f you are an employer, you and an employee may have a dispute and decide to part ways. In exchange for some type of settlement, which could include cash or a non-disclosure or a positive recommendation, the employee will be asked to sign a Release, which absolves the employer of responsibility for allegations against it by the employee.
But will a Severance and Release prevent all future lawsuits from the employee? Not if the Release is worded too narrowly. This is exactly what happened to retailer Target after it executed a workers’ compensation settlement agreement with a former cashier who alleged he was harassed on the job. The employee filed a claim for workers’ compensation benefits saying he suffered from head and neck injuries and digestive and psychological problems as a result of the hostile working conditions. Eventually Target paid the employee $12,000 as part of a Severance and Release Agreement.
Five months after settling the workers’ compensation case, the employee filed a cause of action for discrimination against Target. Target believed that the Release portion of its Severance and Release Agreement with the employee was broad enough to cover such discrimination.
However, when the court analyzed the Severance and Release agreement, it determined that the Agreement did not release Target from potential civil claims that fell outside workers’ compensation system. Target had failed to use “clear and nontechnical language” to indicate that the settlement was a general release of all claims. In addition, the formatting and structure of the release did not emphasize Target’s intent to include non-workers compensation claims. The one reference to a more general release was in fine print that was “not underlined, bolded, or capitalized like other substantive portions of the document that are highlighted through formatting” to suggest it was of any particular significance.
Had the Release been worded more broadly, it would likely have shutdown the ex-employee’s direct civil lawsuit against Target. (However, no Severance and Release Agreement can forbid an employee from filing a discrimination charge with the Equal Employment Opportunity Commission or other agency). The lesson: when you are drafting a Release and parting ways with an employee: Think Big and Broad.