Federal Employment Law – Dismissals and Layoffs
A severance agreement is a contract, or legal agreement, between an employer and an employee that specifies the terms of a termination of employment, such as layoff. This agreement is sometimes called a “separation” or “termination” agreement or a “general release of separation agreement and covenant not to sue.” Like any contract, a separation agreement must be backed by “consideration.” Consideration is something of value to which a person is not yet entitled and which is given in exchange for an agreement to do or refrain from doing something.
The consideration offered for the waiver of the right to sue cannot simply be a pension benefit or pay for earned vacation or sick leave to which the employee is already entitled, but must be something of value in addition to any existing rights of the employee. . An example of consideration would be a lump sum payment of a percentage of the employee’s annual salary or periodic payments of the employee’s salary for a specified period of time after termination. The employee’s signature and withholding of the consideration generally indicates acceptance of the terms of the agreement.
Federal law, the OWBPA, sets forth specific requirements for a “voluntary and conscientious” release of ADEA claims to ensure that an employee has every opportunity to make an informed decision about whether or not to sign the waiver. There are additional disclosure requirements under the statute when requesting exemptions for a group or class of employees. Even when a waiver meets the requirements, a waiver of age claims, such as Title VII waivers and other discrimination claims, will be invalid and unenforceable if an employer used fraud, undue influence, or other improper conduct to force the employee to sign it. or if it contains a material error, omission or misstatement.
When employers decide to reduce their workforce by laying off or laying off a group of employees, they generally do so pursuant to two types of programs: “exit incentive programs” and “other termination programs.” When an exemption is offered to employees in connection with one of these types of programs, an employer must provide sufficient information about the factors it used in making the selections to allow employees who were laid off to determine whether the older employees were laid off while they were the youngest were retained. . Even if you say goodbye to your employer, be sure to ask for advice about whether you should sign it, whether the terms are reasonable, and whether you should ask your employer to change any of the terms. Make sure you understand what you are giving up for severance pay or benefits. Your employer has its own lawyers and human resources department working against you. You need legal and human resource experts on your side to help you get the best severance package!
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