When employees facing layoffs sign severance agreements before packing their boxes and heading out the door, employers think they have immunized themselves against lawsuits in return for providing a separation package.
But several large corporations discovered recently that it's not always that simple. Several ex-employees have successfully challenged severance agreements in court, some on substantive grounds, others on technicalities.
On the heels of the Lockheed decision, the EEOC reached a settlement in another federal lawsuit it brought on behalf of a former employee of Ventura Foods, a California-based food-processing company. In the Sept. 1 consent decree, Ventura agreed to remove language that required separated employees to agree not to file a charge of discrimination in exchange for severance pay. Three weeks later, the EEOC brought a similar suit against Land O'Lakes.
"What employers need to realize is that the EEOC has shown a desire to take this position on a national basis," says Robert Reid, partner in Dinsmore & Shohl in Cincinnati. "The EEOC's mission is to eradicate discrimination. They will take a position against any effort to chill that."
The convergence of cases has put a spotlight on severance agreements, and the EEOC or the plaintiffs' bar will be alert to faulty agreements going forward. Employment attorneys suggest that general counsel not waste any time in reviewing their severance agreements, as well as any follow-up communications.