Employers who want to trim their work force often sweeten the exit with severance payments. In exchange, employees sign away rights to lawsuits they may otherwise have contemplated.
But what about employees who already have pending employment discrimination lawsuits or EEOC or state agency complaints? You can require employees to give up their lawsuits/ complaints if they want the money, and you don’t have to offer anything extra. Just make sure you allow time for them to consider the offer, and encourage them to consult an attorney.
Recent case: Bank employee Dwight Myricks sued because he thought he had been discriminated against because he is black. He lost his case and appealed. While the appeal was pending, the bank decided to close Myricks’ department. It offered employees, including Myricks, two choices: Accept termination with two weeks salary, or sign a complete release and receive four years’ seniority credit toward retirement plus one year of salary.
Myricks had 60 days to decide and was encouraged to discuss the offer with his attorney. The attorney tried to negotiate a larger severance payment, since the release covered pending lawsuits in addition to other claims. The bank refused and told Myricks to take it or leave it. Myricks signed, taking the money. His attorney then pressed forward, alleging that the release was invalid since Myricks didn’t get extra money for releasing a pending lawsuit.
The 11th Circuit dismissed the lawsuit. Myricks voluntarily signed the agreement, after consulting with counsel, it noted, adding: “Employers have no obligation to vary the compensation offered for a release based on the potential strength of an employee’s claim.” (Myricks v. Federal Reserve Bank of Atlanta, No. 06-11624, 11th Cir., 2007)