The Dialogue – an occasional discussion between myself and a prominent employee-side attorney, Nina Pirrotti returns today after a late summer hiatus. Today’s chat focuses on employee separations and severance agreements.  Share your own tips or observations in the comments below. As always, my thanks to Nina for sharing her insights here.

Dan: Hi Nina! How was your summer? Mine was fine except I can’t stop hearing news about President Trump.

It seems to drown out everything else going on and I think I have a headache from it all. But let’s give it a try, shall we?

I know I’m often confronted with having to fashion separation and settlement agreements for employers.   

What do you find are the items in agreements that you think both sides ought to be paying attention to?

Nina: Drowning in Trump-related noise.  The image is horrifying!  My husband and I were chatting the other day about an old Saturday night live weekend update skit.  As we recall it (it was decades ago), the news media was focused on other events when all of a sudden the character playing Kim Jong Un pops into the screen, holds both arms out and complains:  “What do I have to do to get attention around here?!” 

In the age of Trump that glib remark becomes bone-chilling. 

The art of crafting a fair and balanced settlement agreement isn’t the most riveting of topics in our world but it is among the most important.  

One key strategy I use in evaluating them is to put myself in the position of the employer to ensure I understand company’s (reasonable) priorities. 

Clearly the company seeks to contain the dispute itself, keep the fact that it is settling it confidential, and do everything possible to obtain closure.    If the settlement terms go beyond meeting those priorities, a red flag goes up for me and I scrutinize those terms closely.  

In light of the company’s priorities in containing the dispute and keeping it confidential, I expect to see a confidentiality provision, limiting the disclosure of the settlement agreement to those on a need to know basis (typically immediate family members, financial/tax advisor and lawyer). 

I am also not surprised by a non-disparagement provision which prevents the employee from spreading ill will about the former employer. 

Since I generally advise my client that it rarely reflects well on an employee to speak negatively about his/her former employer (no matter how justified the employee might be in doing so) I usually do not oppose such provisions. 

I will often, of course, make them mutual so that key employees at the company also commit to not disparaging my client. 

In light of the company’s priority in seeking closure, I do not have a one-size fits all response to no re-hire provision.  I understand the company’s concern that should the employee who has settled claims for discrimination apply for a position down the road and the company (for legitimate reasons) declines to hire that employee, it nonetheless remains exposed to a potential retaliation lawsuit by the employee. 

No re-rehire provisions in certain situations can be appropriate but only if they are narrowly tailored to the company itself.  Alarm bells go off for me, therefore, if the employer is large and has numerous affiliates and subsidiaries and the employer insists on including them within the scope of the no-rehire provision. 

In such cases, no-rehire provisions can be tantamount to mini-restrictive covenants and, where they hamper my client’s ability to find comparable work, I will reject them as untenable. 

Speaking of restrictive covenant  provisions, it irks me to no end when an employer tries to slip one into a settlement agreement where the employer was not bound by one during the course of his/her employment!   Such provisions are generally a non-starter for me, absent considerable additional compensation for them. 

Finally, as we discussed in an interview you conducted with me many years ago, I do not abide by liquidated damages provisions. 

If a court determines that my client has breached the agreement, even if that breach is deemed a material one, the employer should still bear the burden of proving that it has been damaged and, to a reasonable degree of certainty, the monetary amount of that damage. 

What are your thoughts, Dan?   Have I articulated the company’s main priorities well?  Are there others I am missing that I should consider the next go-round?   Do tell and I promise to listen with an open mind!

Dan: Well, one day we could talk about Trump-related employment litigation, if you’d like to really talk more about Trump.

You’ve hit on some of the highlights from an employer perspective. When crafting one for an employer, I will let you in on a “secret” – we have a template.

I know — probably not a big surprise to you since our firms have negotiated enough of them.

As a result, I find that agreements at this point are sometimes more of finessing around the edges, rather than major re-writes.

The problem I see is that there are some employers who are using a form separation agreement handed down to them years ago, without understanding what’s in them.

First off, the agreements — regardless of whether you’re trying to comply with federal law or not — should really be written in “plain English”.

Get rid of the “Whereas” clauses.

Use bold language or simply to understand provisions.

And try not to have it be 15 pages.

Second, the agreements should contain: a) a release of all state and federal claims (and local ones if you’re in places like New York City); b) confidentiality (and if it needs to be mutual, so be it); c) non-disparagement (same).  There’s more of course, but start with the basics.

Third, employers should think about provisions that may actually be helpful: a) What are you going to do about references? Is it “name, rank, serial number” or something more? b) Do you want an arbitration provision for any breach of the separation agreement?

Neither is typically a high priority but taking care of some of these details are important.

A few employers are trying to get the “best” deal and negotiate strongly but I find most employers just want to move on; the termination was probably not something that they wanted to do anyways and putting some distance between the employee and the company is probably a good thing for the business ultimately.

Since you’re not finding separation agreements all that exciting, what about how employers handle the termination or termination meeting itself? I’m sure you’ve heard some stories from clients.

Nina: Wow – you hit the jackpot with that question!   

I was once asked at an ABA conference at which I spoke what was one step management lawyers could take to maximize the chances that a departing employee won’t seek out the counsel of someone like yours truly. 

My answer?  Treat them like human beings when you terminate them.   

Don’t do what one Fortune 500 company did to one of my clients which was to call her as she lay in a hospital bed with her infant daughter who had been born earlier that day and inform her that she need not return to work because her job had been eliminated.

Time and again prospective clients had told me that they would have gone quietly into the good night had their employers treated them with a modicum of respect during the termination process. 

I recently settled a case involving a woman in her mid-60s who had worked for the same company for 20 years and proven time and again that she would do ANYTHING for that company and, indeed, had worn a number of hats over the years, shedding one and donning another as the company’s needs shifted.  In her 20th year, a new CEO was hired and you can guess what happened next.  He terminated her and replaced her with a brand new hire, decades younger, who my client had helped train.   

Doesn’t sound kosher right, but that is not the worst part! 

It was the WAY the company terminated her that prompted this lovely, meek, non-confrontational woman to summon up the courage to pick up the phone and call me. 

Her termination consisted of a three minute meeting in which the CEO informed her she was no longer needed and handed her a severance agreement that provided her with two measly weeks’ pay. 

She was literally sobbing as she signed it then and there after which she was immediately escorted out the door.   She contacted me weeks after she signed her agreement.  Too bad, so sad, right?  Wrong. 

The employer neglected to include in her severance agreement language required by the Older Worker Benefits Protection Act (OWBPA), including a 21-day period to consider the agreement and a seven-day revocation period.  She was able to keep her paltry two weeks and I got her many months more on top of that!   

There are so many morals to that story, the least of which is that severance agreements for employees over 40 should comply with the OWBPA.   Employers should be expressing their gratitude to terminated employees who have proven their devotion to the company by providing them with severance that sends the message that they valued that devotion.  

There other ways to go that extra mile to treat such employees with dignity.   Think about how you would want to be treated if you were undergoing one of the worst days of your life and act accordingly.  Thank them for their service, tell them how sorry you are, assure them that you will do everything in your power to facilitate their transition, allow them to say goodbye to their colleagues, hell, even offer to throw them a farewell gathering.  The possibilities are endless.  Sometimes we lawyers get in our own way. 

Dan, I know none of the clients who have had the benefit of your wisdom prior to terminating an employee would succumb to such pitfalls.  But what do you do when you have to clean up after the fact?

Dan: You’ve raised a good question, but I want to address something you said first. 

You said: “Employers should be expressing their gratitude to terminated employees who have proven their devotion to the company by providing them with severance that sends the message that they valued that devotion.”  

It’s that phrase that I think gets to the heart of the issues with severance in 2017. 

When I first started practicing (a few years ago, ahem), there were still many companies that offered severance without ANY release because that just seemed “the right thing to do.”

After all, there was still a bit of an unspoken contract that employers would take care of employees.

Think back to the “Mother Aetna” description of the insurance company.  But as the recessions took their toll and employee mobility took root, that social contract has definitely been frayed over the years.  In part too is the rise of employment litigation. 

Now each employer has to worry: Is THIS going to be the employment termination that leads to a lawsuit?

 I can’t even remember the last time that an employer offered severance without also demanding the employee sign a release. 

In other words, the idea of severance as “gratitude” and “thanks”, has now been replaced with much more of a quid pro quo. 

For employers, the thought ii: If we give you this severance, please don’t sue us. 

And yet for employees, some of them still remember the days when severance was just something companies did without worrying about the lawsuit. And so when the employer demands the release, some employees take offense to it, not realizing that times have changed. 

As a result, I have also seen employers trying to offer less and less; the notion of one week of severance per year of service (with caps) is still strong, but not universal. 

As to being the fixer – yes, sometimes it happens.  The lack of OWBPA provisions is really something that just shouldn’t happen anymore. 

But it’s more that employers go ahead with the termination without thinking about what comes next.  And some employers are moving so fast, that the details such as having two people in the termination meting and having COBRA information available, get lost in the shuffle.

I don’t know of a single employer that has enjoyed firing an employee.  

Even when they catch an employee red-handed, many employers are aware of the consequences that may flow for the employee from a firing. The employee may have a tough time finding a new job, for example. 

But it strikes me that a small subset of terminated employees are LOOKING to bring suit or a payday instead of looking forward to a new time in their life. 

Obviously sometimes past discrimination has to be examined, but what do you think makes employees sue their employers instead of signing severance agreements that are presented to them?

Nina: I think that employer conduct that rises to the level of actionable discrimination and/or retaliation is alive and well, unfortunately. 

The only up side of all of this is that I get to keep my day job, which I love! 

Of course there are those (“small subset” would accurately describe them) who seek to avoid accountability and are looking for a quick pay out of claims. 

Virtually all of those individuals never make it to our front door. 

I say “virtually” because we are human, after all, and one or two may sneak through the cracks in that door. 

But then we have competent lawyers like you for whom we have great respect who (very politely) convince us – – with facts – – that we are being misled. 

That is why I believe that the only situations in which early negotiations are successful are those in which both sides fight their natural inclinations to hold their cards close to their chests and actually share meaningful information from the get go.  

But how to conduct negotiations effectively is a topic worthy of its own separate dialogue, no?

Dan: I think so. Now, I have to save whatever energy I have left to stay up late to watch playoff baseball with the Yankees. Hopefully, it’s a long October filled with lots of late nights and distractions.  Until next time, Nina!  

The Dialogue — one of the more popular recurring posts — returns for the third time. Does that mean the third time’s the charm? Or is it three strikes and we’re out? In any event, Nina Pirrotti of Garrison, Levin-Epstein, Fitzgerald and Pirrotti, P.C. returns for this installment where an employee-side and employer-side attorney discuss the issues of the day. Today’s topic discusses the lay of the land when an employee files a complaint against his or her current employer. Well, that and Unicorn Frappuccinos….

unicornsNina Pirrotti: It is that time, once again for the two of us to lock horns, I mean engage in a spirited discussion about, how we both help our clients to navigate thorny issues which arise in the workplace.    One such issue is how to advise our clients when an employee has alleged discrimination while she is still employed with the very employer she is accusing of wrongdoing.  Wow.  I feel a knot forming in my stomach just contemplating it!   

There are many complexities inherent in this scenario at each stage, from how the complaint is initially expressed, to the manner in which it is investigated, to whether the employee who complains should stay or go (or something in the middle like a leave of absence) to various resolution options.  In fact, I feel so strongly that employees and employers often botch one or more facets of this fraught situation  that I proposed it as a subject for a panel at NELA’s annual employment conference this June and I will be speaking on that panel!

I think I will start the ball rolling by saying that my biggest fear is that clients who remain working in a hostile work environment often feel so powerless and outraged by their situation that they are vulnerable to doing everything wrong from making more frequent mistakes to lashing out at supervisors or peers or far worse.   I used to save my admonishments about refraining from such behavior for my less sophisticated clients until it became clear that my C-Suite executive clients were just as likely to partake.   Now, no matter who my clients are, a big part of my counseling session revolves around how they should conduct themselves in the workplace.  If anything, I want them to strive even harder to be consummate professionals, above reproach.   My most common refrain is:  Do not arm your employer with a legitimate justification for terminating you!

There is so much to territory to explore here, Dan, but, could you highlight for me one or more of your biggest concerns when a client comes to you and says one of its employees has alleged discrimination or harassment in the workplace?

Dan Schwartz: Locking horns, eh? Perhaps you’ve had one too many Unicorn Frappuccinos (R.I.P.)  from Starbucks.  Alas, I do tend to agree with you that this is one area where rainbows and happy endings are rare.

When I hear about current employees who bring suit against their employers, I tend to think an apt comparison may be the spouse that files for divorce but the couple still has to live in the same house.  It’s awkward.  Everyone is walking on eggshells.

The fact is that one big concern I have for employers in this situation is to avoid a retaliation claim.  You say you encourage employees to be “above reproach” and I wish that were always the case, but sometimes employers will get these types of claims and they’re in the midst of either terminating or disciplining an employee — what then? If they do so after the claim, they’re opening themselves up to a retaliation claim. And we know how nasty those can be.  (Documentation is critical.)

But if it’s a harassment complaint that the employer gets, it typically becomes a real fire drill — drop everything and begin an investigation. That investigation may or may not need your client’s help, Nina. So what do you do in that situation where an investigation pops up?

Nina: Ok – you got me.  I couldn’t resist looking up the Unicorn Frappuccino on Google after my husband assured me you weren’t making it up.  This is how Starbucks describes it:  “Magical flavors start off sweet and fruity transforming to pleasantly sour. Swirl it to reveal a color-changing spectacle of purple and pink.”    It sounds like a liquid nightmare.  Hmmm could the Unicorn Frappucinno’s “magical flavors” be a metaphor for the very type of employer-employee relationships of which we are speaking?! Continue Reading The Dialogue: Workplace Complaints and Happy Endings As Rare As Unicorn Frappuccinos?

I’ll confess. I’m excited about today’s post.  It’s hard to find something new to do after nearly 10 years of blogging, but I think today’s post is pretty innovative. Unless you read The New York Times “The Conversation” which we’ve tried to copy emulate here.  Except this post (and hopefully others) will be called “The Dialogue”.  Somehow different, right? 

Today’s post tackles some of the legal issues regarding hiring but does so in a back-and-forth format between a management-side attorney (myself) and an employee-side attorney (Nina Pirrotti).  I’d insert a reference to the letters of Alexander Hamilton and Aaron Burr discussing the issues of the day, but then I remembered that ended in a duel, and it’s not exactly what I was foreseeing here.  I think Nina and I can exchange some thoughts without trying to kill one another. 

Anyways, Nina and I have tried something new below.  Nina is a partner at the law firm of Garrison, Levin-Epstein, Fitzgerald and Pirrotti, where she represents employees in all types of matters.  She’s a past-President of the Connecticut Employment Lawyers Association and a frequent presenter on employment law topics.   My thanks to her for being brave enough to try this with me.  Let me know what you think. 

The Dialogue Begins

Dan Schwartz: Welcome to the blog and thanks for engaging in this discussion on employment law. I promise that we here at the blog don’t bite and we pay all of our workers (me) minimum wage. (Ok, that’s a lie. I get nothing for writing the blog, but moving on….)

I know we were planning on talking about some developments in the world of hiring and employment law, but I can’t pass up the opportunity to ask you something about the new Trump Administration.  From the perspective of an attorney who typically represents employees, what are one or two things you’re keeping an eye out for?

nina_t_pirrotti1-150x150Nina Pirrotti: Thank you, Dan, for your warm welcome.  We plaintiffs’ employment lawyers have been feeling mighty chilly since November 8th and have been bracing ourselves ever since for even more frigid temps ahead.  Ironically, I felt the impact of Trump’s election virtually immediately.  On November 9th, I flew to Chicago and spoke at the ABA’s annual Labor & Employment conference.   

The topic of the panel on which I spoke revolved around laws which prohibit employer retaliation against employees for discussing their wages.  The laws are designed to protect female employees who are trying to figure out whether they are being paid less than their male counterparts.  

I was all set to talk about the Paycheck Fairness Act which would have expanded the protection provided by those laws and was expected to be one of the first pieces of legislation signed by Hillary Clinton.  As you can imagine, my plane ride there was consumed with a furious re-write of my outline! The next day I flew to Dallas to participate in the semi-annual Executive Board meeting for the National Employment Lawyers’ Association where we also had to nimbly adjust our focus to reflect the new (surreal) reality.  

I did not thaw out after learning that Trump nominated Andy Puzder, CEO of chain restaurants, including Hardees (which, sadly, is the maker of my all -time favorite breakfast biscuit) to head the Department of Labor.  Puzder’s employee track record, which includes opposing overtime and minimum wage laws and underpaying his own workers is abysmal.   

I can only hope that the rumors that he might back out of consideration prove to be true.  I did feel  a glimmer of hope after I learned this week that Trump has tapped EEOC Commissioner Victoria A. Lipnic as Acting Chair of EEOC.  Lipnic, who was nominated by President Obama, has served as EEOC Commissioner since 2010.

I was also mildly heartened by Trump’s expression of (granted, lukewarm) support in his campaign for pay equity laws and paid FMLA leave, both championed by Hillary Clinton and I can only hope that the person who might most positively influence him in that regard (Ivanka) is able to carry the day.

Unfortunately, the Trump administration does seem poised to reverse or suspend the changes to Fair Labor Standards Act’s overtime rules which went into effect on December 1, 2016.  

Of course, the most important event that we plaintiffs’ employment lawyers are waiting for is the announcement of Trump’s Supreme Court nominee who would replace the very conservative Justice Antonin Scalia.  That person may likely cast the deciding vote on cases that impact the rights of workers in a myriad of ways.  Unfortunately for us, the three oldest justices – Ruth Bader Ginsburg Kennedy  and Breyer  – are liberal or moderate and Trump may have more than one bite at that proverbial apple during his (hopefully only) four-year stint. 

Since your excellent blog has national appeal and one or more of these justices might actually read it, I hereby urge all three of them to eat well, exercise moderately and avoid all high risk activities! Continue Reading The Dialogue: Hiring Employees the Right Way (From Different Sides)