“If my severance is reduced by monies I make working elsewhere, can I simply ask that payments I earn be delayed?”

Question: I was laid off and am receiving severance from my previous employer. My severance agreement says that it will be “off-set” if I earn outside income.

I would like to start consulting to expand my network, and increase the diversity of my experience, but I would, in essence, be working for free until my severance ends.

My question is this: Can I legally delay receiving payment for my services until after my severance period expires?

Name Withheld
Salt Lake City, Utah

Answer: Your question is a really good one, and one that I’ve been asked many times before. The answer is that you probably cannot collect both severance and consultant monies, but then again, maybe you can. Here goes:

Your severance agreement is what we call “mitigated.” I’d say about 20% of severance agreements I see are mitigated. In effect, it means “What you make elsewhere during your severance period will be deducted from (that’s what “offset” means) your severance monies.” The idea behind “mitigation” of severance is to keep you at the same level of income for a period of time, not to help you earn more than you were earning before. (You’ve got to admit, it makes some sense.) So, it sounds as if monies you might earn as a consultant during your severance period will be for naught.

However, what the words say, exactly, is important. If the words say “if you receive any monies for services rendered during the severance period,” or if the words say, “if you collect any monies for services rendered during the severance period,” then at least technically, if you arrange receipt or collection of your consultant monies after the severance period, you would be “in the clear.”

Then, again, employers are not stupid. More commonly they use the word “earn,” to make sure you don’t try to get around their intentions to “mitigate” your severance.

One thing about your question intrigues me: If you are interested in “expanding your network” and “diversifying your experience,” why would consulting – without charge – limit those efforts? I’d think that, if you explained that due to your severance agreement, you need to work “for free,” you might have a better chance of doing both . . . especially in today’s difficult economic circumstances. It would be their good fortune to have you assist – without charge! Give it some thought. It might be a great way to get your “foot in the door” and develop a whole new set of relations and experiences that you otherwise would have difficulty developing.

As always, hope that helps you, even if it is not what you were hoping to hear.

Best, Al Sklover

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