Thursday, August 5, 2010

Why Is My Employer Asking Me to Sign a Release of Claims?

Employment Law Firm Near Philadelphia With Offices in Paoli, Radnor, Exton, Plymouth Meeting and King of Prussia


What is a the Effect of a General Release in Pennsylvania?

A General Release is a provision wherein you agree that, in exchange for some consideration (payment of money, usually), you will not in the future sue the employer for any conduct it engaged in prior to the date you sign the Release (i.e. discrimination, failure to pay you money you are owed, etc.)  A Release is binding upon you, and will in nearly all cases completely eliminate any right you would have to sue your employer for illegal employment practices you believe it engaged in prior to the date you sign the Release.  Also, by signing a Release, you are giving up the right to collect any money you believe you are owed except for any money you are promised in the Release.

Why Is My Former Employer Asking Me to Sign a Release?

Employers usually "bury" the Release provision in a Separation Agreement.  For you, the key to that Separation Agreement is the severance and benefits you are offered (i.e. medical coverage).  For the employer, the key is the Release. 

Employers want you to sign a Release after you have been terminated so that they will not have to worry about you later filing a lawsuit claiming that you were terminated illegally.  Companies typically offer severance and some other benefits in exchange for this Release.  If you sign the Release you will lose any and all rights you may have had to sue your employer for discrimination, wrongful termination, unpaid wages, commissions or bonuses, overtime, etc. 

Given that most companies only offer between 2 weeks and 3 months of severance to the average employee (and if you are getting 3 months you are doing reasonably well), and given that a good employment-based lawsuit can generate a year or more of salary and benefits, you should think carefully before signing a Release contained within a Separation Agreement.

One  favorite trick of companies is to include as "severance" an amount of money that is equal to what they already owe you under the law (such as accrued vacation pay, bonuses/commissions, pay for people who were fired without the amount of notice required in their employment agreement, etc.). 

Another trick companies use to get you to sign the Release is to agree that they won't fight your unemployment case.  That is what I call a promise without value.  If you are being offered severance, then you probably did not engage in willful misconduct, so you are going to get unemployment anyway.  Thanks for nothing!

What really chaps me the most, though, is when companies offer a meager severance, and ask for a Release, when they know they owe you a lot more in overtime or commissions they did not pay to you.

Philadelphia Employment Attorney representing Employees in Towns such as Malvern, Royersford, Blue Bell, Devon, Berwyn, Narberth, Bala Cynwyd, Bryn Mawr, Broomall, Lawrence Park and Aston

Separation Agreements always contain Releases, and Releases are always upheld by Courts.  If you have any question about whether you may be sacrificing important rights by signing a Release, you should really consider hiring a labor lawyer.  On many occasions, I have sat down with recently terminated people and told them something that they didn't know - that their rights under Federal statutes such as FMLA, FLSA, ADA and ADEA had likely been violated, and that signing away their rights to prosecute their claims for $700 was probably not a good idea!

When I spot a problem, and renegotiate a severance deal, I do so on a contingent fee basis - that means you pay us nothing unless you receive a better severance offer, and only a percentage of what we are able to negotiate above what you were initially offered.  Now, that's a fair deal!

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