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Employment Severance Agreements: Buying Peace Of Mind With Non-Monetary Remedies

Author: Natasha M. Nazareth Date: 06/26/2019

Categories: Employment Law & Litigation

Business handshake of businessman and businesswoman. Concept of teamwork and partnershipLately, the news has been filled with stories about women forced to settle sexual harassment claims through severance agreements. Many of those agreements are perceived as oppressive because they suppress the victim’s rights to tell her story and fail to inform other actual or potential victims that a company has retained a bad actor after repeated complaints were quietly settled.

Nonetheless, severance agreements can still be used creatively to negotiate a mutually acceptable parting of the ways for many common workplace disputes, including claims of harassment or discrimination. Often, the “non-monetary terms” – those agreements beyond cash in exchange for a release of claims sweeten the pot for both parties to settle quickly before becoming embroiled in expensive, time-consuming, and stressful litigation.

Employers should be sensitive that the employees interests in protecting his or her reputation and future ability to earn a living open an opportunity for negotiating terms beneficial to both parties. It can be in the employers financial and reputational interest to step back and consider how to best support the employee moving on.

  1. A positive or neutral reference is a good starting point, but the employee may want clarity on exactly how the employer will or will not respond to requests from future employers or other third parties. It can help both sides to agree that only HR will respond to reference requests and will only provide certain information, such as first and last date of employment and title. The employee may want to ensure that the employer will say s/he is eligible for rehire. The employer may want to ensure it will not have to answer such a question. Parties should also explore crafting a mutually agreeable written reference letter the employee can use right away.
  2. Purge the personnel file of false, negative or sensitive information. Removing such items from the employee’s personnel file prevents the lingering possibility of them being seen or disseminated in the future. If the employer truly needs to keep a record of the information, move it to a more secure location, such as the legal file.
  3. A confidentiality clause can protect the employee from disclosure of contested allegations that were made against the employee, from embarrassment, or from a perception that s/he made trouble by filing a complaint. A reciprocal term should include who is bound to maintain confidentiality, whether the terms of the agreement and also the existence of the agreement itself are confidential, and under what circumstances all or part of the agreement can be disclosed (for example to accountants, treating health providers, the IRS or state regulators). For more about employer reporting requirements of sexual harassment settlements in Maryland, see my previous post.
  4. A non-disparagement clause further contains the controversy which both sides want to leave behind. Such agreements can be mutual or one-sided. They can prevent a party from saying or writing defamatory comments or simply from making comments which may be true but unflattering. Parties should consider exactly who the non-disparagement clause will cover, whether the restrictions are realistic, and whether the restriction itself could be found retaliatory. Both parties should always be free to respond truthfully to governmental authorities, for example regarding an unemployment benefits claim or to the EEOC.
  5. A future cooperation clause may be desirable if the employer may need the employee to assist with transitioning customers or projects, providing institutional memory, or defending against another complaint or lawsuit about which the employee has knowledge. An effective term will spell out a narrow or broad scope of cooperation, reasonable pay for the employee’s time and effort, actual expenses and legal fees, and perhaps whether cooperation is expected during business hours, evenings or weekends. Employee interests in cooperation may include the satisfaction of bringing their important work to successful closure, to be able to truthfully say they are involved in a smooth transition (which reflects well on the employee’s professionalism and value to the organization), or vindicating wrongs beyond a single matter.
  6. A positive and cooperative attitude clause goes beyond non-disparagement and future cooperation to address the employee’s spin and tact in dealing with the press, clients and co-workers. Depending on the situation and the employee’s level of skill and experience, the parties may determine certain messaging in advance. Sometimes, such clauses are reinforced with a performance-based cash payment at the end of a certain time period.

There are many more non-monetary terms which parties can float in their negotiations. Creativity is key to generating solutions which cost the employer little or no money and help the employee walk away with peace of mind.

This article is written for general informational purposes only and not for the purpose of providing legal advice. If you have questions about this article or about investigating and resolving sexual harassment or other discrimination claims in the workplace, contact Natasha M. Nazareth at McMillan Metro, P.C. at (301) 251-1180 or nnazareth@mcmillanmetro.com.  My areas of practice include education, corporate and business, and employment law.