What Every Employer Should Know About Separation Agreements
As an employer, you may find yourself in a situation where you need to terminate an employee's employment. In these cases, it's essential to understand the legal implications of a Separation agreement. A Separation Agreement is a legally binding document that outlines the terms of an employee's termination or separation from the company. This document is crucial in protecting employers from potential legal action by the separating employee, but also to outline the terms of the separation. Drafting a Separation Agreement that complies with all relevant laws can be challenging.
At Lopp Mathias Law, we have experience in employment law, and we understand the complexities of Separation agreements in Illinois and Chicago. In this blog post, we'll outline what every employer should know about separation agreements in Illinois, including any Chicago city law differences.
What is a Separation Agreement?
A Separation Agreement is a legally binding contract between an employer and an employee that outlines the terms of the employee's separation. This agreement is usually signed by the employee after they are informed of their separation from their employer. The purpose of a Separation Agreement is to protect the employer from any potential legal action that the terminated employee may take against them.
When is a Separation Agreement Appropriate?
A Separation Agreement may be appropriate in situations where an employee is being terminated without cause or as part of a layoff. However, it may not be appropriate in situations where an employee is being terminated for cause or in a discriminatory manner. As an employer, it's crucial to consult with an attorney to determine whether a Separation Agreement is appropriate in a specific situation.
Key Components of a Separation Agreement
A Separation Agreement should contain several key components, including:
1. Release of Claims: This clause ensures that the terminated employee releases the employer from any potential legal action.
2. Consideration: Consideration refers to the compensation or benefits that the terminated employee receives in exchange for signing the Separation agreement.
3. Confidentiality: This clause prohibits the terminated employee from sharing any confidential information about the employer.
4. Non-Disparagement: This clause prohibits the terminated employee from making any negative comments about the employer.
5. Non-Compete Clauses: This clause prevents the terminated employee from competing with the employer for a specified period.
Compliance with State and Federal Law
Employers must comply with all relevant state and federal laws when drafting Separation agreements. For example, the Older Workers Benefit Protection Act (OWBPA) requires employers to provide specific information to terminated employees over 40 years old, such as the time period for signing the agreement and the right to revoke the agreement. Similarly, the Americans with Disabilities Act (ADA) prohibits employers from discriminating against employees with disabilities. Title VII of the Civil Rights Act of 1964 prohibits discrimination based on race, color, religion, sex, or national origin.
Drafting a Separation Agreement
Drafting a Separation Agreement can be complex, and it's crucial to ensure that the agreement complies with all relevant laws. As an employer, it's essential to consult with an attorney to draft a legally enforceable Separation Agreement that protects your interests.
In conclusion, a Separation Agreement is a crucial document that protects employers from potential legal action by terminated employees. As an employer, it's essential to understand the legal implications of Separation Agreements in Illinois and Chicago and comply with all relevant laws. At Lopp Mathias Law, we can help you draft a Separation Agreement that complies with all relevant laws and protects your interests.
Illinois SeparationLaws, SHRM, https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/illinois-separation-laws.aspx
The Older Workers Benefit Protection Act, U.S. Equal Employment Opportunity Commission, https://www.eeoc.gov/laws/guidance/older-workers-benefit-protection-act-owbpa
Americans with Disabilities Act, U.S. Equal Employment Opportunity Commission, https://www.eeoc.gov/laws/statutes/americans-disabilities-act-amended
Title VII of the Civil Rights Act of 1964, U.S. Equal Employment Opportunity Commission, https://www.eeoc.gov/laws/statutes/title-vii-civil-rights-act-1964