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Although employers are not typically required by law to offer severance pay, many choose to do so. In particular, an employer may elect to offer a separation agreement and a severance package if the employer is concerned that the discharged employee may later sue the employer.
An employer concerned about a potential lawsuit can offer an employee a severance package conditioned on the employee’s release of all claims against the employer. In effect, the employer requires the employee to agree not to sue the employer in return for certain benefits (such as severance pay) provided by the employer.
A release of claims included in a separation agreement should clearly state that the employee is waiving any right to sue the employer for claims arising out of the employment relationship, including claims related to the termination of employment. The employer should give the employee ample time to decide whether to sign the release and should suggest that the employee seek independent legal counsel to review the agreement. An employer should never threaten or coerce an employee into signing a release. Special terms are required if the employee is over age forty and the employer is seeking an enforceable waiver of claims under the Age Discrimination in Employment Act.
Because the law requires certain conditions be met for releases to be operative, an employer should speak to an employment law attorney prior to drafting a release. To speak with an employment law attorney regarding separation agreements, contact the employment law attorneys at Clouse Dunn Khoshbin LLP at info@cdklawyers.com.
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