When a company terminates a worker's employment for reasons which are outside of the worker's control, most companies will provide the worker with a severance package. This package can consist of anywhere from weeks to months of the worker's salary to provide support during the process of finding a new job. Some severance packages even include a continuation of benefits such as health care and 401(k) benefits for a specified period of time. In return for this severance package, some companies include a release agreement. As our Chicago release agreement lawyers understand, a release agreement is a contract which releases one party from liability to the other. In the case of a severance agreement, a release agreement usually releases the company from liability for wrongful termination of the employee. Because employers are not required to provide severance agreements when they let an employee go, the release agreement provides the company with some leverage in offering a severance package.
When writing a release agreement, companies may be tempted to make the contracts as broad as possible. However, there are certain rights granted to employees by state and federal laws which cannot be waived in a contract. These include any rights granted by the federal Fair Labor Standards Act (FLSA) which cannot be waived without approval from the U.S. Department of Labor. The Family Medical Leave Act is another federal statute which grants rights to employees in the event that they or a family member experience a medical emergency which requires them to take time off work. Not all courts agree as to whether the rights provided by this act can be waived without approval from the Department of Labor. For a better chance at having a legally enforceable contract, companies would be best advised not to have employees waive any of these rights as part of the contract.
State laws must also be considered. In some states, an employee cannot waive the right to collect earned but unpaid compensation. This means that no release agreement in any of those states can require an employee to waive their right to sue for any straight time or overtime which they believe the company still owes them. Other states have laws which prohibit release agreements from requiring the employee to not file for unemployment. Our release agreement attorneys can advise Chicago clients on how Illinois laws may affect them.
In general, a company will include a release agreement as part of a severance agreement in order to use the salary and benefits provided in the severance package as leverage to get the employee to waive certain rights. In the event that the employee exercises those rights in violation of the release agreement, the employee is usually required to return the severance package. However, if a release agreement requires an employee to waive rights which she cannot legally waive, then she can still exercise those rights and retain her severance package.
In order to make sure that the employee has a fair chance of understanding the release agreement, most courts will require the contract to be written in plain language, and as simply as possible. Courts will also consider whether or not the employee was given sufficient time to review the contract before signing. For most companies, seven days to review the contract is standard. It is a good idea for any employee who has been handed a release agreement to consult with an employment attorney before agreeing to sign.
The Chicago release agreement attorneys at DiTommaso Lubin Austermuehle are very experienced in handling severance agreements as well as release agreements. We are committed to protecting the rights of employees, both during and after their employment. With offices conveniently located in Oak Brook Terrace and Chicago, Illinois, we represent clients throughout the Chicagoland area including in Elmhurst, Addison, Lisle, and across the country. To consult with a skilled release agreement lawyer in Chicago today, you can email us online or call us at 877-990-4990.