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Can severance packages waive discrimination claims?

On Behalf of | Nov 17, 2022 | Employment Law

With the number of layoffs in the news recently, especially in technology, there has been a renewed interest in severance packages and discrimination waivers that are now placed in them.

Severance agreements

Severance agreements are legal contracts between the employee and employer. They specify the terms of the employee’s termination, which is usually couched as mutually agreed-upon separation. These agreements usually include some language that the employee agrees not to sue the Greensboro, North Carolina, employer.

What are discrimination waivers?

Discrimination waivers refer to a clause in severance packages where employees waive their right to sue their employers. Usually, these are broad waivers that include waiving your right to sue for discrimination. In other words, if you take the severance package, you cannot later sue your employer for just about any reasons. And, since you are facing unemployment, the urge to sign it can be powerful.

Severance packages are common for senior-level executives. And, they negotiate these packages and provisions. However, non–senior-level executives are often just presented with severance agreements without any say in the agreements themselves.

Contract law

First, it is important to note that severance agreements must follow contract law to be legal and enforceable. This means that the contract must be supported by consideration. This is some value that the employee is not already entitled to prior to the enactment of the severance agreement. This means that if the severance agreement only includes things the employee is entitled to, like pension payouts, vacation time, sick leave, etc., the agreement may not be enforceable.

On the other hand, if there is some separate consideration, it may be enforceable. This can be a lump sum payment, which is usually a percentage of the employee’s salary, or some other form of payment, lump sum or periodic.

Do not just sign it

If you are presented with a severance agreement when you are let go, do not immediately sign it. You should have it looked at by a Greensboro, North Carolina, attorney. While it may not be enforceable, it might be, and you could be giving up rights that are real and tangible. This can be especially true for employees 40 and over who are often illegally targeted in layoffs.