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Can I Be Forced To Sign A Severance Agreement?

Can I Be Forced To Sign A Severance Agreement?

Best Ohio Employment Discrimination Attorney Answer: What happens if you don’t sign a severance agreement? Can you refuse a severance package? Can I still sue after signing a severance agreement? Should I have a lawyer look over my severance agreement before I sign it? Why should I have an attorney review my severance package? Can I Be Forced To Sign A Severance Agreement?

You are sitting in your office and somebody pops their head into to say that the boss wants to see you. That’s never a good feeling. It only gets worse when the boss tells you that the company is firing you, letting you go, going in another direction or some other euphemism for “get the hell out of here, you don’t work here anymore.” You think to yourself, “I’ve was fired today! What am I going to do?” As your head is spinning, the boss or manager offers you an out – here’s a severance agreement that will give you some money until you find a new job and we can agree that you resigned so it will not look like you were fired.

Mostly importantly, remember that a severance agreement is a contract. Contracts are binding. Once it is signed both parties are contractually bound to the obligations writing in the agreement.

So, here is why you should not immediately sign a severance or end of employment agreement: (1) the agreement was drafted by their employment law attorney and it will not likely be fair – it might even slip in terms that prevent you from accepting a new job in the same field; (2) because most employers will not share any information about your employment during background checks except the dates of your employment and position held, the offer to change the designation from termination to resignation is typically meaningless; (3) you do not know if the money being offered is sufficient or fair; and (4) you will be required to give up any claims you may have against your employer – even claims that you may not know that you have. Employers think they can take advantage of newly fired employees because of their mental state.

If your employer thought it was important to have a lawyer at a big law firm draft a severance agreement for you to sign, it is equally important to have an employment attorney review it for you too. You have a right to ask for time to read it outside of the office and to consult an attorney. Think about it this way, if the boss, manager or supervisor says sign it now or no deal, it means that he or she really is afraid about what an attorney is going to tell you.

If it is even possible that you are being fired because of your race/color, religion, gender/sex, national origin, age, disability or pregnancy, or because you recently filed a request for FMLA or a Workers’ Compensation claim, or you think it is retaliation for whistleblowing, absolutely do not sign anything your boss or manager gives you without talking to an employment attorney. You may be forfeiting a very valuable wrongful termination claim. (See what Should I Do If I Was Wrongfully Fired From My Job In Ohio?; Can I Take Evidence With Me When I’m Wrongfully Fired? I Need Help From The Best Employment Discrimination Lawyers; How Do I Make An Employment Discrimination Claim?).

A commonly asked question that our employment attorneys are asked is whether we do severance agreement review or contract review. The answer is yes! Our experienced employment lawyers frequently review employment contracts and severance agreements to ensure that they serve our clients in the best way possible. A common problem that we run into when reviewing severance agreements is that employers try to sneak in clauses that limit the employee’s right to bring a claim of discrimination against their employer.

Under Ohio law, an employer can include provisions in a severance agreement that prevent an employee from suing the company or its management or severely limit the time or ability to do so. This is called a release of claims. Employers can include provisions that the employee cannot compete with the employer within a reasonable distance for a reasonable time, which is called a non-compete contract or non-competition agreement. Ohio law permits employers to contract for an employee to waive any future commissions owed as part of a severance agreement. Employers can put a provision in a settlement agreement that you will not contact anyone you sold to as part of your employment – even to help you find a new job or for a reference. Essentially, employers can do almost anything they want as part of a severance agreement … but not anything as there are some few limitations.

As our employment discrimination attorneys have previously discussed, Title VII of the Civil Rights Act of 1964 makes it illegal for an employer to restrict an employee’s right to file a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”). (See Severance Packages and Employee’s Rights to File a Charge of Discrimination with the EEOC.; and Should I Get My Severance Agreement Reviewed Before I Sign?). Also, it is illegal to retaliate against an employee for filing a charge of discrimination against their employer. Because of this, an employer cannot place a term in a severance agreement that limits an employee’s right to file a charge of discrimination with the EEOC after accepting the terms of his or her severance package.

Can I Be Forced To Sign A Severance Agreement?

However, severance agreements can state that employee can file with the EEOC but agrees to take no money from any settlement with the EEOC – so what’s the point? Many employers, particularly those who recognize that they may have a potential wrongful termination case against them, will include this language. Sadly, often they get away with it. When an employee is informed that they are about to lose their job, many do not want to spend any extra time or money to have the document reviewed by an attorney. It’s understandable, who knows when they’ll get paid next? Saving a few hundred dollars now sounds like the safe bet. However, foregoing legal counsel at an employee’s termination could end up being more costly later on for that employee.

There is an interesting case from last summer, that serves as an example of how a terminated employee could have saved money in the long run, had she had an attorney review her severance agreement before signing it. Not only could she have saved money, but her attorney also would have pointed out that the severance agreement contained an unlawful clause and she was discriminated against.

In 2008, Jena McClellan was hired as a telemarketer for Midwest Machining, Inc. She was quickly promoted to inside sales. Jena was a hardworking, dedicated employee. Jena was liked by everyone at work and consistently received good reviews. In 2015, Jena told her boss that she was pregnant. Immediately things at work started to turn sour. Jena’s boss made negative comments for weeks after the announcement about Jena’s pregnancy. Jena’s boss also expressed that he was annoyed that Jena had to miss so much work because of pre-natal appointments. Who is this guy? Pre-natal appointments are just a fact of life. When a woman is pregnant, those appointments are both foreseeable and necessary.

Roughly three months after Jena announced she was pregnant, she was fired despite her many years of service to the company and had no discipline record in over six years. What bothers our employment lawyers the most about this story—aside from the blatant pregnancy discrimination— is how she was fired.

On the day Jena was fired, Midwest’s president called her into his office. He shut the door so that the two of them were alone, he used a raised voice and a forceful tone and told her that she was fired, effective immediately. He also told her that if she wished to get any severance at all, she needed to sign the agreement right now. Jena stated in her complaint that she felt pressured, bullied and unable to leave. The president rushed through the severance agreement and brushed off questions that Jena tried to ask. Jena signed the agreement without consulting an attorney and without having time to review the contract on her own.

Whenever I hear instances like this, my blood starts to boil. These coercive tactics have absolutely no place in the workplace. It’s bad enough that Jena clearly being discriminated against, but on top of that they are trying to coerce her into signing an agreement, with God knows what in it. Every employee has the right to review a severance agreement with an attorney before signing it. Full stop.

The agreement that Jena signed without consulting a lawyer stated that she “waived any and all past, current, and future claims” she had against Midwest. Under the severance agreement, Midwest agreed to pay Jena $4,000, payable in eight weekly installments. It is important to recognize that this type of language is pretty common in severance agreements. However, the exact wording of the document matters a lot, and it takes a trained eye to spot illegal versus legal clauses.

About a year later, in November 2016, Jena finally met with an attorney. Upon learning about Jena’s treatment, the attorney immediately filed a lawsuit on her behalf. Understandably so, that attorney was probably just as enraged as I was when I first read about her experience.

After her attorney sent the Complaint to Midwest, at the advice of her attorney, Jena sent a letter stating that she rescinded her severance agreement and returned the $4,000. However, Midwest argued to the court that she couldn’t rescind the agreement, and that Jena could not sue them because she did not “tender back” the monetary consideration she received under the severance agreement before commencing her lawsuit. Basically, Midwest argued that Jena was required to return the severance money before she initiated the lawsuit, and she returned the money a few weeks after she started the lawsuit. The District Court agreed. The District Court held that even if the severance agreement was unenforceable because it was signed under coercion or duress, she did not properly “tender back” the severance money, and therefore, could not bring a lawsuit against Midwest.

Jena appealed to the Sixth Circuit Court of Appeals. The Sixth Circuit agreed with Jena, it held that “a plaintiff is not required to tender back consideration received under a severance agreement before bringing claims for violations of Title VII or the EPA.” Midwest argued that the whole point of “tender back” is to allow contracts to function in market participant form. Where if one party were to rescind a contract, they would have to return the benefit they were given through the contract’s terms. Thankfully, and this is a big win for employees, the Sixth Circuit explained that “Title VII was created precisely to combat a deficiency in the market, namely inappropriate discrimination, which had the effect of placing parties in unequal bargaining positions.” The court also added that “we worry that required recently discharge employees to return their severance before they can bring claims under Title VII would serve only to protect malfeasant employers at the expense of employees’ statutory protections at the very time that those employees are most economically vulnerable.”

Essentially, the Sixth Circuit ruled that if an employee does not pay back their severance prior to bringing a lawsuit, that severance money is to be deducted from any judgment awarded to a plaintiff employee.

However, the only thing Jenna won is the right to come back to that same trial court and argue that she signed the severance agreement under unconscionable or very unfair circumstances. As such, she still may lose based on the fact that she signed the severance agreement.

But, this decision reaffirms the idea that employers cannot bully their employees into signing severance agreements. Everyone has the right to have their attorney review contracts before they sign them, severance agreements are no different.

Can I Be Forced To Sign A Severance Agreement?

Jena got lucky. The Appellate Court agreed with her, and essentially gave her a second chance to pursue her claim against Midwest. However, the fight was not won without sacrifice. Long story short, the more a person has to litigate, the more expensive the case becomes. In the case described above, Jena not only had to pay for fees to file the complaint, and litigate it in the lower court, but then she had to pay for the expenses of fighting it in appellate court. That’s a huge gamble, and expenses add up fast. Even though the circumstances surrounding Jena’s severance agreement were sketchy at best, we can all learn from her situation when facing being wrongfully fired from a job.

Call an attorney right away before signing an employment contract or a severance agreement. When employers offer different contracts to their employees, it is not because the employer is worried about preserving their employee’s legal rights. The employer is looking out for what is best for their business. Far too often our employment lawyers see fired employees come in for a consultation and they have signed away some of their rights because at the time they “thought the company was a good company.” Get legal advice early on. Even though it may seem annoying or expensive upfront, it can save you a lot of headache and money later on.

If you are searching “I need a lawyer because I have been wrongfully fired or terminated;” or “I have been discriminated against or harassed based on my” race, national origin, gender, age, religion or disability; or even think that you might need an employment lawyer, then it would be best to call the right attorney to schedule a free and confidential consultation. Call our Cleveland, Cincinnati, Columbus and Toledo attorneys now. The Spitz Law Firm and its attorneys are experienced and dedicated to protecting employees’ rights and solving employment disputes.

Disclaimer: This employment law website is an advertisement. The materials available at the top of this page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “What kind of attorney do I need to review my severance agreement”, “What should I do when I’m fired,” “My boss discriminated against me because I’m pregnant” or “I was fired for no reason”, it would be best for to contact an Ohio attorney to obtain advice with respect to any particular employment law issue or problem. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.

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