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Severance Agreements

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Severance agreements are a standard part of many employment separation processes. However, it’s critical to understand the potential implications these agreements might have on your rights, particularly when it comes to ERISA (Employee Retirement Income Security Act) governed disability benefits.

When you sign a severance agreement, you’re often agreeing to release your employer from possible future claims and lawsuits. If you have a potential disability claim under ERISA, this can be affected by the terms of your severance agreement. In some cases, the language of the agreement may inadvertently waive your right to pursue an ERISA claim. It’s not uncommon for employees to sign these agreements without fully understanding their implications, and then find themselves unable to take legal action if they later discover they have a valid disability claim.

So, what can you do to protect your rights? Firstly, it’s crucial to review any severance agreement carefully before signing it. Look at the list of entities you are releasing from claims. Does it include insurers? Does it include welfare benefit plans? Then look at the claims being released. Do you see ERISA listed? Do you see bad faith or breach of the implied covenant of good faith and fair dealing? If these terms are included, you may be releasing your claims against your insurer.

What does it mean to release your claims against your insurer? If you have an active disability claim, it means that if your insurer terminates it, you have no recourse. If you’ve released your claims, you cannot bring suit against your insurer. If you intend to make a claim for disability beginning prior to leaving your employer, you can, but again, if the insurer denies it and any appeal, you have no ability to contest the denial in court.

If you have any doubts about the terms of the severance agreement, or how they might affect your right to bring an ERISA lawsuit, seek legal advice. A lawyer with experience in ERISA and employment law will be able to guide you through the process, ensuring your rights are protected. Remember, it’s always better to know the full picture before making a decision that could potentially impact your future rights and benefits.

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