In brighter economic times, most employers say goodbye to employees
only following individual resignations or terminations. But as more and
more employers are becoming acquainted with the new “L”
word—Layoffs—employees are departing in larger numbers and for
different reasons.
This makes now a good time to revisit those general releases that
employees are asked to sign before they go. Especially since laid-off
employees, who may already in a panicked state of mind, are more likely
to sue if they feel confused about their rights or bullied by
legalese-laden documents.
400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.
General releases often accompany settlement agreements, severance
packages, or final paychecks. Form or boilerplate general releases
frequently contain a variety of clauses that may not make sense or
should be revised in the context of layoffs. Typical general release
provisions that warrant review include:
that the departing employee won’t seek re-employment with the employer,
either forever or for a set period of time. The purpose of a no-rehire
clause is usually to keep a terminated employee from seeking employment
with another branch or location of the company. If the employee is
being laid off, however, such a provision could become a cumbersome
legal hurdle to getting valuable employees back once finances improve.
employer from “any and all claims” are technically enforceable, they
may cause confusion for laid-off employees. Under California law, an
employee cannot release nonwaivable rights, such as the right to all
earned but unpaid wages and benefits, and the right to seek
unemployment compensation. General releases should be revised to
include a caveat that the release is not intended to cover nonwaivable
rights.
Employment Act (ADEA) claims must comply with a number of procedural
requirements mandated by the Older Workers Benefits Protection Act
(OWBPA), and must be drafted clearly to ensure that the waiver is
“knowing and voluntary.” Ensuring that your general releases comply
with waiver requirements is key to defending against age discrimination
suits down the road.
noncompete and customer no-solicitation clauses are unenforceable
unless they fall within a very narrow set of statutory exceptions.
Including such clauses in your general releases is likely to cause
confusion for your laid-off employees, and may scare potential new
employers away from hiring them. An employee who is denied a job as the
result of an unenforceable noncompete or no-solicitation clause may
come after you to recover for the lost opportunity.
Reviewing your general releases now to ensure that they’re clear,
easy to understand, and legally compliant is a good way to help your
paid off employees during a difficult time while protecting against
potential lawsuits.