Release and Waiver Agreements

  1. Do not try to include prohibitions against unemployment, FLSA, EEOC, and NLRA claims. Texas law flatly prohibits any agreement not to file an unemployment claim, and any such agreement is void and unenforceable. The right to minimum wage and overtime pay may not be waived (Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945)). EEOC takes the position that attempting to have an employee promise not to file an administrative claim regarding employment discrimination is potential evidence of intent to discriminate. The NLRB has signaled a similar view regarding employee rights under the NLRA.

  2. Incentive money, i.e., money paid to secure an employee's agreement not to file claims or lawsuits, is not regarded as severance pay for unemployment claim purposes and will not affect unemployment benefits if it is paid to obtain a release or waiver of liability from the departing employee with regard to the Civil Rights Act of 1991, or to settle a claim or lawsuit that has already been filed, or in connection with a written contract that was negotiated between the employer and employee prior to the date of the work separation.

  3. The enforceability of such an agreement will be dependent in part upon the extent to which the terms are expressed in plain language. Complicated wording and arcane terminology will generally make the agreement less enforceable.

  4. Just like arbitration agreements, release agreements must meet certain standards as to readibility, clarity, and equitable (fair) treatment.

  5. The agreement should make it as clear as possible that in return for accepting whatever incentive is offered and signing the agreement, the employee gives up the right to pursue various claims in court.

  6. Include language in conspicuous lettering advising the employee of his or her right to seek legal advice before signing the agreement, and allow a reasonable time (most companies allow at least seven days) for signing. For special rules regarding releases signed by employees age 40 or older, see "Early Retirement - Voluntary Leave Incentives - Age Discrimination Issues" in this outline.

  7. Preparing a valid release that has a high likelihood of standing up in court really requires the assistance of an experienced employment law attorney. In light of all the laws favoring employee rights, and of public policy against anything that limits a person's access to the court system, it is simply inadvisable to attempt to prepare a release agreement without such help.

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