If was let laid off last weekand my employerdrafted a separation agreement that suggests resignation rather than termination, what are the ramifications if I sign it?

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If was let laid off last weekand my employerdrafted a separation agreement that suggests resignation rather than termination, what are the ramifications if I sign it?

If I sign the separation agreement, does that mean I am ineligible to collect unemployment? Can my ex-employer legally do this? Even though they let me go, can the language in the separation agreement indicate a resignation so as to limit their unemployment expenses? I signed a non-compete at the beginning of employment. If I sign the separation agreement, and if that does in fact admit resignation, what kind of impact does that have on the non-compete (vs. if I were fired)? I have roughly $20,000 billed commissions. Are they obligated to pay me these commissions since I’ve earned them? Company is calling these billed commissions my “severance package”. But it’s technically not a severance package if they are obligated to pay these commissions, correct? In addition to these commissions, they are not obligated to pay a severance package, correct? But I should be able to also collect unemployment, correct? Company will not put a final number (payout) on the separation agreement since there could be adjustments to the invoices. We won’t know the final payout until all invoices are paid, both A/R and A/P. I do have in writing through an email string that the total billed commissions owed to me is roughly $20,000 “pending adjustments”. If Company decides to falsely say there was a huge adjustment that negatively impacted my commissions and they only owe me say $12,000 or $15,000, can I do anything about that? How vulnerable am I since they will not put a final number on the separation agreement? Do I have a legal right to have them change the language from “separation” to “termination”? Would that benefit me? The only downfall I can think of is the potential perception from hiring employers, but I can explain during the interview process if that comes up.

Asked on July 13, 2011 under Employment Labor Law, Virginia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

You need to consult with an employment law attorney before doing, saying--and most critically, siging--anything. Here are some of the things to consider:

1) A company can ask you to sign a resignation letter or separation agreement indicating that you resigning. They can't make you sign it, though; the most they can do is fire you if they choose.

2) Companies don't have to pay any severance; what they pay is what they work out with the employee. (That is, unless there was a pre-existing employment contract providing for severance; then it would have to be honored.)

3) If you are deemed to have resigned, you are not eligible for unemployment.

4) If you are deemed to have resigned, you presumably still be subject to the noncompetition agreement, which you would not be if you were terminated.

5) As to your commissions, whether you must be paid them or not depends on what the agreement (even if not written, there's always an "agreement," or the terms and conditions under which you work and earn commissions) for them was. It's common that commissions are earned on sale, subject only to chargebacks for uncollected invoices, and therefore would have to be paid to you anyway; but it's legal for an agreement to be that you must still be with the company when commissions are normally paid to receive them. If there's nothing in writing on the subject, you can look to what was done in the past for other employees for  guidance.

There are a number of issues and alot of money at stake for you; definitely consult with an attorney.

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