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Severance Waivers Are Endangered Species

By Karl G. Nelson and Samantha A. Ferris
January 31, 2007

When involuntary employment terminations become necessary, employers often seek protection from possible post-employment claims by conditioning severance pay on the signing of a general release and agreement not to sue. As a general rule, such waivers are enforceable if they are 'knowing and voluntary.' Less clear, however, is under what circumstances an employer may condition severance payments on a promise by the departing employee that he/she will not pursue a charge with the Equal Employment Opportunity Commission (EEOC) in connection with an allegation of discrimination, harassment, or retaliation.

Recently, increased litigation activity by the EEOC signals renewed agency focus on severance arrangements that seek to limit a former employee's ability to participate in any manner in EEOC administrative proceedings. Such agreements, in the EEOC's view, are not just unenforceable, but also constitute per se retaliation. The EEOC's position, and its recent litigation in this area, creates increased risk for employers currently using aggressive severance agreements that purport to limit the right of former employees to pursue a charge with the EEOC.

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