Severance Agreements — Do's And Don'ts For Employers

Law360, New York (November 20, 2015, 11:36 AM EST) -- "Breaking up is hard to do." This is as true with romantic relationships as it is when an employer wants to gracefully extricate a problem employee. Scenario: employer decides to terminate an employee and he/she agrees to sign a severance agreement in exchange for an extra payout. All is well until employee sues employer for discrimination, claiming some or all of the severance agreement was unenforceable. Or, a government agency shows up to audit the employer's documents and fines employer for using severance agreements that curb the ability to report wrongdoing to that agency. Scarier still, an employer is sued in federal court for violating Title VII based solely on language used in employee agreements. In light of increased scrutiny by government agencies and mixed federal case law, these are all possibilities for employers who do not take a hard look at severance agreements. This article discusses recent attention that government agencies have focused on employer-employee agreements, and provides suggested best practices for an employer to withstand scrutiny by those agencies....

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