New York Severance Agreements

The Perils of Poorly Drafted Severance Agreements On May 3rd, the New York State Supreme Court Appellate Division, First Department handed down a decision in the case of Johnson v. Lebanese American University (LAU) (You can read or download the decision from the court’s website here: www.courts.state.ny.us/courts/ad1/). The decision revived a lawsuit filed by a former employee of the University who alleged that he was unlawfully terminated because he is gay. At the time of his termination, the plaintiff was presented with a severance agreement, which included a release of claims against the university in exchange for payment of $4,651. The University successfully argued at the trial court level that the case should be dismissed because the employee had unequivocally released all possible legal claims by signing the release and accepting the payment after he was fired. Unfortunately for LAU, the Appellate Division reinstated the lawsuit, essentially finding, among other things, that the specific language of the release could be open to interpretation as to whether it was intended to cover the employee’s claims of discrimination. The appellate decision also found that there was a disputed question of fact as to whether the severance agreement payment constituted money to which the employee was already entitled. The decision highlights two of the many potential pitfalls employers can run into when trying to utilize and implement severance agreements without the assistance of experienced employment counsel: 1. The language of the release contained in the severance agreement MUST be carefully drafted to leave no doubt that it is intended to cover all possible claims that could later be asserted by the employee,...

New York Employment Law, Severance Agreements

The Perils of Poorly Drafted Severance Agreements Author: Nils C. Shillito, Stephen D. Hans & Associates, P.C. On May 3rd, the New York State Supreme Court Appellate Division, First Department handed down a decision in the case of Johnson v. Lebanese American University  (LAU) (You can read or download the decision from the court’s website here: www.courts.state.ny.us/courts/ad1/). The decision revived a lawsuit filed by a former employee of the University who alleged that he was unlawfully terminated because he is gay. At the time of his termination, the plaintiff was presented with a severance agreement, which included a release of claims against the University in exchange for payment of $4,651. The University successfully argued at the trial court level that the case should be dismissed because the employee had unequivocally released all possible legal claims by signing the release and accepting the payment after he was fired. Unfortunately for LAU, the Appellate Division reinstated the lawsuit, essentially finding, among other things, that the specific language of the release could be open to interpretation as to whether it was intended to cover the employee’s claims of discrimination. The appellate decision also found that there was a disputed question of fact as to whether the severance agreement payment constituted money to which the employee was already entitled. The decision highlights two of the many potential pitfalls employers can run into when trying to utilize and implement severance agreements without the assistance of experienced employment counsel: 1. The language of the release contained in the severance agreement MUST be carefully drafted to leave no doubt that it is intended to cover all...