An employer may require employees to execute a release of claims as a condition of receiving severance benefits. Offering severance benefits in return for a general release of claims is neither discriminatory nor retaliatory. In such circumstances, the severance benefits are properly viewed as additional consideration for an employee's agreement to waive his or her rights and claims.
Plaintiffs employees sued defendant former employer, alleging violations of Title VII of the Civil Rights Act. While the lawsuit was pending, the employer shut down the plant where the employees worked, and the employees added an allegation that the severance agreement was discriminatory and retaliatory. The employees contended that the severance package was discriminatory per se under Title VII and/or had a disparate impact on African-American employees. Both parties filed motions for summary judgment on the issue of the severance agreement. The court disagreed and granted summary judgment to the employer for all claims relating to the severance benefits.
Can employers require employees to execute a release of claims as a condition of receiving severance benefits?
In offering the severance package, the employer did not differentiate between employees on the basis any classification, but rather, offered the benefits to every employee if the employee executed a general release of claims. The employer did not "dole out" severance benefits in a discriminatory fashion. In offering the severance package, employer did not differentiate between employees on the basis of race, national origin, or any other classification. Severance benefits were offered to every employee subject to the same condition: that the employee execute a general release of claims. A severance benefit offered to all employees and payable to all employees willing to release all claims "is an archetypical example of a facially non-discriminatory policy."