Sometimes, it’s tempting to offer a disgruntled employee a quick cash settlement in exchange for her signature on a liability release. If a few thousand dollars will avoid an expensive lawsuit, it’s worth it, right?
Maybe, maybe not.
If the release isn’t properly executed, the employee might be able to sue anyway. Then you’ll have to be prepared to defend yourself against the employee’s underlying complaint and the circumstances surrounding the release. That’s especially true if the former employee claims she was threatened, unduly pressured or otherwise made to sign the document under duress.
Advice: Consult with your attorney before you even suggest a release. And let your lawyer manage the process.
Recent case: Stephanie Chappell worked as a high school teacher for the Butterfield-Odin School District for just six weeks in 2005. She left after running into several disputes over alleged disability discrimination, and she signed a release promising she wouldn’t sue in exchange for a settlement.
Chappell sued anyway, alleging disability and other discrimination. But she had to find a way to get out of that release in order to continue her lawsuit. She found two. Chappell said the payment she received had been too small to trade for her promise not to sue. She also said she had been under great duress when she signed it.
The school district asked the court to toss out her case early, but it refused. It said Chappell should have a chance to prove the duress she was under made the agreement invalid, and that she got too little money in exchange for her promise not to sue. (Chappell v. Butterfield-Odin School District, et al., No. 08-CV-0851, DC MN, 2008)
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