Employer-Side Strategies for Negotiating a Severance or Settlement Agreement: Single Plaintiff Employment Dispute

by Practical Law Labor & Employment

A Practice Note outlining employer-side strategies for negotiating severance or settlement agreements in single plaintiff employment disputes. This document emphasizes the importance of understanding business operations and employee relations, weighing the benefits of negotiated resolutions, and drafting provisions that favor the employer, and explores strategies for responding to employee demands. The Note also discusses mandatory and voluntary severance payments, settlement of claims, and the impact of regulatory agency scrutiny on confidentiality and waiver provisions. It examines key legal frameworks, such as the Older Workers Benefit Protection Act (OWBPA), the Fair Labor Standards Act (FLSA), and the Speak Out Act, and their implications on settlement agreements. Employers are advised to consider the potential costs of defending claims, the risk of adverse verdicts, and the impact of litigation on business operations when deciding whether to settle. The document provides insights into drafting effective agreements, including general releases, restrictive covenants, and severability clauses, while addressing unique challenges posed by recent legal developments and agency rulings. This Note addresses federal law but flags common state law issues that employers must consider. For state-specific resources, see Settling State Law Employment Disputes Toolkit and Employment Claims in Release Agreements: State Q&A Tool.