This as-told-to essay is based on a conversation with Craig Levey, an employment law attorney and partner at Bennett & Belfort, P.C., based in Boston. The following has been edited for length and clarity.
When companies offer employees buyouts — like Microsoft did last week to around 60,000 employees — those employees have a decision to make.
Speaking generally, a buyout offer can be a decent thing to happen to an employee if they were planning on leaving the company in the short term, such as retiring or quitting to go to another job. If an employee feels like their job could be in jeopardy in the future, they may want to take a buyout so that they get money and benefits and not risk being laid off, in which case there may be no severance offer.
In many situations, when a company offers a buyout program, the writing on the wall is that there will be additional layoffs in the future. (Editor’s note: A Microsoft executive previously told Business Insider, “Never say never, but there’s a lot of desire not to do big layoffs.” Microsoft also said in a statement that “future workforce needs will continue to be based on business needs and priorities.”)
On the other hand, if you’re an employee who’s planning on staying with the company for the long term and you have many years of employment in the future, a buyout might not necessarily be a good thing because you’re taking a small amount of money in the grand scheme of things and you then have to find new employment, which can be difficult in this job market.
I’m an employment law attorney who routinely assists employees in negotiating their departure from employers, including through buyout agreements. Here’s what to make sure you do if you’re an employee offered the opportunity to be part of a buyout program.
1. Thoroughly understand the offer
HR or legal will send you the offer, which typically includes a release of legal claims, a no-rehire provision, potentially a non-disparagement provision, and so on. You need to make sure you totally understand it; if not, hire an employment law attorney to explain it to you.
Questions to ask include: How much am I being paid? Is it going to be a lump sum or installment payments over time? When will the payments be made? What are the benefits? When would I have to leave the company? How much paid time off would I receive when I leave? Would I qualify for unemployment benefits after I leave the company?
Remember to research your state’s unemployment rules; every state’s a little different, and you’ll want to make sure you know whether you’re going to be entitled to unemployment.
2. Try to get a sense of whether you might be laid off in the future
Try to ascertain information as to whether your job is protected moving forward. Get a sense of whether, if you don’t accept this buyout now, you’ll be laid off in short order anyway.
It’s usually not something to ask HR or your supervisor because they either won’t know that information or won’t provide it. Some employees may have the approach of “I have nothing to lose” and just ask; it depends on the individual employee’s comfort level.
Try and get as much information as possible from the facts at your disposal. Get a feel from the environment around you, possibly speak with colleagues that you trust, and do a little research internally.
Look back at documents that were sent by the president or CEO, like emails or letters. What state is the company in? Is it in dire financial need, so much so that you can reasonably predict that there are going to be additional layoffs in the future? Have they done several rounds of layoffs? Perhaps they’ve done return-to-office mandates, which resulted in people resigning.
Oftentimes, employees can get the vibe of the situation and understand if there’s more trouble on the horizon or if the company’s doing very well and has just decided to offer buyouts to a particular division because they’re restructuring while the rest of the company is going to be unaffected.
3. Decide if you want to accept, reject, or negotiate the offer
Trying to negotiate can be difficult if you don’t have leverage. With Microsoft offering 60,000 people a buyout, it may be difficult for one single person to try to negotiate a higher payout.
However, if you’re an employee who does feel like you’re being targeted, you should do an analysis to see if the company did violate the law; did they target you? Assess whether you’re being targeted and discriminated against because of a protected class, such as age, gender, or race, or if the company’s engaging in retaliation because you complained about something illegal prior.
You may want to speak with an employment law attorney in your state, because that might be a situation where you could negotiate a higher amount.
Be very cognizant of the deadline by which you have to either accept or reject the offer. To the extent that someone is thinking of accepting the offer and getting a payment, they may want to speak with their tax advisor or CPA regarding the tax implications of any payment, particularly as we reach the end of the calendar year in the next couple of months.
At the end of the day, the buyout offer is a contract; you can either accept it or reject it. You don’t have to sign it. However, if you feel like you’re being forced into the buyout or you’re being targeted, you should speak with an employment law attorney to understand your rights.
Do you have a story to share about being offered a buyout and deciding whether to take it? Contact this reporter at [email protected].
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