Settlement and severance agreements are legal contracts and must adhere to certain contract laws. Each agreement will offer the employee certain benefits, like money, if the employee agrees to do something. In a settlement agreement, the employee must agree to drop each lawsuit or complaint and not file additional legal complaints against the employer. For a severance agreement, the employee agrees not to file any legal complaints against the employer.
In both of these situations, if the employee has already filed a workers’ compensation suit, that suit must be identified in the document and allowed to proceed. In most states, once a workers’ compensation suit is filed it requires a specific settlement document to remove it. This is one of those serious issues that your attorney needs to help you with.
If your employer wishes to get rid of a workers’ compensation suit or a discrimination suit, and stop future lawsuits, the document must adhere to the regulations of both the workers’ compensation agency and the agency or court where the discrimination suit is filed.
Other items that may be included in a settlement or severance agreement, in addition to dropping any current lawsuits and agreeing not to sue the employer, are as follows:
• a statement as to whether the employer will fight the employee’s application for unemployment benefits;
• how the severance or settlement amount will be paid;
• how taxes will be withheld from the payment amount;
• that paying the money does not mean the employer admits guilt,
to any violations of the law, or any future liability;
• a list of all laws—federal and state—that the employee agrees
not to sue the employer under;
• that the employee agrees not to discuss the terms of the agreement
with anyone other than his or her spouse, accountant, or attorney;
• other benefits—besides the money that the employee is receiving—such as health insurance, COBRA, pensions, 401(k)s and other investment plans, commissions, etc.;
• that the employee must return all company property, including
cars, computers, and identification cards;
• a statement of any rehire rights;
• that if the employee violates the terms of this agreement, the case will be litigated in a particular court, usually in the state of the home office of the employer;
• that this single document covers the entire agreement between the employer and the employee, and that the employee should not rely on any verbal promises or documents that are not referenced within the agreement; and,
• finally, if your attorney negotiated this agreement on your behalf, there may be other items listed that are particular to your case.