separation agreement or termination agreement, is a contract between an employer and an employee that governs the terms of employment separation. Severance agreements are often used when an employee is laid off, terminated, or voluntarily leaves the company under certain circumstances.

Severance agreements serve many purposes. Severance agreements often provide financial compensation or benefits to employees beyond what the employees are entitled to under federal and Oregon law or their regular employment agreement. These agreements typically entitle the employee to various benefits and pay in exchange for giving up their right to sue for legal violations, such as harassment, discrimination, or retaliation. While there are employers who offer very fair severance agreement terms, many overstep and infringe on workers’ rights.

Workers should carefully evaluate these agreements with the help of an experienced severance agreement lawyer. Alina M. Salo is an experienced employment lawyer who has counseled and represented both employees and employers in litigation.

Common Terms in Severance Agreements

Severance agreements typically contain terms that serve to protect the employer’s interests, such as confidentiality and non-disclosure clauses. Confidentiality and non-disclosure clauses often limit the employee from disclosing and discussing certain information, such as the reason for the termination. Though, sometimes those clauses are more narrowly tailored to only limit the employee’s ability to disclose confidential business and proprietary information of the company. 

Non-disparagement clauses are also often found in severance agreements. These clauses often limit an employee’s ability to make negative comments about an employer, such as in blogs and social media posts. 

Employers also often include a clause limiting the worker’s ability to re-apply for a future position with the company. These clauses are often called, “no re-hire” clauses, and serve as an employee’s promise to not seek re-employment at the company, which can often include any subsidiaries of the company. 

Confidentiality, non-disclosure, non-disparagement, and no-rehire clauses, depending on the circumstances and how they are worded can infringe upon an employee’s rights under federal and Oregon law. Oregon law now restricts employers from pressuring an employee to sign severance agreements with those clauses if the employee has made various reports, such as complaining about sexual harassment. 

In nearly all severance agreements, the employee is being asked to agree to a “general release” of their legal claims. Typically, by agreeing to a general release term, the employee essentially waives their rights to assert any claims against the employer, which generally includes employment claims the employee does not even know about. The general release is often the employer’s primary motivation for offering the severance agreement. 

Often, the more liability a company faces, the more severance pay the company will offer. Though in many situations, the amount of severance pay being offered in exchange for the general release is not enough for the loss of the employee’s ability to sue for damages. For example, if a pregnant worker is terminated because of her pregnancy, it’s possible the employee may have a viable discrimination claim under federal and state law. Employees who bring pregnancy discrimination claims may be entitled to recover economic damages, such as lost wages, and damages for their emotional distress, as well as attorney fees and costs. When considering signing a severance agreement, it is highly suggested to consult with an employment lawyer to determine if there are potential employment claims so the employee can make an informed decision on what the employee is giving up.

Many employers pressure an employee to quickly sign severance agreements. However, federal law requires employees aged 40 or older be allowed 21 days to consider signing a severance agreement and 7 days to revoke the agreement after signing. 

Some severance agreements provide for extended health insurance benefits. While employers are already required to comply with the Consolidated Omnibus Budget Reconciliation Act of 1995 (“COBRA”) which entitle terminated employees to continue health insurance coverage under the company’s plan for up to 18 months, some employers offer to pay the employee’s COBRA payments for a few months or pay the employee a lump sum to cover some of the payments. 

Many employers include clauses, sometimes called a “neutral employment reference clause,” explaining how the company will respond to reference checks for the worker in a neutral manner. Neutral employment reference clauses generally limit an employer from disclosing very limited information to prospective employers. 

A severance package may not be the deal you think it is. Before signing, it is highly recommended you have it reviewed by a severance agreement attorney. Alina M. Salo has extensive experience with severance agreements and can help you understand what you’re being asked to give up, as well as negotiate more favorable terms for you.

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If you need assistance with an employment agreement or a severance agreement, please contact Alina M. Salo at alina@salolawoffice.com.