Last time, we looked briefly at a recently settled Minnesota case involving severance agreements in the Minneapolis Public School District. As we noted, about 50 district employees were required to sign the legally precarious agreements over the last 2 ½ years. In that case, the EEOC made it clear that requiring employees to waive their right to file discrimination lawsuits violates federal law.
There are a number of legal requirements that apply to severance agreements. Without meeting these requirements, such agreements will not be recognized as valid and enforceable. With respect to releases of claims, it is important first note that such agreements must be supported by adequate consideration, or exchange of something of value. This usually takes the form of a monetary payment.
First of all, any monetary payment associated with a severance agreement must not be compensation to which the employee is already entitled. The payment must be additional. This can include payment of a contested right to payment, such as for unpaid overtime.
In addition, different requirements for releases apply under different laws. For example, the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act both have very specific requirements, each of which must be met in order for agreements to waive rights under these laws to be enforced. The Minnesota Human Rights Act and the Fair Labor Standards Act also have specific requirements for waivers to be considered valid. The same is true for a variety of other laws, including the Family Medical Leave Act, the Americans with Disabilities Act, and Title VII of the Civil Rights Act of 1964.
Generally, employees who are being asked to waive their rights under any law should be cautious and should be sure to obtain a clear understanding of what is being asked of them before they sign. Consulting with an experienced attorney can provide clarity and guidance, and advocacy in the negotiation process, if necessary.