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Don’t withhold promised severance when a former employee files suit

by on
in Discrimination and Harassment,Employment Law,Firing,Human Resources

When Shawn Bernstein lost his job in a company merger, he sued under just about every discrimination law imaginable. The court threw out those claims, saying the company had legitimate reasons for its actions. But now that same company may be on the hook for retaliation.

Reason: Before the lawsuit, Bernstein was promised, in writing, a severance package that included two weeks of pay for every year of service, no strings attached. But the company changed the rules after he filed suit. It told Bernstein that he would get his severance pay only if he dropped his lawsuit and released the company from any future claims.

If you make a promise in writing, you can't later decide that it's negotiable, the court said in letting the case go to trial.

Employers can legally offer additional payment in exchange for withdrawing a filed discrimination claim, or it can require workers to sign a waiver of future claims in exchange for severance. But you can't make an already promised severance package contingent on dropping an existing claim, the court said. (Bernstein v. The St. Paul Companies, No. L-99-3056, D. Md., 2001)

Employers often run into trouble by setting an unwritten severance policy, then altering the policy when they think they're going to get sued. The "switcheroo" can lead a court to believe you're retaliating.

Advice: Always make severance payments conditional on the signing of a release that waives any future claims, and put that policy in writing. If you want a worker to drop an existing suit, be ready to pay more money.

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