Short and Concise Release Agreement Saves the Day for Employer According to NY Federal District Court
On February 24, 2015, in Brewer v. GEM Industrial Inc., the United States District Court for the Northern District of New York found a two-plus page separation agreement sufficient to dismiss the plaintiff’s court complaint because it was short, understandable by a lay person and included a provision notifying the employee of the right to seek counsel before signing it. The plaintiff, Samuel Brewer, sued his employer claiming discrimination in violation of Title VII of the Civil Rights Act of 1964 related to his termination. Before filing his discrimination lawsuit, he executed a separation agreement containing a release of claims. His employer moved to dismiss the lawsuit based on the release in the separation agreement.
Facts and Analysis
In opposing GEM’s motion, Brewer claimed he signed the one-sided agreement under duress, the influence of medication and threats by his supervisor’s associates. He also alleged he signed without the benefit of counsel. The District Court discounted Brewer’s challenge, finding the agreement withstood these arguments. Specifically, the Court found persuasive the fact that the agreement was just more than two pages, Brewer’s complaint did not articulate economic duress and Brewer gave a “knowing and voluntary” release in the document — although he did not consult with counsel. The court used several factors well-established in the Second Circuit (which includes New York, Connecticut and Vermont) to decide the release was knowing and voluntary: (1) plaintiff’s education and business experience; (2) the amount of time the plaintiff had possession of or access to the agreement before signing it; (3) the role of plaintiff in deciding the terms of the agreement; (4) the clarity of the terms; (5) the existence of counsel representing the plaintiff; and (6) the existence of consideration for the release. With facts meeting most of these criteria, the Court did not find the absence of counsel for Brewer to affect the deal. Likewise, the fact that the plaintiff did not play a role in deciding the terms did not impede enforceability because the Court found the consideration the employer provided in exchange for the agreement to be adequate.
Separation agreements provided to employees in connection with a termination of employment must be drafted to achieve enforceability. The language used should be understandable by an average person. Also, both the agreement and a cover letter provided to the employee should make clear the person’s right to counsel. Furthermore, the more succinct the agreement, the better the chance an employer will have to enforce it. Keep in mind that the agreement must be tailored to comply with the law of the state in which it is used, the employer is based, and/or the employee worked. Employers should consult with counsel to prepare and consider the implications of a separation agreement.
Gibbons Employment & Labor Law Department attorneys regularly advise on employee separations, draft separation agreements, and handle related litigation.