New Jersey Severance Agreements: Injunctive Relief and Attorneys' Fees

Most severance agreements contain provisions permitting the company to file a lawsuit and seek injunctive relief against the employee.  These provisions also includes cost shifting provisions that require the employee to reimburse the company for all legal expenses associated with seeking the injunctive relief (even if the company does not prevail in the lawsuit). 

An employee should be aware that the attorneys' fees may be more than the amount of severance received.  Accordingly, in the event that an employee may work for a competitor or create a competitive business, any provision regarding the shifting of costs or injunctive relief should be removed. 

If the company refuses to remove this provision, an employee should request that the costs be awarded to the prevailing party. This will prevent the employee from reimbursing the company is its unsuccessful lawsuit.

Please contact Castronovo & McKinney if you have any questions regarding your severance agreement and visit our blog for additional information.