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John, Employment Lawyer
Category: Employment Law
Satisfied Customers: 5491
Experience:  Exclusively practice labor and employment law.
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I just got a lay off because per the CEO, he needs to reduce

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I just got a lay off because per the CEO, he needs to reduce payroll immediately. They want to complete the paperwork immediately so they are offering me 2 weeks of severance if I give up all my rights to making any further claims or lawsuits against the company.

At my asking, they are also offering to convert my ISO options to NQ options to get this going.

I feel there is something brewing like a pending sale etc. Should I hold off on signing, or would it not matter, since they can hire/fire at will?


Companies often use "reduction in force" as a false pretense to terminate someone. But an investigation may reveal that the job wasn't actually eliminated but given to another employee. Or for example, you are equally qualified to similarly situated, but another employee is selected for a particular job. This is generally how these cases are litigated. If you do not believe you have any basis to show the termination is for a false pretense - i.e., you have no suspicion that the company does not have to reduce payroll, then you really have no leverage in negotiations other than the fact that they may truly need a lower payroll to have their books appear more appealing to an investor, which is your intuition rather than a known fact.

I've negotiated severance packages for clients ranging from small firms to fortune 500 companies, and I can tell you they all have different policies on how willing they are to negotiate a severance package. Some will not negotiate even if you threaten to sue them...others are always willing's just impossible to tell. But there's no law or legal requirement for them to offer X amount of severance for year(s) of service. Two weeks of severance in my experience is a fairly low severance offer, but I have no idea of the value of the stock .

One option you may consider is retaining a local attorney to draft a demand letter for more severance for yourself. I often do this for clients, and what I try to do is point out possible liability they have in the termination and in exchange for releasing that claim demand more severance. Other than this my thoughts on this are that you have a choice of options - 1) take the severance package, you'd be giving up any right to sue but you at least get the 2 weeks pay and benefits, 2) try to push them up on your own - on the theory that they simply want you off the books as soon as possible (I'd suggest you at least ask for 2- 3 months severance)...but you do risk losing the original offer of severance.

I believe this answers your question. However, if you need clarification or have follow-up questions regarding this matter, I will be happy to continue our conversation – simply reply to this answer. If you are otherwise satisfied with my response, please leave a positive rating as it is the only way I am able to get credit for my answers. Thank you, XXXXX XXXXX wish you all the best with this matter.


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Customer: replied 3 years ago.

thanks for you reply.

This is a small company ( ceo runs everything). I had asked for 8 weeks and they came back with the same - no change.


I just spoke to the CFO again and asked him to reconsider, so they could get me off their back. It is clear, they are doing this to make the books look good.


thanks for you advice.