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Termination? Consider offering severance in exchange for waiving right to sue

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Just letting an employee sign a resignation letter instead of being terminated won’t always prevent her from suing you. What can work: Include a litigation waiver along with a small payment to improve the odds she won’t be able to drag you into court.

Recent case: Laxmi immigrated to the United States to pursue a medical degree. She was placed in a residency program in Harrisburg.

At the time she began her training, Laxmi was 30 weeks pregnant. Almost immediately, her supervisors complained she wasn’t communicating well with patients. She gave birth and then returned to work. However, her communication skills apparently didn’t improve.

Faced with termination, she chose to resign. She sued anyway, alleging pregnancy discrimination. Nothing in her resignation paperwork barred filing a lawsuit.

The court eventually dismissed Laxmi’s case, since she offered no evidence to counter the hospital’s claim of poor performance. However, all that litigation cost the hospital time and money—and the court refused to make Laxmi pay its attorneys’ fees. (Challa v. Pinnacle Health, No. 370 MDA 2016, Pennsylvania Superior Court, 2017)

Final note: Remember, litigation is expensive. It’s often difficult to get a judge to order the losing side to pay an employer’s attorneys’ fees. You would have to show the case was frivolous and vexatious.

That’s one good reason to consider offering some sort of severance pay in exchange for an agreement not to pursue litigation. Always discuss that possibility with your attorney before making a final termination decision.

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