Tuesday, November 2, 2010

Do you know? 10 provisions to include in severance and separation agreements

Last week, I wrote about problems in enforcing non-disparagement clauses in separation agreements. It got me to thinking—what other clauses should businesses prioritize for inclusion in separation agreements, other than the release and waiver? Here are my thoughts:
  1. Consideration: A statement that the consideration provided to the employee is more than that to which the employee is otherwise entitled to employment by way of employment. Otherwise, the release and waiver could fail for the employee not receiving anything of value in exchange.
  2. Confidentiality: A covenant as to the confidentiality of the agreement. You do not want other employees learning the terms of the separation, or that agreement was even reached. Otherwise, it could open the floodgates to other employees seeking separation packages.
  3. Secrets: A covenant as to the confidentiality of employer’s confidential and proprietary information.
  4. Return of Property: A covenant that all corporate property has been returned, or will be returned by a date certain.
  5. Transition: A promise to reasonably cooperate with the employer as to the transition of job duties and responsibilities.
  6. No-rehire: A promise that the employee will not apply for any positions in the future, and that the company is not obligated to consider him or her for future employment. Because there is some risk that a clause such as this could be viewed as retaliatory, indemnification language is not a bad idea.
  7. No Liability: A statement that the agreement is not an admission of liability.
  8. Governing law, Jurisdiction, and Venue: An agreement as to the law that will govern the agreement, and the jurisdiction and venue in which one must file any lawsuit regarding a breach of the agreement.
  9. Entire Agreement: An integration clause, stating that the written agreement is the parties’ entire agreement, that no other written or oral agreements exist, and that the parties may only amend the agreement in writing signed by all.
  10. Voluntariness: An acknowledgement that the employee read and understands the agreement, and had sufficient time and an opportunity to consult with his or her own legal advisor prior to signing the agreement.
What else are people including in their separation and severance agreements? Readers, did I miss any?

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.