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Dealing w/ Draconian Severance Contracts?
outOfWork asks: "I've just been recently announced that I was getting laid off from yet another dot-bomb company. I have received my papers and they are simply dragonian! I understand the need not to disclose any information on the company I was with (that's only natural; I have also signed a similar paper when I started working there anyways), however the papers they are requesting me to sign do include such terms as not being to sue (should I require to). I thought suing someone or a company was a fundamental freedom that we enjoyed here in Canada. If I do not sign these papers, they do mention that I will not be entitled to my severence's package. I'm fairly certain that several companies do these sorts of things, however do they have the right to do this? This company has had a bad reputation when it comes to how HR deals with certain issues and I'm wondering if they might be trying to pull a fast one on us. With the market being what it is, I could sure use that severence's package. Your input would be very welcome."
A lot of companies attempt this sort of thing. One reader suggested that if your dot bomb company is going down the tubes, take the money and run. He's got a pretty good point. There probably won't be anything left to sue them for, unless they were up to some Enron-style activities.
In the United States, there must be an equitable exchange in such a contract for it to be valid. Suppose they get you to agree not to sue them. Then, a while after your departure, they renege on paying you severance as they agreed. Presumably, because you signed that paper you can't sue them. But the truth is, if they don't stand by their part of the agreement, then the contract is null and void. You can sue the crap out of them and collect triple damages.
One of my favorites is the "non-compete" clause, where you agree not to compete against your former company. This never stands in court, because they can't force you not to earn a living. When another company hires you for your skills, technically that means you could be competing against your old company.
Again, in the US, if the compensation you receive is not considered equitable to the conditions that you are being asked to accept, any such contract is null and void. If the severance is good -- take it! But if you have any doubts, maybe you should seek counsel. I live in Massachusetts, and the Attorney General's office is very aggressive in pursuing companies that pull these sort of things. The office offers legal advice and free counsel for people who want to find out if they have a complaint. Maybe your province in Canada offers something similar?
I wish you the best of luck.
Whew! This water sure is cold!
No most of what this person is describing is completely legal and enforcable in the US.
i na tions/sepagreementsT.htm
In the US, if you are entitled to a severance package as part of the terms aand conditions of your employment, the employer cannot require you to sign a no-sue agreement at the time of your departure in exchange for this severence since you were already entitled to it. The employee has to offer you something extra. If they try this, the agreement is valueless.
In addition there are a lot of very strict rules covering the form and execution of this agreement, especially if the employer wishes immunity from suit under ADEA. Some of these can be seen at:
http://www.cbia.com/HRBus/EmploymentIssues/Term