Employment Releases that Don't Work
In New York, and around the country, employment discrimination cases are avoided by having potential litigants sign a release. Releases are intended to end or avoid controversy, but sometimes they do the opposite. Courts have recently voided releases for three different reasons. Those reasons are discussed below.
First, there is a U.S. Department of Labor regulation that prohibits any waiver of FMLA rights - unless a court or the DOL first approves the waiver. Courts are catching on and invalidating releases that purport to waive FMLA matters. In Dougherty v. Teva Pharmaceuticals USA 2006 WL 2529632 (E.D. Pa. Aug. 30, 2006), the court held that a release did not preclude a former employee from suing the company for FMLA (Family Medical Leave Act) violations even though the release said so. The court relied on the DOL regulation that prohibits waivers of FMLA rights. Accord Taylor v. Progress Energy, Inc. 415 F.3d 364 (4th Cir. 2005).
Second, releases that prohibit an employee from filing an agency charge is not only invalid, it is actionable. Last August, a district court held that a release that prohibited an employee from filing an EEOC charge was retaliatory and the employee could sue the company for retaliation. EEOC v. Lockheed Martin Corp. 444 F. Supp.2d 414 (D. Md. 2006). The court held that a broad covenant not to sue that includes EEOC charges is unlawful and constitutes retaliation. It is well settled that a release cannot prohibit the filing of EEOC charges. See, e.g., EEOC v. Cosmair, Inc. 821 F.2d 1085 (5th Cir. 1987). The new Lockheed decision now indicates that such language amounts to retaliation and an employee can sue if one is presented for signature.
Third, confusing legalese can render a release invalid. Some releases are so convoluted that they are incomprehensible to the employee. The Older Workers Benefit Protection Act protects employees from legalese and requires clear language in a release that can be understood by the person signing it. In Syverson v. IBM 461 F.3d 1147 (9th Cir. 2006), the court, citing the OWBPA, threw out a release because it was too confusing. The offending language read:
"You agree that you will never institute a claim of any kind against IBM … If you violate this covenant not to sue…you will pay all costs and expenses of defending against the suit incurred by IBM …. This covenant not to sue does not apply to actions based solely under the [ADEA] … That means that if you were to sue IBM …only under the [ADEA] you would not be liable under the terms of this Release for their attorneys' fees and other costs and expenses of defending against the suit."
The 9th Circuit held that the language was confusing and could cause a person to believe that they retained the right to sue under the ADEA. The release was held invalid.
From now on, make sure the release does not (1) cover the FMLA, (2) prevent an employee from filing an agency charge, or (3) contain confusing legalese.
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