Sept. 18, 2013 – Ending the employment relationship causes anxiety for all involved. Ideally, severance or separation agreements are used to ease those anxieties. Just as each employment relationship is unique, the agreements that are meant to amicably bring those relationships to a close present a host of complex legal issues that require careful consideration from lawyers on both sides of the bargaining table.

In this video, Milwaukee attorney Frank Gumina discusses some of the common errors and pitfalls of severance and separation agreements. “Many employers believe that severance agreements are form documents that can be pulled off the internet,” says Gumina. “They are far from it. They are complex documents that need to be carefully drafted to ensure you have a final deal and not one that will land you in court.”

Gumina says for an employer to ensure it has an enforceable deal that provides finality to the employment relationship, it is critical to:

• cover all aspects of release language and special regulations that apply to severance agreements; and
• understand the case law that applies to severance agreements.

Employer Provisions Can Actually Create Coercion and Duress Claims

“If a severance agreement is not properly drafted, it can create litigation,” says Gumina. “Claims can be filed against the employer, especially age discrimination claims when the provisions of the Older Workers Benefit Protection Act have not been met. For example, an employer may add provisions to an agreement that provide for benefits the employee is already entitled to, thus creating a duress claim for not providing sufficient consideration.

“Many lawyers know some of the basic rules of the Act, such as the 21-day consideration period and the seven-day revocation period. However, when you are offering a program to two or more employees special EEOC regulations apply. Under case law, with respect to age claims, the employer has one shot to get it right. If they don’t, then they don’t have an enforceable release,” he says.

Avoid the Pitfalls; Hire an Expert

It is critical that employers use appropriate agreements for the right circumstances to avoid the many pitfalls that exist with severance and separation agreements. While the EEOC has some guidelines, Gumina advises employers to, “seek out someone who works in this area and knows the lay of the land in this complex area of law.”

Gumina is a shareholder with Whyte Hirschboeck Dudek S.C., Milwaukee. He practices labor and employment law on behalf of employers.

Gumina presented “Peacefully Ending the Employment Relationship: Negotiating Thorough, Enforceable, and Sustainable Separation Agreements,” at the August 2013 State Bar of Wisconsin PINNACLE^® Health, Labor, and Employment Law Institute.

Select programs from the August institute will be offered as Webcast seminars later this year. Tuition for institute webcast programs is included in the cost of the Gold and Silver Ultimate Pass, and the first two webcast offerings are complimentary for institute attendees.