Severance Agreements—They’re Business Transactions

Challenges by EEOC and NLRB

To avoid having your severance agreement challenged by the EEOC or NLRB, says Van Parys, include language to the effect that the former employee has the right to file charges and participate in investigations with the National Labor Relations Board and Equal Employment Opportunity Commission.

Nothing in this Agreement infringes or is intended to infringe on the former employee’s right to engage in protected activity under Section 7 of the NLRA.

You might put this in boldface, says Van Parys, so you make it very clear to the employee what the agreement says. Still, remind people that they have no right to recover monetary damages. (You can write the agreement so that it allows them to recover, but then, what’s the point of the agreement? Van Parys asks.)

Drafting the Documents

Make your written agreement as simple and straightforward as possible. Check with a local attorney. For example, you may not want to include workers’ compensation claims in the release.

Managing the Process

• Meeting: Hold the meeting in a neutral environment, and make it as easy to sign as possible. 
• Have a check ready. That is more powerful than “we’ll get you the check within a week.” With the check sitting there, younger employees can walk out with it; those 40 and over can pick up the check in 7 days.
• Avoid the suggestion of coercion. You want to show the court that you were not twisting the person’s arm. As one example, if you fill the room with people, the ex-employee may say to a fact finder, “I’m just 20, and my supervisor, the head of HR, and the company president were all there urging me to sign.” That’s going to look like coercion.
• Consult an attorney. It’s also smart to advise the person that he or she can consult an attorney. That’s a lot of protection, says Van Parys. You can stand in front of court and say, “We suggested to him that he consult an attorney.”
• Meeting tone. As to meeting tone, treat the severance as a business offer. “You can sign if you would like, the money is available; if you don’t sign, that’s your decision. “
• If a person refuses your offer, Tate says, it’s no problem to call a day or two later and say, I know you are upset; I think we made an attractive offer; everyone else signed it; might you want to reconsider?

Possible Roadblocks

If an employee threatens to sue, maintain your business offer tone. “If you don’t want to sign, that’s OK.”  Don’t pressure or try to further explain, says Van Parys.

If the employee says something like, “I don’t want to sign because my manager has said some inappropriate things to me,” we have a tendency to ignore that, Van Parys says, but you can’t. Treat it as an internal complaint. Get what information you can, say thank you for your complaint, and investigate, says Van Parys. If others support the person, you may need to evaluate why that person was let go.

The important thing is to guard against shoving it under the rug and not investigating.
You want to be able to say, “Yes, we did investigate; this issue was not related to reason for termination; we did discipline the person involved.”

Severance Other than Monetary

Van Parys gets two requests that don’t involve money; both of which can often be accommodated.

Agreeing not to fight an application for unemployment.

Agreeing on a type of reference. Typically, we advise clients to respond only with dates of service, position, and rate of pay, says Van Parys. The person may want you to make a statement about his or her performance. You have to be careful if the person was let go for performance reasons. You don’t want to be too positive in that situation. You might say, for example, “Attendance was good, and there are no disciplinary notices in the file.”

Source: HR Daily Adviser