Law Office of David Miklas, P.A.

management labor & Employment law

End of Employment Agreements and Waivers and Releases

It is important that an employer uses an experienced employment lawyer in order to draft and effective and enforceable employee termination and release agreement.  These may include provisions for severance pay. They also may be complicated if the employee is over the age of 40 because there are special requirement imposed by the Older Workers Benefits Protection Act (OWBPA). 


In Florida, separation and release agreements with terminating employees are valid and enforceable, provided that they are sufficiently clear and supported by adequate consideration. 

 When offering a separation and release agreement to a terminating employee, employers should consider the following guidelines:

  • Write the agreement using plain language, in a manner calculated to be understood by the employee.
  • State the consideration in the agreement, and remember that consideration includes only those things of value that the employee would not otherwise have been entitled to receive.
  • Include a broad release in full of all claims, including claims arising under constitutions, statutes, ordinances, common law, and public policy.
  • Consider a confidentiality provision, and consider adding a penalty for violation of that provision.
  • Consider a non-disparagement clause.
  • Include a statement that the employee has been encouraged to consult with counsel regarding the agreement and that ample time for such consultation has been provided.
  • Include a provision requiring the employee to repay all consideration if the employee (or anyone acting on behalf of the employee) is successful in challenging the enforceability of the release language.
  • Include a choice of laws provision, stating which state’s laws will govern in the event of a dispute.
  • Consider adding a venue provision, stating where suit must be brought in the event of a dispute.
  • Include a statement that the employee has read the agreement, fully understands it, and is signing the release of his/her own free will.
  • If claims of age discrimination are to be included in the release, ensure that the release complies with all requirements of the Older Workers Benefit Protection Act.


 Should an Employer Try To Get A Release In Exchange For Severance Pay?

  • In certain cases depending on the circumstances of the discharge or the nature of the employee, obtaining a release in exchange for severance pay (or additional severance pay) may be advisable and cost effective.  For example, if you think the employee will sue or of there were considerable problems with the discharge.
  • In order to avoid coercion claims, employee should not be required to sign release when it is first presented.  You can present it at the time of termination, but give the employee time to think it over.  Allow time for review and consultation.
  • In order to avoid age discrimination claims, releases must contain certain statutorily required provisions and allow certain time periods for revocation. Legal advice should be sought by an employer to make sure waiver and release is sufficient for age claims.  In fact, such an agreement should probably be prepared by the employer’s legal counsel. 


 Special Requirement for Settlement and

Waiver of Age Title Discrimination Claims

 

The Older Worker Benefits Protection Act amendments to the Age Discrimination in Employment Act (ADEA) provide that employees may waive rights and claims under the ADEA so long as the waiver is “knowing and voluntary.”  (29 USC 626(f))  Knowing and voluntary requires that:

1.        The waiver be part of a written, clearly understood agreement between the individual and the employer;

2.        The waiver refer specifically to rights or claims arising under the ADEA;

3.        Rights and claims arising after the date of the execution of the waiver may not be waived;

4.        Rights and claims may be waived only in exchange for consideration in addition to anything of value to which the individual already is entitled;

5.         The individual is advised in writing to consult with an attorney prior to executing the agreement;


6.       A period of 21 days is given for the individual to consider the agreement or if a waiver is in connection with an exit incentive or other employment termination program offered to a group or class, at least 45 days are given within which to consider the agreement; and


     a.     An employee may sign a release prior to the end of the 21 or 45 day time period, thereby commencing the mandatory 7 day revocation period as long as the employee’s decision to accept such shortening of time is knowing and voluntary and is not induced by the employer through fraud, misrepresentation, a threat to withdraw or alter the offer prior to the expiration of the 21 or 45 day time period, or by providing different terms to employees who sign the release prior to the expiration of such time period.  However, if an employee signs a release before the expiration of the 21 or 45 day time period, the employer may expedite the processing of the consideration provided in exchange for the waiver. (29 C.F.R. § 1625.22(e)(6))

     b.     The 21 or 45 day period runs from the date of the employer’s final offer.  Material changes to the final offer restart the running of the 21 or 45 day period; changes made to the final offer that are not material do not restart the running of the 21 or 45 day period.  The parties may agree that changes, whether material or immaterial, do not restart the running of the 21 or 45 day period. (29 C.F.R. § 1625.22(e)(4))

7.     The waiver provides for at least 7 days in which the employee may revoke the agreement. 

a.  The 7-day revocation period cannot be shortened by the parties, by agreement or otherwise. (29 C.F.R. § 1625.22(e)(5).

8.         If a waiver is executed in connection with an exit incentive or other employment termination program offered to a group or class of employees, the employer must inform the employees in writing about the class, unit, or group covered by the program, any eligibility factors for the program, and any time limits applicable. The employer also must make clear the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organization unit who are not eligible or selected for the program.

      Florida employers should be aware that nonstatutory circumstances, such as fraud, duress, or coercion in connection with the execution of the waiver, may render an ADEA waiver not “knowing and voluntary.”

With regard to Florida's public employers (such as cities and counties), Fla. Stat § 215.425 provides that no extra compensation shall be made to any officer, agent, employee, or contractor after the service has been rendered or the contract made

On or after July 1, 2011, a unit of government that enters into a contract or employment agreement, or renewal or renegotiation of an existing contract or employment agreement, that contains a provision for severance pay with an officer, agent, employee, or contractor must include the following provisions in the contract:

1. A requirement that severance pay provided may not exceed an amount greater than 20 weeks of compensation.

2. A prohibition of provision of severance pay when the officer, agent, employee, or contractor has been fired for misconduct, as defined in s. 443.036(29), by the unit of government