Employment Dispute Settlement Agreement

What a good one includes

• A comprehensive and mutual release of all known and unknown claims, specifically referencing relevant federal, state, and local labor laws.
• Exact terms of the financial consideration, including the payment schedule, tax reporting treatments, and any structured payout dates.
• Strict confidentiality and non-disparagement clauses, outlining exactly what information cannot be shared and the specific exceptions permitted by law.
• Clear statutory revocation and consideration periods, particularly the mandatory 21- or 45-day review and 7-day revocation periods required for employees over forty.
• A robust denial of liability clause confirming that the settlement does not constitute an admission of wrongdoing by the employer.
• A clean transition of technology and return of company property clause to ensure all intellectual property and hardware are secured.

Common mistakes to avoid

• Draftsmen often fail to carve out legally protected rights, such as the employee's right to file a charge with the EEOC or participate in government investigations.
• Many agreements neglect to specify the tax allocation of the settlement proceeds, leading to post-settlement disputes and audits with the IRS.
• Organizations frequently overlook state-specific restrictions on non-disclosure agreements, rendering the confidentiality clauses completely void in states like California or New York.
• Agreements sometimes omit a clear clause regarding the waiver of future employment, leaving the company open to failure-to-hire claims if the individual reapplies.

Frequently asked questions