There are times when it makes sense to resolve an actual
or potential employment law claim by paying something and getting a release
from the employee. Paying severance in return for a release and waiver of
claims isn’t unusual in connection with reductions in force, and sometimes it’s
appropriate in an individual termination.
One way or another, most human resources professionals and in-house
counsel will, at some point, have occasion to use a release in connection with
an employment matter.
Generally speaking, preparing a release for an employment
matter isn’t a do-it-yourself project.
Even lawyers, if they’re not employment lawyers, should be cautious. Employment statutes and the case law that
interprets them have created all sorts of requirements for effective
releases. Here are some general
guidelines and reminders:
Use plain language. Employment laws require that releases be “knowing
and voluntary.” If a release is full
of legal jargon and complicated language, it is less likely to be enforced by
the courts and the employee may be allowed to pursue the claim that the release
was meant to avoid. Courts will consider
the employee’s level of education and business experience when evaluating whether
a release is clear enough to allow knowing and voluntary execution.
Specifically
reference certain laws. Title VII,
ADEA, the FLSA, and their state counterparts should be specifically mentioned
in a release. General mention of “any and all claims” is probably not specific
enough to create a knowing and voluntary waiver.
Pay attention to
state law quirks. Some state employment
laws give employees more rights than their federal counterparts. For example, under the Minnesota Human Rights Act, an
employee who releases state discrimination claims must be given 15 days after
signing the release to reconsider and revoke it. If the 15-day rescission period isn’t spelled
out in the release, Minnesota Human Rights Act claims will not be effectively waived
unless the claims have been filed with a court or agency. In California employment law releases, it’s
necessary to include reference to Section 1542 of the California Civil Code so
the release covers both known and unknown claims the employee may have. Be sure to review the state laws relevant to
the claims you’re trying to get released, or you might end up paying severance
or other consideration and getting very little for it.
Allow employees to contact
the EEOC. A release of Title VII,
ADEA, and other federal discrimination claims will not be effective if an
employee is prohibited
from contacting the EEOC by the terms of the release. Employers can require employees not to accept
monetary recovery if the employee files a charge of discrimination, but no
release, settlement, or severance agreement can lawfully prevent an employee
from filing a charge or providing information to the EEOC.
Address Older
Worker Benefit Protection Act issues.
Employees who are over the age of 40 are afforded additional protections
under the federal Older Worker
Benefit Protection Act. When there is a “group termination” (meaning a
termination of two or more) and the employer wants to get releases of ADEA
claims, the OWBPA imposes very specific requirements. There are complicated notices that have to
be given to affected employees, and employees have to be given extra time to
decide whether or not to sign the release, in addition to being given the
opportunity to rescind a release after it’s signed.
Remember that
releases only look back. Releases
are only effective for past claims. Employers
sometimes ask employees to sign releases and then continue to work for a period
of time. If something happens during that period that could form the basis for
an employment claim, the release will not be effective. A second release, signed when the employee
actually stops working, will be necessary to fully protect the employer. If an employer is required to give notice in
advance of an employee’s last day (for example due to WARN Act
requirements), then the employer should provide a draft release so the employee
can see what it involves, and then present the official release on the last day
of employment.
Never press for a
decision. A release of employment
claims signed under pressure is not likely to be upheld by a court. It’s never appropriate to threaten (or even
suggest) that the amount of severance being offered will get smaller if the
employee doesn’t sign quickly, or that a letter of reference or some other
benefit will only be available if the employee signs quickly. For a release of some claims – including
discrimination claims – to be effective, the employee has to be given an
opportunity to consult with a lawyer before signing.
Employment disputes and claims are hard enough to deal
with. If you decide that an agreement
and release is the best way to proceed, be sure you get what you pay for. The only thing worse than facing a claim is
facing a claim you thought you paid good money to get rid of. The highly complicated and technical
requirements for employment releases are worth paying attention to in order to
avoid that unhappy outcome.
Posted by Judy Langevin and Kate Bischoff
