A recent Colorado federal court decision serves as a good reminder to employers on how not to obtain a release of claims from a terminated employee. For starters, don’t tell the employee her job is being eliminated and then run an advertisement seeking to fill her position. Actions like those may serve to invalidate the release of claims you obtained from the employee.
Quick Case Background
In Hawks v. Ballantine Communication, Inc., Ballantine Communications, a publishing company, told Hawks, a 53-year-old newsroom assistant, that it needed to eliminate her position (and others) because of financial difficulties. Ballantine’s HR Director drove to Hawks’ house six days after informing her of her termination to obtain a signed copy of the severance agreement, even though Hawks’ was recovering at the time from major surgery and taking multiple prescription pain medications. Hawks alleged that she felt heavily pressured to sign the agreement under the circumstances, but having no reason to doubt the truthfulness of the company’s statements, Hawks signed a severance agreement, including a release of claims. Barely a week later, Ballantine ran classified ads in the local newspaper for the newspaper assistant position (and other eliminated positions), which it filled a couple of months later with a substantially younger candidate. Hawks sued Ballantine for age discrimination, but Ballantine moved to dismiss based on Hawks’ execution of the release of claims.
The Court Allows Hawks to Press Her Age Discrimination Claims Despite Having Signed the Release
The court allowed Hawks to proceed on her age discrimination claims finding she sufficiently alleged that Ballantine had fraudulently induced her to sign the release of claims. If Hawks could ultimately prove fraudulent inducement (i.e. that Ballantine made those statements to induce her sign the release), then she may be able to show that she did not enter into the release knowingly or voluntarily, thereby making it void and freeing her up to pursue an age discrimination claim.
The decision serves as a good reminder to employers to be truthful when stating reasons for terminating an employee. Otherwise, you may find a demand letter on your desk suggesting unlawful discrimination was the true reason for the termination, and claiming that the employee’s release was fraudulently induced and is invalid.
Employers should also remember the importance of giving employees an appropriate amount of time to consider whether or not to sign a release of claims and not to take action that would cause an employee to feel pressured into signing the agreement. For employees 40 years old and over, federal age anti-discrimination laws require the consideration period to be at least 21 days (45 days if in the context of a group layoff). For employees under the age of 40, a reasonable amount of time should be given based on the circumstances.