Severance Agreements And Employment Separation Agreements in New York City During the Coronavirus Pandemic

As of mid-April 2020, the coronavirus pandemic has caused the loss of approximately 22 million jobs in the United States, based on the number of unemployment claims around the country since early March. With layoffs becoming increasingly common, New York City employment attorneys are seeing that more and more workers are being asked to sign severance agreements as they are shown the door. State and federal law regulate certain aspects of typical severance agreements, so New York City workers should consider seeking a legal opinion before signing anything.

What Is a Severance Agreement?

The term “severance agreement” can refer to any document that purports to show an agreement between an employer and an employee at the end of the employment relationship. A severance agreement is usually part of a “severance package,” which might include additional compensation besides wages or salary already owed to an employee. This could be a cash payment, stock options, or contributions to a retirement account.

Waivers of Rights in Severance Agreements

The employer, of course, expects something in return. In exchange for the additional compensation in a severance package, a severance agreement might contain a clause waiving the employee’s right to bring claims for wrongful termination, discrimination, harassment, or retaliation. The only way for a waiver of these rights to be enforceable is if the employer gives something in return. This is where severance agreements can be dangerous for workers.

The law of contracts requires an employer to provide something of value in exchange for an enforceable waiver of rights. Under contract law, an employer can offer a severance package in exchange for signing a severance agreement, and can withdraw that offer any time before the employee accepts it. At least one statute sets additional requirements for any agreement with a waiver of rights.

The Older Workers Benefit Protection Act amends several provisions of the federal Age Discrimination in Employment Act (ADEA). Any time an employer asks an employee who is at least 40 years old to waive any rights under the ADEA, they must give the employee at least 21 days to consider it. If the employee agrees to the waiver, they have seven days to revoke their agreement. If the employer’s request for a waiver of rights is part of a layoff of two or more employees, they must give the employee at least 45 days. This applies regardless of whether there is a public health emergency going on.

Enforceability of Waiver of Rights

Any waiver of rights must be “knowing and voluntary” in order to be enforceable. Even if a worker signs a waiver, they can still file a lawsuit for wrongful termination, discrimination, or another claim. The employer will almost certainly move to dismiss the suit because of the waiver, and the worker will have to challenge the waiver’s validity.

A worker cannot waive their right to file a charge with the Equal Employment Opportunity Commission, and any provision that purports to waive this right is invalid. If a worker accepts severance pay in exchange for a waiver, they cannot be compelled to return any of it if they file a complaint under the ADEA. For complaints under other statutes, including Title VII of the Civil Rights Act of 1964, the law is less clear on that issue.

The employment attorneys at Phillips & Associates help New York City workers assert claims for unlawful workplace practices under state, federal, and city law. To schedule a free and confidential consultation with a member of our experienced and skilled team, please contact us today online or at (866) 229-9441.

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