Employment Separation Agreements

August 27, 2021
Business Law

Please note this blog post is written for employers, although we understand it may be of interest to employees as well. At this time, our firm only represents business owners and employers. If you need assistance with a legal matter as an employee, please consult a firm that represents employees.

As a business owner and employer, you’ve undoubtedly had situations where you’ve had to terminate someone’s employment.

Ending a relationship with an employee is never easy. Ensuring that the end of a job is as friendly as the start is important for business owners and employees alike.

The best way to do that is to use separation and release agreements.

These agreements help protect you during an employee’s departure from your company, whatever the reasons.

“Employers are sometimes surprised when their former employees sue them, even if they never made a complaint during the employment. A practice of using well-drafted employment separation agreements, supported by consideration, can limit those post-termination lawsuits.”
Florida Employer’s Attorney, Kristi Benson

What Is an Employment Separation Agreement?

Whether an employee is leaving your company voluntarily or you are terminating their employment, documenting the terms on which they are leaving benefits you both.

In a job termination situation, you want to be especially diligent about documenting everything. An employment separation agreement represents the complete, written understanding of terms between you and your soon-to-be-ex employee.

Unlike tax forms or other items an employer needs to provide to an employee, an employment termination agreement is not a legally required document. Most states have few rules about the process of terminating an individual employee. This is why it is very important for your business to be proactive about knowing how to handle employee separations.

Having experienced employment law counsel can be essential to handling employee separations smoothly. Our team at BrewerLong has extensive experience in all aspects of helping Florida business owners with employment law issues. We’d love to get to know you and help you too.

At-Will Employment

Most employment in the U.S. is “at-will.” This means that an employer can terminate someone’s employment at any time, for almost any reason. An employer typically does not have to provide notice to an employee of the termination. Employers do not have to tell employees why they are being terminated.

However, an employer cannot fire someone for a discriminatory reason or as an act of retaliation for the employee exercising their legal rights (See Florida Laws on Firing Employees). Discriminatory actions may create serious liabilities for your business. That said, once you terminate someone’s employment, you will want to confirm in writing that the employee understands their employment is over.

Waiver of Claims

One of the most important reasons to get an employment separation agreement is to obtain a waiver of claims. A well-drafted waiver usually prevents a terminated employee from suing your business for claims related to their employment.

However, a waiver is part of a contract between you and your former employee—that means consideration is required. Typically consideration comes in the form of a payment, a severance package, or some other type of benefit.

What Should an Employment Termination Agreement Include?

Any employment termination agreement you enter into with a former employee should include terms that are relevant to your business. The agreement should also incorporate terms relevant to the employment situation.

An experienced employment lawyer can help you navigate employee terminations. They can also provide important drafting expertise when crafting employee separation agreements.

The team at BrewerLong business law attorneys has more than a decade of experience in crafting employment separation agreements for employers.

Termination of Employment Details

When drafting an employment separation agreement, identify the former employee’s job title and date the employment ended. Depending on what you agree between your business and the employee, you may want to state a reason for departure.

Sometimes, in a separation agreement, the parties decide to mutually agree that the employee should leave. An experienced employment lawyer can help you understand how best to identify your terminated employee’s departure details.

Severance Package

Because one of the key reasons to seek a separation agreement is to get a waiver of claims, severance packages are important considerations for any employer considering a job termination.

Employees who are fired, laid off, or otherwise terminated are usually the only ones who get severance. Sometimes, money is offered as an incentive to sign a waiver of claims. Often, senior executives may be entitled to severance under an employment agreement.

Make sure to check all employee documents and agreements before drafting employee separation documents. A business-savvy employment lawyer will be your best ally in protecting your business from employment law liability.

Benefit Plans

Often, employees are offered access to employer benefit plans as a post-termination benefit. Sometimes they are entitled to this as part of the plan’s terms or part of an employment agreement.

In any event, make sure to use a separation agreement to document what post-employment benefits a terminated employee will receive.

Non-Financial Clauses

Not all parts of employee separation agreements relate to money.

One important aspect of entering into an agreement with a soon-to-be-former employee is confidentiality. Reputational damage done to your business by a former employee who disparages your products or your services can cost you more money than a separation agreement ever would.

Some clauses to consider include:

A waiver of the employee’s right to sue the company for discrimination;
A confidentiality clause ensuring that any information about the company that the employee may have gained during their tenure is kept private;
A non-solicitation clause preventing the former employee from hiring other employees or taking away your clients;
A non-compete clause preventing the former employee from competing with your business for a certain period of time within a certain geography;
A non-disparagement clause confirming what each party can say about the other;
A non-disclosure clause ensuring that the former employee will not disclose the existence of the agreement; and
Other non-financial clauses that may be applicable to the particular employment situation.

Remember that separation agreements are meant to protect you in more ways than one. Identify your biggest risks when considering which clauses to add. Be specific and thoughtful in your drafting.

Special Requirements When Terminating Older Employees

When terminating an employee that aged 40 or older, some additional steps are required to comply with the federal Age Discrimination Discrimination in Employment Act of 1967 (the ADEA). These steps include:

You must advise the employee in writing to consult an attorney before signing the separation agreement.
The employee must be given at least 21 days to consider the separation agreement.
After signing the separation agreement, the employee must be given 7 days to revoke his or her signature.

Specificity is Important

One thing to carefully consider as you finalize an employee separation agreement is whether it will be enforceable. A poorly drafted agreement that attempts to ban an employee from doing anything and everything may not serve the intended purpose. It is true that an employment separation and release might reduce some general liability when terminating an employee.

However, it is very important to consider the exact risks that terminating that specific employee presents to your business. Tailoring an employment separation agreement to those risks is the best way to approach mitigating your liability.

Talking to an experienced employment law attorney as soon as you think you might need help with a separation agreement and release is essential. Our team at BrewerLong business law attorneys has been helping Florida businesses with employment law issues for over a decade.

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