Buying Peace Of Mind With Non-Monetary Remedies in Employment Separation Agreements 

Early settlement remains a top tool for resolving common workplace disputes, including claims of harassment or discrimination. Often, in addition to some type of separation payment or severance package, the “non-monetary terms” – those agreements beyond cash in exchange for a release of claims — sweeten the pot for both parties to settle quickly before becoming embroiled in expensive, time-consuming, and stressful litigation. 

Employers should be sensitive that the employee’s interests in protecting their reputation and future ability to earn a living  may open an opportunity for negotiating terms beneficial to both parties. These points of negotiations are often “low hanging fruit” for the employer but essential to the employee. It can be in the employer’s financial and reputational interest to step back and consider how to best support the employee moving on. 

  1. Positive or neutral reference. The employee may want clarity on exactly how the employer will or will not respond to requests from future employers or other third parties. It can help both sides to agree that only HR will respond to reference requests and will only provide certain information, such as first and last date of employment and title. The employee may want to ensure that the employer will they are eligible for rehire, while the employer may want to ensure it will not have to answer such a question. Parties should also explore crafting a mutually agreeable written reference letter the employee can use right away. 
  1. A requirement to purge the personnel file of false, negative or sensitive information. Removing such items from the employee’s personnel file prevents the lingering possibility of them being seen or disseminated in the future. If the employer truly needs to keep a record of the information, move it to a more secure location, such as the legal file. 
  1. Confidentiality clause. This can protect the employee from disclosure of contested allegations that were made against the employee, from embarrassment, or from a perception that they made trouble by filing a complaint.  A reciprocal term should include who is bound to maintain confidentiality, whether the existence of the agreement and its terms are confidential, and under what circumstances all or part of the agreement can be disclosed (for example to accountants, treating health providers, the IRS, or state regulators). Depending on where the employee and employer are located, local or state laws may require the employer to report settlements of sexual harassment claims which contain a confidentiality clause.  
  1. Non-disparagement clause.  This clause further contains the controversy which both sides want to leave behind. Such agreements can be mutual or one-sided. They can prevent a party from saying or writing defamatory comments or simply from making comments which may be true but unflattering. Parties should consider exactly who the non-disparagement clause will cover, whether the restrictions are realistic, and whether the restriction itself could be found retaliatory. Both parties should always be free to respond truthfully to governmental authorities, for example regarding a claim for unemployment benefits or to the EEOC. 
  1. Future cooperation clause. This may be desirable if the employer may need the employee to assist with transitioning customers or projects, providing institutional memory, or defending against another complaint or lawsuit about which the employee has knowledge. An effective term will spell out a narrow or broad scope of cooperation, reasonable pay for the employee’s time and effort, actual expenses and legal fees, and perhaps whether cooperation is expected during business hours, evenings or weekends. Employee interests in cooperation may include the satisfaction of bringing their important work to successful closure, to be able to truthfully say they are involved in a smooth transition (which reflects well on the employee’s professionalism and value to the organization), or vindicating wrongs beyond a single matter. 
  1. Positive and cooperative attitude clause. This goes beyond non-disparagement and future cooperation to address the employee’s spin and tact in dealing with the press, clients and co-workers. Depending on the situation and the employee’s level of skill and experience, the parties may determine certain messaging in advance. Sometimes, such clauses are reinforced with a performance-based cash payment at the end of a certain time period. 

There are many more non-monetary terms which parties can float in their negotiations. Creativity is key to generating solutions which cost the employer little or no money and help the employee walk away with peace of mind. 

Natasha M. Nazareth, Esq.



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