Should I Sign a Release of Claims?

When an employee is terminated from her job, she may be requested by her employer to sign what is known as a release of claims. As the name implies, this agreement is intended to release the employer from any and all claims which the employee may otherwise wish to file against the employer after termination.

Deciding whether to sign a release of claims depends largely on the conditions under which your job was terminated, and whether taking any future legal actions may be prudent on your part, which the release may preclude you from taking.

What am I releasing in a release of claims?

The release of claims will enumerate the agreed upon terms of your employment prior to termination, and effectively releases your employer from their obligation to those terms. A release is commonly offered in exchange for a severance package, and the employee’s agreement to refrain from litigation.

Under the duress of termination from your job, along with the prospect of gaining a severance package and taking the next step in your career, it’s understandable that you may wish to simply sign off on a release of claims and move on with your life. It’s important to understand that, first, you don’t need to sign a release of claims the moment it’s offered. Depending on your state of employment, you will have a specified time frame to decide.

Secondly, if there are any circumstances surrounding your termination that may warrant filing suit, signing a release of claims is tantamount to letting your employer off the hook. You would not only be releasing your employer of any claims for compensation, benefits, or other severance considerations, you are also agreeing not to sue for any claims, including wrongful discharge.

Legal consultation before signing

Since the release of claims would restrict you from seeking legal recourse that may be due you, it’s strongly recommended that you take the opportunity to have an attorney read over the release before signing it, who can also advise you on employment law pertinent to the circumstances surrounding your termination.

Even under the most amicable parting of ways, it is in the best interest of the employee to take time to consider before signing a release of claims. Some conditions covered under the release may not be fully known to the employee at the time the release is presented. You’ll want to weigh any severance package against potential claims such as back wages, expenses or other compensation.

A release of claims is standard procedure at the conclusion of many business transactions including employment termination. It doesn’t imply that there is anything nefarious that your employer is seeking absolution for, but it does warrant examination by a legal expert before signing in any case.

If you are a member of a protected category under discrimination law; if you were engaged in a protected activity prior to dismissal, or suspect that your termination was retaliation for whistleblowing, for example, then it’s imperative that you refrain from signing any release before seeking legal counsel.

At-will employment

At-will employment can be terminated at any time for any or no reason, by either party. If you’re being offered a severance package along with a release of claims at your termination, that could be an indication that your employer is trying to avoid being sued for wrongful dismissal.

Before waiving your right to sue, make sure there aren’t any legal grounds to do so before terminating your relationship with your employer. Take advantage of the time period allotted to make your decision. Note also that a release does not prevent you from filing suit against future actions by your employer, after signing the release.