Limited Time to Review Release is No Defense to Waiver of Employment Law Claims

Often, companies offer money or other benefits to employees who they have laid off or fired, as part of a severance agreement or separation package. Most severance agreements require you to waive your employment law rights before you can receive those benefits. In a recent case, Gregory v. Derry Township School District, the Court of Appeals for the Third Circuit ruled that an employee waived her right to bring a discrimination claim against her employer because she signed a Separation Agreement and General Release, even though she only had 15 minutes to review it before she signed it.

The Third Circuit is the federal appellate court that handles appeals from the District of New Jersey. It ruled that when deciding whether an employee had waived his legal rights, a Court should look at the totality of the circumstances including:

  1. How clear and specific the language of the release is;
  2. The employee’s education and business experience;
  3. How much time the employee had to consider the release before signing it;
  4. Whether the employee knew or should have known his legal rights when he signed the release;
  5. Whether the employee was encouraged to or actually received advice from a lawyer;
  6. Whether the employee had an opportunity to negotiate the terms of the separation agreement; and
  7. Whether the employee received any additional benefits for signing the release.

Applying those factors, the court found that public school teacher Rhauni Gregory could not bring a race discrimination claim against her former employer because the Separation Agreement and General Release she signed included a waiver of all claims arising out of her employment. Ms. Gregory claimed she was forced to resign from her job after her supervisor gave her unfavorable performance evaluations and placed her on an oppressive “intensive assistance track” because she is African-American. However, the Third Circuit found Ms. Gregory had waived the right to bring her national origin discrimination claim because she signed a valid release. It found that the release Ms. Gregory signed was valid even though she signed it within 15 minutes after it was provided to her.

In reaching that conclusion, the court considered the fact that Ms. Gregory’s union representative had negotiated the terms of the resignation with the school district. It also considered the fact that, under the separation agreement Ms. Gregory is entitled to receive medical benefits for herself and her family through the end of the year, and a positive job reference letter. She would not have been entitled to either of those benefits if she had not signed the separation agreement.

The Third Circuit’s opinion in Gregory is unpublished, meaning it is not a binding legal precedent. However, it is an excellent example of why it can be critical to have an experienced employment lawyer review your severance agreement before you sign it. If you have been offered a severance package from your employer in New Jersey or New York, you should consider meeting with an employment attorney before you sign away important employment law rights.