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Breaking Up Is Hard To Do: Terminations, Severance/Separation Agreements, and Related Issues

Breaking Up Is Hard To Do: Terminations, Severance/Separation Agreements, and Related Issues. Ugo Ukabam Sam Diehl April 21, 2010. Overview. Myths. Legal Risks. Before the Decision is Final: The Internal Examination. Investigate Before You Terminate The Termination Meeting

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Breaking Up Is Hard To Do: Terminations, Severance/Separation Agreements, and Related Issues

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  1. Breaking Up Is Hard To Do: Terminations, Severance/Separation Agreements, and Related Issues Ugo UkabamSam Diehl April 21, 2010

  2. Overview • Myths. • Legal Risks. • Before the Decision is Final: The Internal Examination. • Investigate Before You Terminate • The Termination Meeting • Severance/Separation and Release Agreements • Post-Termination Issues

  3. Common Misconceptions • Employee knows job is in jeopardy. • Employee is looking for a job and will leave. • Employee won’t sue, too embarrassed. • “At-will” will save me.

  4. Reasons Employees Sue • Need money. • Revenge for “mistreatment.” • Nothing to lose. • Headlines about large verdicts. • Contingency fee arrangements. • Lawyers know most settle.

  5. Legal Risks • Discrimination. • Whistleblower/Retaliation. • Breach of Contract/Promissory Estoppel. • Defamation.

  6. Before the Decision is Final: The Internal Examination • Talked to everyone? • Reasons internally consistent? • Consistent with policies and practices? • Is there documentation? • Any conflicting documents? • If performance, progressive discipline?

  7. Before the Decision is Final: The Internal Examination • Higher discrimination risk? • Any oral or written statements/promises? • Restrictive covenant/severance required? • Has employee complained/taken leave/workers’ compensation? • Are there alternatives? • Offer severance/separation agreement?

  8. Before the Decision is Final: Investigate • Make sure allegations are true. • Question employees privately. • Don’t reveal unnecessary details. • Instruct employees about keeping private.

  9. The Termination Meeting • Draft a script. • Cover relevant points. • Be brief, clear and direct. • Be respectful and professional. • Have a witness present. • Timing and location. • Minimize embarrassment • Private location • Don’t debate.

  10. The Termination Meeting • Move quickly to transition issues. • Outline severance/separation offer. • Unemployment. • Return of property. • Personal/ company/passwords • Anticipate employee reactions. • End the meeting.

  11. Separation and Release Agreements • Why? • Finality. • Accuracy. • Certainty. • Enforceability. • Important Considerations. • Consult legal counsel. • Anything of value: Obtain Release. • No obligation to offer. • Release must be supported by consideration.

  12. Separation and Release Agreements • Important Considerations (cont.). • Can release most claims. • Can’t release others (e.g., unemployment, FLSA, Prospective discrimination claims). • Should specifically mention certain claims (e.g., age discrimination). • Time periods: • MHRA-15 days to rescind. • ADEA- 21 days to consider (45 if part of group severance program), 7 days to rescind. • ADEA requires written disclosures if group severance program. • Employee may refuse to sign/evidence.

  13. Post-Termination Issues • Final paycheck. • Discharge: 24 hours after demand. • Have the final paycheck ready. • Don’t make deductions. • Benefits continuation. • “Qualifying event” under COBRA. • Minnesota law covers more. • Unemployment. • Oppose or not? • Uphill battle to avoid (quit or disqualifying misconduct). • References. • Safest to give out position and dates.

  14. Post-Termination Issues • Other employees. • Limit to those who need to know. • Others: basic information, no longer with other company. • Request for truthful reason. • Request within 15 working days. • Inform employee within 10 working days. • Review of personnel record. • Right to review/receive copy once/year. • Documents depend on statute, not file.

  15. Questions? 2762146 v1

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