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Does Signing a Severance Agreement Prevent You from Suing an Employer?


Are you preparing to sign a severance agreement? Did you already sign an agreement? You may have questions about the impact it will have on your rights. Severance pay is not required by law in New Jersey or New York. When an employee signs an agreement, he or she usually must agree not to sue their employer. In this article, our employment attorneys explain what you need to know about how a severance agreement impacts your right to sue an employer.

Virtually All Severance Agreements Contain a ‘Release of Claims’

To start, it is crucial to emphasize that severance agreements almost invariably contain a release of claims. As defined by Westlaw, a release of claims requires a party to “agree to give up legal causes of action against the other party in exchange for adequate consideration.” In other words, it is a clause that prevents an employee from suing their employer. With most severance agreements, the general structure is pretty straightforward: The employee gets some form of financial consideration—most often additional pay—in exchange for agreeing not to sue their employer for an employment law related matter, such as a wage and hour violation or workplace discrimination.

Some Limited Exceptions: Release of Claims May Be Rendered Invalid 

A release of claims in a severance agreement is, in general, enforceable. When you sign such a release as part of your severance package, you should assume that it will be enforceable. That being said, there are some exceptions to the rule. Indeed, there are some cases where the release of claims in a severance agreement might not stop you from suing. For example, if the agreement was signed under duress—such as if you were pressured to sign that agreement under unfair conditions—it might not be enforceable. Additionally, some claims may be outside the scope of the severance agreement. If you want to sue and you did already sign an agreement, you should speak to an attorney.

Best Practice: Consult With Attorney Before Signing Severance Agreement 

Before you sign anything, it is always wise to talk to a top-tier employment lawyer. An attorney can help you understand the terms of the severance agreement and whether it is in your best interest to sign. Beyond that, your lawyer will also let you know if the agreement seems unfair or if there are any red flags. The initial severance package you are presented by your employer may not be the best agreement. A lawyer can negotiate on your behalf. They might get you a better deal or make sure that certain rights are not waived. Remember, every situation is unique.

 Get Help From an Employment Lawyer Serving New Jersey and New York

At Poulos LoPiccolo PC, our employment lawyers are skilled, experienced, and reliable advocates for the people who need help the most. If you have any questions about negotiating or signing a severance, please do not hesitate to contact us online for a confidential initial appointment. We provide employment law representation in New Jersey and New York.

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