Severance Agreements

EMPLOYMENT ALERT

YOUR SEVERANCE AGREEMENT

By Karen A. Khan, Esq.

You are terminated. Your position has been eliminated. Chances are that your employer gave you a Severance Agreement and asked you to read it and sign on the dotted line. Ever wonder why employers want separated employees to sign these types of contracts? It's simple - they don't want you to sue them for discrimination, or for anything else, once you leave their employ. Is that legal? Yes, if certain conditions are met.

First, the agreement cannot prevent a separated employee from filing a charge of discrimination with the EEOC. And, it cannot restrict their right to testify, assist, or participate in any proceeding conducted by the EEOC. The agreement may, however, waive an employee's right to sue for prior acts of discrimination, but not claims of discrimination which arise in the future.

Next, the employee's waiver of rights must be knowing and voluntary. Whether a waiver is 'knowing and voluntary' under Title VII, the Equal Pay Act, or the Americans With Disabilities Act, depends on the following factors:

* Was the agreement written specifically and clearly enough for the employee to understand?

* Was the waiver obtained by fraud, undue influence, or duress?

* Did the employee have enough time to read and think about the agreement before signing?

* Did the employee consult with an attorney, or did the employer discourage the consultation?

* Did the employer offer any consideration?

Consideration? It doesn't mean that the employer was being nice when it presented the Severance Agreement! Here, "consideration" means that the employer must offer something of value, in addition to what the employee is already entitled. Usually, money.

Finally, if the employee is over 40, there are additional requirements which must be met for a waiver of rights under the ADEA, as amended by the Older Workers Benefit Protection Act ("OWBPA") to be valid:

* The waiver must spell out the Age Discrimination in Employment Act (ADEA) by name.

* The employee must be given 21 days to think about it.

* The employee must be given seven days to revoke, if they signed the agreement.

* The employee must be advised in writing to consult with an attorney.

* For "Group Layoffs" the employee must be given 45 days to think about it, and the employer must inform employees, in writing, of the group from which it chose the employees for separation; the eligibility factors for the separation; and the job titles and ages of all eligible or selected employees, and of those not eligible or not selected for separation.

Lately, I have reviewed many Severance Agreements which are not in compliance with existing law. So, whether you are an employer or an employee, it would serve you well to consult with counsel before you present a separated employee with a Severance Agreement, or before you sign such a contract.

The contents of this Employment Alert are intended for informational purposes only and must not be considered as legal advice.

Karen A. Khan is a local attorney and litigator representing employers and employees in all areas of employment law who has represented both large corporations and individual employees alike in employment discrimination matters, and who has conducted litigation nationwide.

The Khan Law Group, PLLC is a Washington, D.C. based employment law firm representing corporate clients as well as individual employees with employment issues in Washington DC, Maryland, Virginia, and nationwide. The Group is dedicated to providing the highest caliber of personalized legal services and representation.

Contact The Khan Law Group, PLLC at 202-290-1670, for a confidential consultation.