This week, the Sixth Circuit Court of Appeals (which includes Tennessee) rejected an attempt by a terminated employee to evade the terms of a waiver and settlement agreement she signed in conjunction with her departure. In West v. Dow Chemical Co., the plaintiff’s position was eliminated as part of a reduction in force. She was presented with a separation agreement that included a release of claims against the employer and payment of post-employment severance.
The plaintiff later filed a race and gender discrimination lawsuit against the employer, which moved to dismiss the suit based on the signed release agreement. The plaintiff raised a number of arguments in her attempt to void the settlement agreement. First, she claimed that she did not understand the agreement and that she did not realize it contained a release of claims against her employer. She argued that the employer called the document a severance agreement and not a release, and that the employer presented the document to her on the day of her termination without any explanation of its terms.
The Sixth Circuit had little difficulty in rejecting these arguments. The court noted that the plaintiff held a master's degree and had the education and experience to understand the document. She was given the required Older Workers Benefit Protection Act (OWBPA) 45-day period to consider the release, seven days to revoke after signing, and was advised to consult with an attorney. The court found no evidence of fraud or duress on the part of the employer.
Courts are understandably hesitant to undo separation agreements in the absence of extraordinary circumstances. Even so, employers should tailor written agreements to the level of sophistication and knowledge of the recipient, avoiding excessive length and legalese where appropriate. The OWBPA provides grounds for voiding age discrimination releases if the agreement is not written in a manner that can be reasonably understood by the employee. If the employer’s release is generally understandable by the average person in the employee’s situation, that employee faces an uphill battle to later void the release provisions.
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