So you’ve decided to let Bob go, and you’re offering him the severance amount set forth in your written policies. He signs the severance agreement, waiving his right to make any claims against his former employer. Later, he files discrimination charges with the EEOC. Can you stop paying his severance?
The answer’s no, according to a recent case in Indiana.
Trinity Health Corporation, the parent company of of St. Joseph Regional Medical Center in South Bend, IN, recently agreed to settle a lawsuit in which federal authorities alleged it had unlawfully denied or delayed severance payments to employees and former employees who signed severance agreements and then filed discrimination charges with the EEOC.
In the consent decree settling the suit, Trinity agreed that it will not deny or delay severance payments to employees who sign severance agreements and file EEOC charges.
Trinity also agreed to pay $25,000 in damages to an employee whose severance pay was withheld after she filed an EEOC charge.
Finally, the company agreed not to force employees to choose between receiving severance benefits or taking their disputes to the EEOC.
But wait a minute …
There are situations where a severance agreement might shield you from an EEOC claim, Richard B. Cohen recently wrote on the Employment Discrimination Report.
“[I]f the severance agreement is properly drafted and provides consideration for the employee’s agreement to release the employer from all claims, then the result could be different — the employer would have a defense to the EEOC charge based upon the release,” Cohen says.
The key word here? “Consideration.” Employers who wish to receive something from a departing employee — here, obviously, it would be the agreement not to file a discrimination claim — must provide some kind of compensation for that capitulation.
And just offering the departing employee the standard severance amount isn’t going to cut it. This can turn into an expensive proposition.
But you haven’t heard the worst part: Should such a case make it to trial, the judge (or even worse, a jury) will make the final call on whether the consideration the employer has offered is sufficient to balance the rights the employee has waived.