Employers often use severance pay as a way to fend off possible lawsuits by departing employees. But here’s the catch: if you don’t require the employee to sign a waiver of all rights to sue you in exchange for the severance, you can be sued anyway. Whenever you offer severance an employee is not otherwise entitled to, be sure to get a valid release of claims-otherwise, you might just be throwing money away.
To help ensure the release will hold up in court, keep the following tips in mind:
- Put the agreement in language the employee can understand, avoiding complicated legalese.
- Allow the employee to consult with an attorney before signing.
- Be sure that the release covers, but isn’t limited to, any and all claims under state, federal, and local law, and be specific regarding any claims you’re aware of. But remember that some types of claims, such as those for unpaid wages or workers’ compensation, can’t be released.
- Remember that the Older Workers’ Benefit Protection Act (OWBPA) imposes additional requirements for the waiver of age bias claims for workers over age of 40.
Additional Resources:
Terminating Employees in California A 21-Point Risk Assessment Checklist