What You Need To Know About Employment Separation Agreements

If you own a business, you are already aware that terminating an employee is one of the most difficult things that a business owner sometimes has to do.

When you have to terminate someone, be sure that you do it in a way that protects you, your company, and your other personnel.

Secondly, be sure that when you have to terminate someone, you do it legally, because you can’t let a wrongful termination lawsuit come back against you. Even if you beat such a lawsuit, you’ll lose time and money unnecessarily.

In the state of Florida, to protect themselves legally, employers who are terminating an employee may ask that employee to release the company formally from any binding claims.

This is typically accomplished by having the employee sign an employment separation agreement.

It’s a legal method for confirming that both parties have agreed to conclude the working relationship without any legal disputes or claims against one another.

There is no federal or Florida law that requires employment separation agreements, but these agreements offer legal protection to a company’s trade secrets, and they also protect employers against wrongful termination claims.

WHAT IS INCLUDED IN A TYPICAL EMPLOYMENT SEPARATION AGREEMENT?

If you are the employee, signing an employment separation agreement will probably prevent you from suing for severance pay or for wrongful termination, because signing a separation agreement in most cases effectively waives your right to file a lawsuit.

With that in mind, let’s examine the terms and conditions of the typical employment separation agreement.

These will legally replace any terms and conditions set forth in any previous agreements – including the employment contract that the parties may have signed when the employee was hired. Common terms and conditions in an employment separation agreement include:

Facts about the separation: An employment separation agreement names the employer and employee and states both the hiring and termination dates.

The agreement may specify a reason for the separation or instead may simply state that the employee and employer are separating.

The severance package: Severance packages are optional, and they may or may not include cash. Federal and state law only requires employers to pay wages and benefits that have already been earned.

Even the largest corporations frequently offer their employees no severance pay or benefits upon separation.

Amount and distribution of payments: If an employer offers a severance package, the employment separation agreement must stipulate the precise amount and type of compensation.

The employment separation agreement should also specify the date when payment is due and the method of delivery.

If the severance pay is made over time, the agreement must spell out the duration and structure of the payments.

Insurance plans: In some cases, and particularly when an employee is part of a group health insurance plan, an employer may continue paying into an employee’s health insurance.

If so, the employment separation agreement must spell out the details.

Non-compete agreements: A non-compete provision restricts an employee from working for a competitor, working in a specific location, or both, for a particular amount of time.

The ability of Florida employers to enforce non-compete clauses is limited, so employers should have an experienced Daytona Beach small business attorney draft the employment separation agreement or at least review it before anyone signs.

Non-disclosure and confidentiality agreements: Employers sometimes require the conditions and details of a separation to stay confidential.

A non-disclosure or confidentiality agreement should spell out what is to remain undisclosed, which may include trade secrets, customer lists, company financial information, and more.

WHO BENEFITS FROM AN EMPLOYMENT SEPARATION AGREEMENT?

An employment separation agreement may also include a non-disparagement clause specifying what a former employee may or may not say publicly about the employer.

The conditions for the return of employer property, for post-employment cooperation, and for re-hiring should also be a part of any employment separation agreement in the state of Florida.

A good employment separation agreement should protect the interests of both the employer and the employee.

Before a business owner fires any employee in the state of Florida, the ongoing difficulties with that employee should be fully documented, and the employee should receive both written and verbal warnings. This protects the employer.

When the employee is being fired rather than laid off or separating from the employer voluntarily, the employer should arrange to have a face-to-face termination meeting.

WHAT IS THE PURPOSE OF A FORMAL TERMINATION MEETING?

At that meeting, the employer should state the precise grounds for the termination and have the employment separation agreement ready for signing.

Florida is an at-will employment state, so a business owner may terminate an employee at any time, with or without cause.

However, employees cannot be fired for exercising their legal rights and duties, for “whistleblowing,” or for any reason based on discrimination:

Whistleblowing: Employees cannot be terminated for reporting an employer’s illegal activities to state or federal law enforcement or regulatory authorities.

Exercising legal rights: Employees cannot be terminated for requesting or taking family or medical leave, military leave, or for taking reasonable time off to serve on a jury or to vote.

Discrimination: Employees cannot be terminated because of their race, national origin, religion, disability, age, gender, or condition of pregnancy.

When an employer in the state of Florida lays off fifty or more employees at once, a notice in writing must be given to the employees at least sixty days in advance of the layoff as required by law.

If an employer terminates employees or reduces their hours because the employer has little or no work to do, those employees are entitled under the law to apply for unemployment benefits.

Sometimes an employer may insist on excessive restrictions or complicated language in an employment separation agreement with the aim of confusing or bullying the employee.

And sometimes an employee will balk at even the most generous terms and conditions and will refuse to sign an employment separation agreement simply to be obstinate and to aggravate the employer.

In Central Florida, a number of problems – including but not limited to costly and time-consuming lawsuits – can be avoided when business owners have their employment separation agreements drafted by an experienced Daytona Beach business attorney.

A good business lawyer can ensure that an employment separation agreement is fair, reasonable, understandable, legal, enforceable, and that it effectively accomplishes the employer’s purposes.

By: Melody Lankford
After graduating from Davidson College, Melody Lankford earned her J.D. from Florida State University’s College of Law in 2004 and was admitted to the Florida Bar that same year. Ms. Lankford joined Raydon Corporation as in-house counsel in 2004. She worked there until 2012, when she founded the Lankford Law Firm. She is an experienced Daytona Beach small business attorney who offers sound legal counsel and experience-based insights to her business clients.