Can a Florida employer still be sued after it pays an employee a severance?
An employee raised concerns about her employer’s billing practices that she believed were fraudulent. She claims she was then stripped of her responsibilities and then forced to resign. The employer decided to pay the employee a severance in exchange for her waiving her right to sue for various things, including discrimination and retaliation.
After the employee signed the severance agreement and received the money, she then filed a lawsuit, in federal court in the Middle District Court of Florida, against the employer for retaliation.
The employer filed a Motion to Dismiss the lawsuit and the judge focused on the terms of the severance agreement that the employer provided to the employee to sign. Very recently (August 2019) the Florida court ruled on this matter, which provides guidance to Florida employers.
The severance agreement provided that the company would pay the employee the following: (1) two months’ salary, (2) a lump sum payment equal to all unused paid time off that the employee had accrued, and (3) a two-month continuation of the employee’s vision, health care, medical, and dental insurance benefits with the company. In exchange, the employee agreed to: irrevocably and unconditionally release the Company from any and all claims of any nature whatsoever.
The severance agreement provided the employee with at least 21 days to consider the terms of the agreement and seven days to revoke her consent after signing, and further advised the employee of her right to consult with an attorney prior to signing the Agreement. The employee signed the severance agreement 22 days after her resignation.
The heart of the court’s analysis was whether the release contained in the severance agreement was valid and enforceable. This was necessary because the employee claimed that she was coerced or forced into signing the severance agreement.
In Florida, a waiver of an employee’s statutory rights must be scrutinized under the totality of the circumstances to ensure that the release was “knowing” and “voluntary.” (involving employment discrimination suit under Title VII).
The Court explained that its review of the totality of the circumstances involves several objective factors, including:
A) the employee’s education and business experience;
B) the amount of time the employee considered the agreement before signing it;
C) the clarity of the agreement;
D the employee’s opportunity to consult with an attorney;
E) the employer’s encouragement or discouragement of consultation with an attorney; and
F) the consideration given in exchange for the waiver when compared with the benefits to which the employee was already entitled.
Applying these factors to the instant case, the Court found that:
(1) the employee was educated, as she has a Bachelor of Science degree;
(2) the language in the severance agreement gave the employee 21 days to consider the agreement before signing it and an additional seven days to revoke her consent (change her mind);
(3) the severance agreement plainly and clearly included all claims arising from the employee’s employment and her subsequent termination;
(4) the agreement advised the employee of her right to consult with an attorney before executing the agreement, which the employee had time to do because she did not sign the Agreement until 22 days after her termination date; and
(5) the employee was given an additional two months of salary and insurance benefits and a lump sum payment for paid time off to which she would not otherwise have been entitled.
Therefore, this Florida court determined that the totality of the circumstances indicated that the employee accepted valuable consideration in exchange for her knowing and voluntary relinquishment of the claims described in the severance agreement. United States ex rel. the employee v. HealthSouth Corp., 2019 U.S. Dist. LEXIS 146351 (M.D. Fla. Aug. 28, 2019).
The above “facts” were taken in the light most favorable to the employee.This recent case shows Florida employers how the language included in a severance agreement is crucial, and will be scrutinized by a court if the employee later tried to sue after receiving the employer’s money.
If you need any assistance in drafting severance agreements concerning your Florida business or if you need guidance in any employment policies, please promptly email the Law Office of David Miklas, P.A. or call us at 1-772-465-5111.
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