Typically, an executive separating from employment is asked to sign a severance agreement in exchange for severance.\u00a0 Severance agreements may include myriad terms \u2013 such as post-employment work restrictions, confidentiality, non-disclosure and non-disparagement covenants, and, almost always, a release of legal claims.<\/p>\n
Many executives, having no interest in suing their former employer, skim over the release of legal claims, considering it nothing more than \u201cboilerplate.\u201d\u00a0 That can be a costly mistake.<\/p>\n
In the recent Massachusetts Appeals Court case of MacDonald v. Jenzabar, Inc.<\/em>, an executive who signed a release of claims was found to have waived his other-wise viable post-termination equity rights.\u00a0 Although the executive asserted that such outcome was unintended by the parties, the Court was unmoved.<\/p>\n Applying common law principles, the Court found that the language of the severance agreement was unambiguous and, therefore, evidence outside the agreement could not be considered.\u00a0 The language on which the Court relied for its holding was both that of the release (\u201c\u2026 you agree to\u2026 release\u2026 the \u2018Release Parties\u2019 from any and all claims\u2026 of any nature whatsoever\u2026.\u201d) and that of the \u201cintegration clause\u201d (\u201c[t]his Agreement \u2026. terminates \u2026 all other oral and written agreements \u2026.\u201d).<\/p>\n What was missing from the MacDonald<\/em> severance agreement were the exclusions that executives\u2019 counsel usually insist be added.\u00a0 For example, if it is the intent of the parties, the severance agreement should include language to the effect that nothing in it \u2013 in the release or elsewhere – is or is intended to be a waiver or limitation on the executive\u2019s rights (1) under equity plans, awards and\/or agreements,(2) under retirement plans, polices and\/or\u00a0 agreements, (3) under deferred compensation plans, awards and\/or agreements, (4) to defense, indemnification and contribution, (5) under ERISA-governed benefit plans and\/or policies, (6) to COBRA benefits, and\/or (7) to apply for and receive unemployment benefits and other rights that cannot be waived as a matter of law.<\/p>\n Needless to say, the list of exceptions is also not \u201cboilerplate.\u201d\u00a0 Rather, the list is case-specific.\u00a0 So, for example, in some situations, an executive may be intentionally waiving some post-termination rights (such as in exchange for additional severance).\u00a0 In other situations, the parties may embed in the exclusions clarification as to specific rights (such as the date on which a deferred compensation payment is due).<\/p>\n BOTTOM LINE FOR THE SEPARATING EXECUTIVE:<\/strong>\u00a0 Before signing a severance agreement, retain counsel to review it and your situation.\u00a0 Be mindful of your post-employment rights and do not waive them inadvertently.\u00a0\u00a0 There is no such thing as boilerplate.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Typically, an executive separating from employment is asked to sign a severance agreement in exchange for severance.\u00a0 Severance agreements may include myriad terms \u2013 such as post-employment work restrictions, confidentiality, non-disclosure and non-disparagement covenants, and, almost always, a release of legal claims. Many executives, having no interest in suing their former employer, skim over the […]<\/p>\n","protected":false},"author":9,"featured_media":116,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[],"class_list":["post-115","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\n