How to create a valid severance agreement: Sweeten the pot above and beyond the usual — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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How to create a valid severance agreement: Sweeten the pot above and beyond the usual

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in Employment Law,Human Resources

To prevent lawsuits over layoffs, employers often offer a severance agreement that requires the employee to waive the right to sue. When those agreements involve older workers, they have to meet very specific legal requirements.

For example, older employees can’t relinquish their right to sue unless the agreement provides them with more money or benefits than they would otherwise receive if they didn’t sign. That’s why the agreement must be crystal clear about the basis of the extra payments.

Recent case: Charles signed a severance agreement when he was laid off from Motorola. It gave him more than $80,000 in exchange for promising not to sue.

He sued anyway, arguing that the agreement was invalid because it wasn’t obvious how the payout was calculated or even that it was more than he would have received had he not signed.

The court said the case could go forward. Motorola will have to show the court how the payment compares to what Charles would have received if he hadn’t waived his rights. (Lamberti v. Motorola Solutions, et al., No. 12-Civ-2472, SD NY, 2013)

Final note: Severance agreements aren’t do-it-yourself projects. Get your attorney’s help, especially if the employees involved are over age 40. A good lawyer can create a solid package that passes legal muster. A poorly drafted agreement may be worse than no agreement at all.

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