Thursday, August 5, 2010

Why Is My Employer Asking Me to Sign a Release of Claims? Should I Give A Release in Exchange for Severance?

What is a the Effect of a General Release in Pennsylvania?  Can I Sue a Company if I Signed a Release?

A Release is a Contract -
Release Agreements are ALWAYS Enforced
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?  Why is the Company Asking Me to Waive Any Claims I May Have?  Separation Agreements Virtually Always Include 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.


Severance is Offered in Exchange for a 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.  If you sign a Release, you also give up the right to seek any unpaid wages, commissions, overtime, vacation or sick pay, etc.

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 longer-term 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.

Severance Pay Sometimes Includes Wages, Commissions, Bonuses, Overtime, Sick Pay or Vacation Pay the Employee Has Already Earned

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.). 

If I am Offered Severance if I Agree to Quit, Should I Accept That Offer Under Pennsylvania Unemployment Law

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!

Is the Severance Offered Voluntarily or
Because the Company Has to Make Such an Offer
Companies also will offer severance if an employee agrees to resign, and then have them execute a Release.  You need to think carefully about that.  Sometimes it is a good idea, but it often depends upon whether you are entitled to severance even if they fire 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!

Negotiating Releases for Pennsylvania Employees Since 1991
Philadelphia Are Employment Attorney Representing Employees

John A. Gallagher is an employment lawyer who represents employees in Pennsylvania. 

John typically represents employees who need an employment lawyer in Philadelphia County, Chester County, Delaware County, Bucks County, Berks County, Lancaster County and Montgomery County.

Pennsylvania Employment Attorney Provides Free Telephone Consultations

If you are looking for an employment lawyer, and live in Malvern, Wayne, King of Prussia, Downingtown, Glenside, Doylestown, Radnor, Newtown Square, Exton, Philadelphia, West Chester, Skippack, Langhorne, Haverford, Nether Providence, Broomall, Drexel Hill, Reading or any of their surrounding towns, feel free to send me an e-mail or give me a call.  I am always glad to spend some time with people via a free telephone consultation.

Need an Employment Labor Lawyer Near Philadelphia?

Click Here if you have questions about any aspect of employment law, from wrongful termination, to wage and overtime claims, to discrimination and retaliation laws, to Family and Medical Leave

Click Here if you have questions about any aspect of Pennsylvania Unemployment Law, from willful misconduct, to voluntary quit, to Referee Hearings, to severance issues

Click Here to e-mail John directly.

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