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Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Wednesday, July 16, 2014

5 Guiding Principles for Drafting a Severance Agreement

Contract

When drafting severance agreements, there are several things that employers need to take into consideration.  Below are five considerations that all human resource managers should consider before asking an employee to sign on the dotted line.

  1. One Size Does Not Fit All. If an employee is 40 or older, any severance agreement must contain specific language advising of certain rights.  Moreover, the employee must be provided with a right to rescind the agreement and a waiting period becomes effective.  Consult with an attorney for the specific language applicable to employees.
  2. Stop The Negatives. Employers should refrain from adding language that works to prevent the employee from speaking negative about your business.  Such clauses cannot prevent the person from filing a charge with a government agency like the EEOC, or from participating in governmental investigations.
  3. Consideration. Consideration is required for a valid severance agreement.  There must be a benefit to the employee for the agreement—something they would not otherwise be eligible for.
  4. Firing Practices. While some employers want to add no-rehire provisions, these are not looked upon positively by the EEOC.
  5. Seek Counsel. Because laws are ever changing, and specific wording can be required to prevent litigation, it may be in your best interest to consult with a skilled attorney to ensure that the agreements will hold up in court.

See Shayna H. Balch, 5 Things to Remember When Drafting A Severance Agreement, Mondaq, July 15, 2014.

http://lawprofessors.typepad.com/trusts_estates_prof/2014/07/5-guiding-principles-for-drafting-a-severance-agreement.html

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