You’re Damned if You try to Get an Employee to Sign a Release at Termination.

Posted: June 4, 2012 in Hiring and Firing, Severance Agreements and Severance Pay, Wages, Overtime, Commissions and Pay Issues

Some employers are too smart for their own good.  Employers know that if they get an employee to sign a well-drafted release, the employee can’t sue later.  While that is true, employment law is rarely that simple.  And taking a release that you found on the internet may not cut it.  Releases and settlement agreements are not always one-size fits all documents.

Employers sometimes try to get an employee to sign a release when they fire the employee, but don’t offer anything in return.  This usually will not work.  Releases, like any contract, must be supported by consideration.  Also, some statutes will overrule your contract in some circumstances, such as the Massachusetts payment of wages statute.

Also, sticking a release in front of an employee, who is emotional about being fired can backfire in several ways.  One, the employee will think that he must have a good claim if you are willing to pay some severance in exchange for the employee giving up that claim.  The employee’s attorney may think the same way.  In reality, the employee may have just been sub-par, but you wanted to avoid any future problems.  Instead of preventing a claim, you caused one.

Two, believe it or not, in some situations the offer of a release and payment of a severance or a settlement can be used against you in court.  The employee will spin the story about how your fired them for some illegal reason, and you were so concerned about it that you were trying to pay them off and buy their silence.  Although offers to compromise disputes are normally not admissible, if you unilaterally offer to pay money in exchange for release, this could be admissible against you (this is probably surprising even to some attorneys).

Finally, there are some specific laws with respect to releasing claims.  Under the Age Discrimination in Employment Act, you have to give “older” (over 40 according to the Feds) employees 21 days to review a settlement agreement (45 days in some cases), or your release won’t be effective.  As stated above, there is also the Massachusetts Payment of Wages statute to consider.

There are some tricks of the trade to terminating problem workers and maximizing your chances of getting an effective release.  Contact me if you need to terminate an employee and you need to get a release because there is some issue, or you know the employee is litigious.  Releases and settlement agreements can be a great way to have peace of mind, for relatively short money, but only if done correctly.  The $500 or $1,000 or so that you pay a lawyer to help you avoid a lawsuit is better than the $50,000 to $100,000 or more you will pay to defend the suit.

By, Adam P. Whitney. 617.338.7000.

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