No liability release, no severance

November 3, 2006

A fellow doctor told me that when he lets a staffer go, he gives severance only if the employee signs a release giving up her right to sue for wrongful discharge or discrimination. Is this a good idea?

Q:A fellow doctor told me that when he lets a staffer go, he gives severance only if the employee signs a release giving up her right to sue for wrongful discharge or discrimination. Is this a good idea?

A: Yes. Such releases can help head off claims against you for violation of employment laws. But make sure you explain the terms of the release carefully, and give the employee sufficient time to read and consider it before signing. If a disgruntled former employee later challenged a release and tried to sue you anyway, you'd have to prove that its language was sufficiently clear and specific and that the employee understood the agreement and signed it without being coerced.

Other considerations: The release can't restrict a former employee from suing you for any money she contends you owe under the Fair Labor Standards Act. Also, a release for age discrimination claims must meet certain requirements under the Age Discrimination in Employment Act. Have your attorney prepare the release.