April 21, 2017
Authored by: Bill Wortel
All employers, at one time or another, will provide terminated employees with a severance payment for a release of all claims that employees may have against the employer, as well as other promises. Too often, employers blindly “copy and paste” language from old agreements that may contain outdated provisions that no longer comply with current law, or that were tailored to a factual setting different from the situation they are currently facing. Employers should review their standard settlement agreements, with the following non-exhaustive items to bear in mind.
Timing of Execution. An employee may not release future claims, i.e., claims that have not yet accrued. Employers sometimes provide severance agreements to departing employees while they are still employed. If the employee signs while employed, waiving any past claims, the waiver would not apply to any claims that accrue after the employee’s execution of the agreement. Thus, if the employee is subjected to improper conduct after executing the agreement (but while still employed), or does not receive a bonus or some other benefit to which the employee believes he or she is entitled, the employee’s release would not be a defense to such a claim. Accordingly, the employer should present the