The economy does not have to be bad a company to incorporate severance
agreements into its employment policies. Severance agreements are important
for a variety of reasons regardless of the business climate. Certainly
there are the goodwill aspects of offering severance payments to former
employees who have provided years of valuable and loyal service to an
employer. However, the single most valuable aspects of severance agreements
are (a) the inclusion of broad, full and final releases covering any legal
claims the former employee otherwise may have considered bringing against
the former employer for unlawful discrimination, harassment, and other
claims, and (b) non-compete covenants or, in cases where a non-compete
agreement is already in place, provisions can be included in the severance
agreement that expands the coverage of the existing restrictions.
When drafting the release language, careful attention needs to be taken
to broadly include all claims that the employer desires to be released.
Certain employment related claims are governed by statutory waiting period
requirements, and the failure to follow the statutory procedures will
render the agreement invalid. In addition, limiting language such "the
released claims consist of and are limited to any and all Claims that
in any way relate to: (i) employment of the Employee with Company, or
the termination thereof, or claims for compensation, bonuses, commissions,
lost wages, or unused accrued vacation or sick pay," would not serve
to release the Employer from tort claims and other claims that may not
specifically relate to the employment relationship. In fact, a recent
Florida appellate case held that this specific language did not constitute
a release of a claim for tortious interference brought by the former employee
against the former employer.
The time to avoid costly mistakes is when the employment relationship is
being terminated and severance is being offered. There is not going back
to correct mistakes so careful attention should be taken to adequately
address all issues in a severance agreement.
Alex P. Rosenthal, Esq.
Rosenthal Law Group
2115 North Commerce Parkway
Weston, FL 33326