If I had a dollar for every time a client told me that some dispute should be easy to resolve, or they can’t imagine that the other side would litigate… well, I pretty much do because I always end up defending those “surprising” lawsuits.
Being a lawyer makes you cynical. Most of the time, things don’t come to me until long after everyone has stopped being reasonable or cooperative. So perhaps my clients are not being delusional when they think that the problem they are dealing with will peter out… perhaps that happens nine times out of ten.
The tenth time, though, you are in my office, and it’s going to be a doozy.
Sometimes you need a little insurance so as to avoid spending too much time with me and people like me. That’s why I suggest getting releases from exiting employees strategically.
A release is an agreement not to sue you for any harms (real or imagined) in exchange for some sort of benefit (usually an extra payment, like a severance agreement). A release ensures (with only the very rare exception) that the employee will not come back to create problems.
But the release has to be done correctly.
Releases are legal contracts that are also regulated by a dozen or more employment laws. Here are a few things you should know:
- You cannot enforce a release on undisputed, owed wages.
- You cannot enforce a release without adequate consideration (that’s the benefit provided to the employee in exchange for waiving rights).
- Certain laws require waiting and revocation periods for certain classes of employees, and these cannot be waived.
- You cannot enforce a release on future liabilities (i.e. harms that have not happened yet).
- Certain provisions may be illegal, such as non-compete, no rehire, confidentiality or non-disparagement clauses.
- You cannot have an employee release rights to complain regarding criminal activities or to certain governmental agencies because that might amount to payment for blackmail.
- You should have carefully considered construction and enforcement provisions to ensure that the release will hold up in court and in your favor.
Releases do not need to be done for every exiting employee. Nor would that be cost-effective or even necessary. So do not do them routinely as part of the exit interview.
But if you have an employee who has had some drama during their employment, then a release can be worth the extra expense. You must weigh the cost of providing a benefit for severance and using a lawyer against the likelihood that you will be sued. But remember that the expense of a payment and release is often a teeny, tiny fraction of a lawsuit.
Releases are a great strategy to mitigate or avoid risk. If you have an employee you are worried about, contact your employment lawyer to determine whether a release is a worthwhile idea.
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