Companies entice sacked employees to waive legal action

Over the last few months, Minnesotans have been getting laid off at a rate of about 1,000 each day. When they're cut from their companies, they're often prodded to sign documents waiving the right to take legal action against their employers.

Companies typically offer departing employees extra cash or benefits to get them to sign the waivers.

Employees being shown the door should carefully examine what they're signing away.

If you're laid off from a job or take a buy-out, your employer will likely offer you a some more cash and benefits than you're due according to any contract, employment agreement or company policy.

It's generally not done out of kindness. It's done because the employer wants to entice you into agreeing not to sue the company. The company wants to render you legally moot.

Elaine Tourville worked for 3M for about 12 years before the company let her go from her position as a chemical compliance officer.

She signed a waiver of legal claims against the company. That signature bought her extended health benefits and some extra money.

Looking back, Tourville sometimes wonders if signing the waiver was the right move.

"I can't say that I wish I hadn't signed them. In hindsight, maybe some legal action would have been the better thing to do," Tourville said.

Tourville suspects she might have had a claim against 3M based on a disability.

But back when 3M let her go, Tourville felt she had to sign the waiver, promising not to sue the company.

"I thought it was important to accept the money and the additional insurance coverage because I was dealing with some health issues that were not resolved," Tourville said.

And Tourville didn't think it would be worth fighting 3M in court.

Asked about Tourville's experience, a 3M spokeswoman said it's a standard practice among employers to have employees give up the right to sue in return for receiving enhanced severance packages.

Stephen Cooper, an employment law attorney, says whether or not an employee signs a waiver, an employer has to provide the severance spelled out in any contract, employment agreement or company policy.

Cooper says employers can't take that away if someone refuses to sign a legal waiver. But they can withhold any extra benefits offered to induce an employee to sign a waiver.

"The only time you should sign something is if you're getting something new that you want, that you think is worth signing for what you give up," Cooper said.

For employers the waivers have a clear benefit: they reduce the financial and legal risk of layoffs.

"The purpose is to make sure no legal claims are brought and to assure some closure or finality," says attorney Marshall Tanick, who represents both employers and employees in legal disputes.

Attorney Marshall Tanick, represents both employers and employees in legal disputes.

If an employee decides the terms are unacceptable, Tanick says there might be room to negotiate better enticements.

"Like most matters, negotiation depends on leverage," he says. "And oftentimes employees have some leverage because the employer wants the employee to sign to assure there will be no legal claims," Tanick said.

Waiver agreements may well be in the interest of an employer and employee. But attorney Stephen Cooper warns the documents deserve a good looking-over.

"An employee often thinks, 'Oh this is something that serves both our interests. This is just a mutual way to both agree we're both protected. That is very seldom the case. Usually the only person being protected in those documents is the employer," Cooper said.

Cooper said that when some employers start getting rid of people in great numbers, they may revert to biases in deciding who stays and who goes. And if the employees haven't waived the right to sue, any bias can be the basis for lawsuits.

"Those biases may be against people with disabilities, may be against women, may be against older workers. They may be against workers who ever filed a worker's compensation claim. They may be against minorities," Cooper said.

But any employee who chooses suing instead of signing has to give up the certainty of getting added benefits, and accept the uncertainty of a lawsuit.

That was a tradeoff Elaine Tourville was not willing to make.

"I didn't feel that I wanted to spend all my savings on taking legal action against them, even though I didn't feel what they did was legal or fair," Tourville said. If an employee wants to run a waiver deal past a lawyer, Marshall Tanick says that'll likely cost $250 to $500. That's still a hefty chunk of change for most workers.

Tanick says it's mostly mid and upper-level managers who contest waiver deals, not rank-and-file workers.

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