The U.S. Labor Department has announced it plans to update
Now a recent case spells out under what circumstances a release will be contractually and legally binding under Pennsylvania law.
Recent case: Barbara Dougherty worked as a senior secretary for TEVA Pharmaceuticals, but her performance began to deteriorate. She claimed her supervisor was working with her family to get her back on medication to deal with post-traumatic stress disorder.
Her supervisor suggested that Dougherty leave the company. TEVA offered Dougherty a severance package that included one month’s pay.
Dougherty went home. Then she called and said she might want to take a leave of absence. TEVA then offered two months’ pay as severance, which Dougherty accepted.
All told, she had several weeks to consider the company’s offer and spoke with both the EEOC and her family about accepting it since it included a release of all discrimination claims, including her . She also tried to get legal advice but was unable to hire an attorney.
Then, after cashing the check, Dougherty went to court to void the agreement.
First, she argued that the FMLA doesn’t allow employees to sign away past violations without either court or Labor Department approval. But the court said that wasn’t so.
Then she argued that the severance agreement wasn’t a valid contract under Pennsylvania law. The court rejected that claim, too—but only after laying out the contract requirements and concluding they had been met.
To be valid under Pennsylvania law, a liability release like the one Dougherty signed must include clear and specific language, and the employee must:
- Have the experience and education to understand the agreement
- Have enough time to decide whether to sign the agreement
- Have known what her rights were before signing them away
- Have the opportunity to seek counsel
- Have the opportunity to negotiate the terms of the release
- Get something of value in exchange for the liability release
- Not have been under legal duress.
The court found that Dougherty had signed a valid release based on all the facts. Therefore, she could not sue now for alleged FMLA violations. The agreement was clear; she understood what she signed; she sought outside advice; she negotiated two months’ pay; she got the money for signing the release; and she was not under duress. (Dougherty v. TEVA Pharmaceuticals, No. 05-CV-2336, ED PA, 2008)
Final note: The court was careful to point out that employees can release only past FMLA violations, not future ones. Thus, if an employee settles an FMLA case and stays with the company, the release isn’t binding on possible future violations—just past ones. In this case, Dougherty signed a type of release that included severance. In other words, she also gave up any claim to her job.
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