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When faced with potential employment claims, many employers often elect to resolve them amicably by providing additional severance in exchange for a release of those claims. However, as recognized in a recent decision from the Maryland Federal Court, a poorly drafted severance agreement can prove to be a very expensive mistake. This article takes a closer look at this decision: Equal Employment Opportunity Commission v. Nucletron Corporation, D.C. Md., Civil Action No. L-07-2644, July 2, 2008.)
Background Facts
Nucletron, the employer, provides severance pay to eligible employees whose employment is terminated for reasons that are not prejudicial to the company. Nucletron requires its employees to sign a severance agreement upon their termination in order to receive severance benefits. The agreement requires that the employee waive his rights under several employment statutes, including the Age Discrimination In Employment Act (ADEA), Title VII of the Civil Rights Act (Title VII) and the Equal Pay Act of 1963 (EPA). The agreement also requires the employee to promise neither to file a charge with any federal agency, nor to participate in any such action.
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