Johnston v. Carnegie Corporation of New York: How Strong Are Your Nonprofit’s Severance Agreements?

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Nonprofits often feel like Davids in a world of Goliaths. Struggling with tight budgets and lean staffs, the last thing they want to add to their basket of worries is a complex regime of human resource policies. Often, overworked senior staffers rely on outdated, internally generated employment documents that haven't been reviewed by a lawyer in years. Worse still, these documents have frequently been overwritten to the point where they are so ambiguous and confusing so as to become meaningless. In these moments, the would-be Davids become vulnerable themselves to legal challenges from disgruntled employees.

This phenomenon appears to be perfectly captured in a recent New York federal court decision, Johnston v. Carnegie Corporation of New York,2 wherein Magistrate Judge Debra Freeman allowed a pro se plaintiff's state and federal disability discrimination claims to survive a motion to dismiss, even though the plaintiff-employee had signed a severance agreement that included a full release of those claims. Why? Applying a multi-factor analysis, Judge Freeman concluded that the severance agreement was confusing and ambiguous to the point that it created a factual issue as to whether the employee's release was knowing and voluntary.3

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