Severance Pay

Why SunTrust Required Laid-off Employees to 'Be on Call' for 2 Years in Severance Package

Why SunTrust Required Laid-off Employees to 'Be on Call' for 2 Years in Severance Package
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The severance package for SunTrust’s recently laid-off staff members came attached with a special requirement. In exchange for their severance packages, employees would be required to be on call for two years, making themselves available for meetings, court deposition and phone calls to discuss matters related to their previous work with the company.

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After the severance terms made news, SunTrust decided to eliminate the clause, although the company clarified that it never expected employees to perform actual work during that two-year period. The clause was merely meant to ask for help with any legal issues that arise. The company is laying off more than 100 IT workers, who are now actively training the overseas workers who will replace them. As SunTrust allows its employees to walk away without signing its “cooperation clause,” here are a few things professionals at other firms can learn from the experience.

Avoid vague terminology.

SunTrust’s cooperation clause stated that the employee agreed to provide assistance and be reasonably available for two years after the end of employment with the company. By signing the agreement, the employee would agree not to receive any compensation for this assistance. Since the employees in question were IT workers, they were concerned that this assistance would include consulting on technology-related issues.

While SunTrust insists the clause only referred to legal issues, the terminology was vague enough to raise concerns. In fact, it isn’t uncommon for an employer to contact a former employee to ask simple questions about misplaced documents or system passwords. But without specific wording, employees feared SunTrust would be free to request ongoing support from former employees.

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Remember that severance is optional.

At stake in the agreement was a severance that reportedly equated to two weeks of pay per year of service. For newer employees, this amount might not have added up to much but to long-term employees, tens of thousands of dollars could be at stake. The best way to protect against a contract that trades compensation for control is to set money aside in case a layoff or firing occurs.

Before you spend too much time worrying about a severance agreement in your own future, be aware that cooperation clauses for mid-level employees are rare. The practice usually applies to higher-level employees like CEOs, who might be called to testify in a legal proceeding. If such terminology does appear in a severance contract, ask that wording being included that stipulates you will be compensated for any services you provide following your employment outside of participation in a legal proceeding. If the employer refuses, it might be necessary to consult an attorney before signing. It’s important to understand your rights as they apply under the Fair Labor Standards Act (FLSA), since requiring non-employees to provide services for free likely violates labor laws -- whether the employer has a contract in place or not.

SunTrust’s severance agreement called attention to the helplessness terminated workers feel when negotiating dismissal terms. While this situation likely won’t apply to many workers, it’s important to understand that cooperation clauses exist in order to effectively handle them.

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