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I was recently laid off. A severance package was offered to me, contingent on me signing a contract. The contract has terms that require me to tell anyone who asks that I was not, in fact, laid off, but instead that I voluntarily resigned from the company.
I could maybe understand a "keep quiet about it" provision, but a "lie about it" provision seems wrong. Is such a thing enforceable in contract law?
As others have done a good job at explaining, asking someone to resign in lieu of termination is generally legal. In your particular case, though, it's more tricky than that. Down in the comments, you said:
no, I'm already laid off. The paychecks have stopped and the insurance is gone
Since the separation event has already happened, an attempt to change the reason for it retroactively might not hold water. This gets into some tricky and possibly locale-specific legal details, so it's probably best to consult an employment lawyer.
Also in the comments, you clarify:
there exist no paper saying that I am resigning of my own free will. The document only states that I must tell anyone who asks that I resigned. I realize that this seems like a weird distinction, but this is the language in the document.
This changes the situation quite a bit. They're not changing the reason for your separation, they're simply asking you to respond to questions about your separation in a particular way. This sort of thing is legal in general (it's a bit like an NDA), but there's an important factor to keep in mind. You do not have to abide by this agreement in any situation where lying about your reason for separation would be illegal. Falsifying information on an application for unemployment benefits would be criminal fraud, which their contract cannot require you to commit. Similarly, if you are questioned by a government agent investigating the company or are subpoenaed to testify in a lawsuit, lying would be illegal and the contract cannot force you to do so. Lying when questioned during a job interview is tricky because the contract could be enforceable here, but lying in an interview is usually cause for termination should the truth be discovered.
This is important to keep in mind, because there are several things to be aware of here. A federal law called the WARN Act places requirements on any employer who closes a plant or lays off more than a certain number of people. Several states have their own layoff notice laws as well. If your employer didn't comply with these rules, they could be trying to avoid trouble by making enough terminations look like resignations such that they fall below the threshold. That could be illegal in and of itself. Also, the Civil Rights Act, the Americans With Disabilities Act, the Age Discrimination In Employment Act, and others protect workers from layoffs as a form of discrimination. If your employer received a loan under the Paycheck Protection Plan of 2020, they have certain obligations towards laid-off employees (but not those who resigned) that could impact how much of the loan they have to pay back. The severance contract cannot prohibit you from cooperating with an investigation into a violation of any of these types of laws. The clause requiring you to lie about the reason for leaving does not in and of itself prevent you from filing a complaint with the Department of Labor if you believe that the company violated one of these laws. Some (not all) severance contracts include an agreement not to bring a civil suit against the company for such violations. A contract cannot, however, bar you from making a good-faith report of a criminal violation of law to the appropriate authorities.
In my mind, doing this after the fact makes it look like the company realized they messed up and are trying to CYA. They would have to be offering me a exponentially better severance package before I'd even consider helping them out after they laid me off. If you have any reason to believe they might be doing this to cover up any level of wrongdoing, I strongly recommend that you file a (normally anonymous) complaint with the Department of Labor.
Do NOT sign! Ask for a few days to think about it, then consult with an attorney specializing in employment law in your state.
While a clause like that is almost certainly unenforceable, signing something like this could jeopardize your ability to get unemployment payments and/or other benefits.
Good luck!
You say that, if anyone asks, you are to tell them that you resigned. So if we are to take your word for it, the following exchange might take place:
Unemployment office clerk: Did you resign?
You: Yes. May I speak to your manager?
...
Manager: Yes, what's the problem?
You: I was not allowed to tell the clerk that I was laid off, because they explicitly asked me, so my severance contract forbids me to tell them the truth. But I can tell you that I was laid off, because you didn't ask me. And yes, I was laid off.
Obviously this is ridiculous. But it explains why we have to know the exact wording of your contract before we can have an opinion on it. You might even be able to get away with the above scenario!
Sharpenologist is correct. You can't collect unemployment insurance if you quit your job. The contract could be enforceable in the law (the company could sue for breach). On the other hand your state might have laws that declare that employers trying to get around paying unemployment insurance is an unlawful act, and that would render such a contract as void. A court can't enforce a contract to do something that's against the law.
(I'm not an attorney)
The whole situation is fishy. Chances are VERY VERY high that when they present such a contract to you, it's going to have a clause in it that says you've waiving any rights to unemployment insurance and other related benefits. Of course, they won't be looking to give you time to have it reviewed by proper counsel, or expect you to not know any better.
The real question is, "what's the real advantage for this company doing things this way?"
The contract you're about to sign most likely doesn't have an actual "lie about it" clause, which would indeed be illegal. Resigning voluntarily in exchange for a severance package, on the other hand, is legal in many jurisdictions, and this is most probably how the contract is drafted. If you sign it, you will in fact not be laid off anymore, instead you'll agree to quit.
If you have the next job on the horizon, getting the extra money could be worth it, but you indeed should calculate how much money you'd lose in various benefits if you accepted that money. This calculation can be quite complex, it's not necessarily only about unemployment benefits. E.g. I've seen mortgage insurance contracts where being laid off is an insured case (but quitting obviously isn't) and employment contracts which require your former employer to pay your health insurance fees for a certain time (but again, only if they let you go, not if you quit).
DO NOT SIGN THIS
without consulting a lawyer first.
There are significant legal differences between being laid off and resigning voluntarily in the US. Trying to conceal the real reason for termination may be fraudulent or illegal. You do NOT want to be complicit in this. It would also most likely prevent you from getting unemployment benefits.
It looks like the company is doing something highly questionable. You may be able to use this to your advantage. You can ask them to drop the clause from the contract and hint that you otherwise be inclined to have the authorities have a look at it. This needs to be done very delicately, so a lawyer can help with the right wording and approach as well. Something like "I was really surprised to find this clause in the contract since I thought there are considerable legal differences between being laid off and resigning. Do you mind if I have this reviewed by the unemployment office, just to make sure this is ok for me to sign?"
The contract is most likely unenforceable but you also don't want to be the center of attention of the investigators in case this all blows up.
I would literally respond with "I have been instructed in the wording of my separation contract, and in order to get my severance pay, that I should dishonestly answer 'that I quit voluntarily'. It is your right to assume that I was actually laid off."
