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Amid Twitter Severance Controversy, Practical Tips on Release Agreements

    Client Alerts
  • January 20, 2023

As part of the well-publicized reductions in force taking place at Twitter, former employees and their advocates have heavily criticized the severance packages the company offered. In many cases, those offers were limited to one month’s pay and, in return, required the employee to release any claims against the company (including stock and bonus incentives) and agree to strict non-disparagement and confidentiality provisions as well as extensive post-employment cooperation requirements. Those packages were considerably less generous than those offered to departing employees prior to the sale of the company.

The controversy has led to questions about the adequacy of severance arrangements provided to employees who lose their jobs due to economic circumstances. Of course in most situations, employers are not legally required to provide any severance. In many cases, financial circumstances limit the amount of severance that the company can afford.

We have had clients propose offering a few weeks of severance in return for releases and other terms similar to those contained in the recent Twitter agreements. In response, we ask the client whether employees who believe that they have a viable legal claim relating to their employment are likely to waive such claim in return for a few weeks’ pay. In most circumstances, employees who accept such offers are the ones who are unlikely to pursue any claims against the company.

Realistically, employers that expect employees to release substantive legal rights, or to agree to significant post-employment obligations, should be prepared to offer severance packages that reflect the perceived value of those terms. In many cases, this means some combination of severance, group medical plan coverage, and other measures reasonably intended to allow the workers to transition to new employment.