The COVID-19 emergency and resulting shutdown are resulting in job losses in Michigan and nationwide. No industry is exempt. Retail, travel, real estate, and even healthcare are just a few of the sectors in which workers are taking a hit.
One consolation is that some employers are offering severance packages. This means that employees are being offered financial compensation and in some cases benefits upon being laid off. If you’ve been offered a severance, you need to understand a few key concepts right away:
A successful severance negotiation can maximize your payout and limit potentially burdensome restrictions that your employer may wish to impose on you as you leave your job.
Terms of a Separation Agreement
If your employer offers you a severance package, this is probably not out of the goodness of its heart. Your employer expects something in return. You have a limited amount of time to review and respond to a severance agreement offer. Use that time to get clarity on any requirements and to fully understand what you are agreeing to. It may make sense for you to consult an attorney.
Here are some items you may run across in a separation agreement:
Your Employer May Want a Release of Liability
A severance package typically includes a release of liability. Essentially, you are waiving your right to sue the company in the future.
Why would an employer want you to sign a release? In some cases, the employer may be aware of potential legal liability. Perhaps you were the subject of discrimination or harassment, and the company wants to prevent you from pursuing your claims. In other cases, the employer may simply want to insure against a future lawsuit based on some unknown or undisclosed legal claim.
Either way, you are giving up something potentially very significant when you agree to release liability. You should weigh this very carefully against whatever compensation the company may be offering you in return.
In particular, you will want to understand exactly what you are releasing the employer from. The terms of the release may be broad or narrow -- i.e., all liability or only some. Moreover, you should consider how the release might make you vulnerable. For example, if your employer defames you or releases false information about you in a reference, would you have any legal standing to sue them? Finally, remember that signing a release could preclude you from joining any future lawsuits brought against the company by others.
This does not mean you should not sign the release. In some cases, it may make sense to do so. But an employee should not sign the release unless he or she understands what is being released and is satisfied with what the employer is offering in return.
Your Employer May Want to Limit Your Career Options
Severance agreements sometimes also include various career-limiting provisions. Employers include these to improve their own competitive position -- but don't forget that these may come at a cost to your career options. Examples include:
Again, you will want to weigh the agreement carefully before signing it. While accepting severance pay may be appealing -- especially in these challenging times -- ask yourself whether you can live with the restrictions. It is vital for you to understand is how severely the restrictions impact your ability to get a new job and what limitations they impose on your career path.
Points to Keep in Mind During Severance Negotiations
A severance package is not a parting gift. It is an agreement that should -- if negotiated properly -- benefit both parties. Arm yourself with an understanding of what you are giving up and what you are getting in return. Ask yourself:
Remember, a separation agreement is just that -- an agreement, a contract. It will be legal enforceable against you. While you should be mindful of any deadlines, resist the temptation to rush. And do not be afraid to demand your employer's attention to discuss and negotiate any provisions that concern you.
Your payout will depend on a variety of factors including your tenure with the company, the company's financial situation, and the strength of your bargaining position. As you negotiate, keep in mind that employers that have downsized due to COVID-19 might have limited options to increase severance pay. But that does not mean you should not ask. Even when more money is not on the table, you might be able to negotiate an increase in benefits or narrow the scope of any non-compete, non-solicit, or non-disparagement provisions.
Hire a Lawyer to Negotiate Your Severance
In the end, it's your choice whether to accept the severance package your employer offers. You want to leave your job well, but you also want to protect yourself. As you consider your options, don't go it alone. A knowledgeable attorney can help you understand the implications of the agreement terms. Equally important, an attorney skilled in negotiation may help you get a better deal.
Businesses across the state have been hurt by the coronavirus pandemic. Many are struggling to keep the lights on, while others are closed forever. The good news is that help is available.
You may have heard about the Michigan SBA loans offered as part of the federal government’s Paycheck Protection Program. A Michigan small business loan is a start but it may not be enough. COVID-19 Michigan business resources are also available through a number of privately funded grants.
Here are eight private grants that may help your Michigan business.
Facebook has announced that it will give a total of $100 million in cash grants and ad credits to businesses impacted by COVID-19. You must have been in business for more than a year, be located near an active Facebook business location (Detroit is one) and have between 2 and 50 employees. There is no currently posted deadline.
You can find more information about the Facebook grants here.
Salesforce is supporting businesses with individual small business grants in the amount of $10,000. The company has committed to giving $5M.
Applications have not yet opened but you can go here and sign up to be notified when it begins to accept applicants.
The Quicken Loans Community Fund and Gilbert Family Foundation are providing $1.2 million to the city of Detroit. The investment will include donations to the community as well as $450,000 that will be offered as flexible investments for small businesses and existing grant partners. These grant partners may be a source of funding for your business.
You can learn more about the Quicken Loans flexible investment program here.
Google Ads Credits
Google is offering ad credits for small and medium-sized businesses to offset the burden of COVID-19 financial issues. Google is giving $340 million in ad credits that can be used for the rest of the calendar year. You may be eligible if you have advertised directly with Google and had an active spend for at least 10 out of the 12 months of 2019. Google will begin distributing the ad credit in phases in late May.
Go here to learn more about Google’s free ad credit program.
GoFundMe Small Business Relief Fund Initiative
GoFundMe is partnering with Yelp!, GoDaddy, and Bill.com to support small businesses. These companies are facilitating the donation of money in a Small Business Relief Fund. These donations will be matched up to $500 for qualifying businesses. To qualify, you must raise $500 on GoFundMe. They are still building partnerships and have not set a deployment date for this.
Click here for the information request form from GoFundMe.
Sara Blakely of Spanx
Female entrepreneurs can benefit from a unique offering of $5 million from Sara Blakely, the founder of Spanx, to help small businesses. Blakely intends to give $5,000 to 1,000 small businesses that are owned by women. She is distributing this money through GlobalGiving.
Applications are not yet open for this. Go here to sign up to be notified when applications open.
Greater Grand Rapids Chamber Foundation
The Rapid Response Fund is specifically for residents of Kent County, Michigan. You may qualify if you have a small business with 5-25 employees. The goal is to provide funds in lieu of access to federal relief money. The Greater Grand Rapids Chamber Foundation is offering short-term grants that range from $5,000-$10,000.
Go here to learn more.
ID Ventures: Early Stage Tech Company Support
A tech startup stabilization fund is supplying $3 million in investments and loans for Michigan tech startups. This is being administered by ID Ventures. You may be eligible if you are a tech-based company with a headquarters in Michigan and have fewer than 50 employees. Go here to read about this opportunity. Applications for this money will close on May 1.
Click here to apply.
More Resources for Small Businesses: Detroit Metro
Private grants are a great option for your small business. However, don’t forget that there are loan and grant programs also provided by state and local governments and public partnerships. If you are in or near the Detroit Metro area, the following resources may be helpful to you:
Updated Executive Order Extends and Slightly Relaxes Restrictions on Michigan Businesses and Individuals
Michigan Governor Whitmer has issued a new stay-at-home order, Executive Order 2020-59, that supersedes, extends, and modifies Executive Order 2020-42. For ease of reference, you can find a redline comparing the new order to the prior iteration HERE.
Governor Gretchen Whitmer's new stay-at-home order, issued last night, imposes stringent new restrictions and adds certain clarifications for individuals and businesses. If you'd like to see the changes for yourself, I generated a redline comparing the new order (EO 2020-42) and the prior one (EO 2020-21). Get it HERE.
Lawsuits relating to the coronavirus crisis are starting to bubble up. There are going to be a lot of these.
A wrongful death suit has just been filed against Walmart by the brother ow Wando Evans, 51, an overnight stock and maintenance associate near Chicago who died two days after being sent home from the store. Details here.
The complaint alleges that Walmart failed to respond and share information about COVID-19 symptoms among several workers. It also alleges that Walmart didn't provide adequate safeguards for employees.
This lawsuit has implications for businesses of all sizes. Time to get your legal houses in order.
Remote work raises a host of management and workflow issues for businesses. It also raises data security, confidentiality, overtime, and other legal issues. If your business doesn't have a written work-from-home policy, it needs one now. Get a free checklist for creating your own HERE:
Modern technology makes it all too easy for employees, vendors, hackers, and others to make off with your business's trade secrets. In this video, I outline some quick tips for handling these valuable business assets.
Commercial lease payments can be a big-ticket item for any business. During this uncertain time, when the coronavirus crisis has many businesses strapped for cash, what do you do if you can't make your commercial lease payments?
This legal blog is written by attorney Maxwell Goss. Max practices business litigation, with a focus on non-competes, trade secrets, shareholder dispute, and intellectual property.