by Michelle D. Craig
Partner | Adams and Reese LLP
Question: I am terminating an employee. We have agreed that I will give her a two month severance package. I’m really doing this to help her out. She was a terrible employee, and I’m glad to see her go. She verbally agreed that she won’t try to sue me. I believe her, but I want her to sign the back of the check under a statement that says “I agree to release all claims.” Is that legal? Will that keep her from coming after me?
Any time money exchanges hands, you should absolutely put a signed agreement in place between you and the former employee. You mentioned that she verbally agreed not to sue you, but a couple months down the road when she needs more money or she begins to think she received the short end of the deal, she won’t remember saying that. Also, you will have nothing in writing saying what you both agreed to. You should have her sign a severance and/or separation agreement which outlines all of the terms of the agreement. There are many considerations that go into such an agreement. For starters, you do not want her disparaging your company after you give her money. You probably want a confidentiality provision as well. Most importantly, you want to spell out all of the claims that she will not pursue against the company in exchange for the severance. None of that will be addressed in a one-liner on the back of a check. It is even arguable that this one-liner will have no legal standing. If you are an organization that receives public funds, you may not be able to give severance checks to ex-employees. Those are all things that need to be fleshed out with any attorney. The short answer to your question; however, is that you should do more than have her sign a statement on the back of the check. You should strongly consider retaining someone to draft an agreement that will address the specific situation, that will address your concerns and that will make sure that she doesn’t cost you a fortune down the road in legal fees.
The information contained in this column does not constitute legal advice or opinion and should not be viewed as a substitute for legal advice. The information provided is based on laws and regulations in effect at the time of creation and is subject to change. The sending of this newsletter is not a privileged communication and does not create a lawyer/client relationship. Michelle D. Craig is a Partner in the Labor and Employment Practice Group at Adams and Reese LLP. She can be reached at email@example.com; 504-585-0441; www.adamsandreese.com. Please send her your questions.