In fact, accepting a severance package often obligates an employee to sign noncompete clauses, confidentiality agreements and nondisparagement pledges. For years, these kinds of conditions have been written into executive contracts, but now the average worker is facing this sort of Hobson's choice: Sign it or lose it. In the Unifi survey, 19 of the 24 dot-coms surveyed said they required laid-off employees to waive their right to sue the company in order to collect severance.
"They said, 'Here's your amount. But to get it you have to sign this waiver and write off any future claims,'" said a worker laid off from business e-commerce firm Commerce One, who asked for anonymity. "For all I knew, they were blowing asbestos through the air ducts. If I were to die in 20 years, my wife couldn't sue them. But given that I was only there for a few months, I realized that was highly unlikely, and I signed it."
Some companies sweeten the pot to induce employees to sign away their rights. Cisco Systems' standard package for some of the 8,500 workers to be laid off this year was two months of pay. But sign an exit agreement with the standard restrictions and you get four additional months. Cisco says most of the workers signed and took the six months.
Amazon.com rolled out a similar plan but got nailed for it in the press. After the online store cut 1,300 positions in January, it asked workers to sign a nondisparagement agreement to receive a more lucrative payout. Amazon quickly backtracked, asking only salaried employees to comply.
A generous severance package can also help a company recruit in the future. That's why Cisco offered 12 weeks of severance pay to about 70 graduate students whose offers of employment were rescinded in April. "They're waiting for the next surge in business when they need to hire again," says John Challenger, CEO of Challenger, Gray and Christmas. "The way you handle a downsizing, the way you let someone go has a lasting impact on your reputation."
That's one lesson that dot-coms have been slow to learn. "I loved my job," says Mike Donatello, who worked for two years as the research director at Washingtonpost.Newsweek Interactive before being laid off in May. At 38, Donatello had 15 years of experience at traditional newspapers and advertising companies; he's still miffed that he got only four weeks of severance.
Now Donatello says he has a new concern when he goes on a job interview. "The first thing I want to ask is, 'What's the possibility of getting an upfront severance agreement?'" These days, that seems like an awfully good question.
Kathi Black and Maryann Jones Thompson contributed to this report.
