Professional Service Agreement

Ensuring Enforceability of Severance and Release Agreements

September 10, 2018

The U.S. Court of Appeals for the Sixth Circuit recently allowed an Equal Pay Act and Title VII pregnancy discrimination suit to proceed despite the fact that employee signed an agreement releasing all claims and, did not turn back the severance payment given in consideration for the release. The lawsuit was allowed to proceed, and enforcement of the release denied at this early stage, because employee, who was pregnant at the time of termination, “was ‘blindsided’ by an unexpected meeting” to terminate her employment and felt “bullied” into signing the agreement. SESCO is available to draft or review Severance and Release Agreements to ensure they will be enforceable if challenged.

Employee testified that the company’s president said she “needed to sign if [she] wanted any severance.” While employee and the president reviewed the agreement together, employee claimed she felt “pressured” into signing without a lawyer and later explained that she did not understand that the claims she released were discrimination claims. As such, it was possible for a jury to conclude that plaintiff’s execution of the release was not knowing and voluntary. Ensuring that an employee enters into release agreements knowingly and voluntarily is of primary concern when presenting such agreements to employees.