Hiring & Firing: What Does a Successful Separation Agreement Between Employer & Employee Look Like?

by JD Supra Perspectives
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In light of recent lawsuits and enforcement actions by the Equal Employment Opportunity Commission against companies with overly broad or misleading severance agreements, we asked our contributors:

What exactly is a successful separation agreement between employer and employee? What to include in such a severance agreement, what to exclude?

Here's what we heard back from Chuck Knapp, litigation partner with law firm Faegre Baker Daniels in Minneapolis:

In many respects, the agreements at issue in the EEOC lawsuits are not well written and create the opportunity for bad facts to make bad law – they unnecessarily overreach in seeking to ensure protections for the employer that may go beyond even your typical belt-and-suspenders approach. A successful separation agreement should be short and simple. Recall that the ADEA cautions that waivers must be  "written in a manner calculated to be understood" by the people asked to sign it. 29 U.S.C. § 626(f)(1)(A).

A separation agreement also should address only those issues that need to be addressed; there’s no need to repeat continuing obligations already undertaken by the employee in other agreements – let those agreement speak for themselves. In addition, a separation agreement should fairly delineate for the departing employee what his or her remaining rights may be. As to some of the specific issues addressed by the EEOC in the highly-publicized lawsuits, we recommend that employers:

  • Avoid non-disparagement provisions altogether - the law of defamation already protects employers. However, if such a provision must be included, carve out an explicit exception for communications with government agencies.
  • Avoid covenants not to sue. Such provisions should not be necessary if you have drafted a valid release of claims. However, if such a provision must be included, it should specifically state that it is not intended to prevent the filing of a charge with any governmental agency.
  • Include within your release language a provision explicitly advising the employee that, despite the release, he or she may still file an administrative charge or participate in an administrative investigation.

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[Chuck Knapp leads Faegre Baker Daniels' employment litigation team and focuses his practice on representing employers in employment-related litigation.]

 

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