Your Ex-Employee Signed a Release.. So How Can S/he Sue?

You have a problem employee.  You’ve given warnings and clearly pointed out the problems in performance reviews. You offer the employee the option of retiring in place of termination. The employee agrees. You offer the employee a Separation Agreement, with a release of claims. The employee signs. You breathe a sigh of relief, glad to see the last of that employee — or so you thought.

About two years later, just before the statute of limitations (time limit to sue) runs out, your ex-employee sues your company for discrimination. You immediately move to dismiss, based on the release. The trial court grants the motion. The employee appeals and the appellate court reverses the lower court’s ruling.

How that can happen? Read on…

Our real, live case example is Lon C Taylor v Public Defender Joseph Joseph Krakora, et al. Here, in a nutshell, is what went down:

Lon Taylor, an Assistant Public Defender at the New Jersey Office of Public Defender (OPD) from 1990 to 2017, had a spotless record up until 2012. From 2012 on, Public Defender, Joseph Krakora and at least two different supervisors allegedly began harassing him.  In 2012, Krakora allegedly told Taylor that “he expected older attorneys ‘to shoulder their burden,'” and allegedly bragged about hiring many young attorneys to replace them, and mocked older attorneys for their views about zealous advocacy. Criticism and harassment allegedly continued throughout 2013 and onward.

In 2014 and into 2015, Taylor underwent hip replacement and retinal surgery and a difficult divorce that left him clinically depressed and on medication.  In July 2015, three days after a Facebook post defending a colleague that Taylor felt the same supervisor had also criticized unjustifiably, the supervisor confronted him, asking him why he “liked hanging around losers”, and again scolded him for the post and for unfriending some of his colleagues (which others in the office also did).

Taylor regarded the increasing criticism as retaliation and an effort to fire him because of his age, disability, and his Facebook post. In early 2016 Taylor’s supervisor warned him he was “on the hot seat” and asked him if he was mentally  “up to the job”, without offering options for improvement. In February 2016 a co-worker told him that the supervisors said he would likely be harassed less if he retired by the end of the year, and promised a “soft landing”.

Taylor felt he had to agree, and asked if he could retire in Sept 2017 so he could receive Social Security at age 62.  He was allegedly told, “That is not going to happen”. These actions were allegedly against protocol. Taylor felt he had no choice but to retire at the end of 2016. In March 2016 per his doctor’s directions, he took a month-long mental health leave of absence. By December, Taylor filed grievances and an EEOC charge amid continuing and increasing harassment.

In response to the grievances, in a  December 29, 2016 meeting (where Taylor appeared without counsel) the OPD presented Taylor, with a settlement agreement permitting him to withdraw his retirement application, conditioned upon Taylor a) resubmitting it with a September 1, 2017 retirement date; b) accepting a demotion in title and pay, c) requiring that he immediately resign/retire if they determined he was not meeting the standards of that position and d) release any employment-related claims (including, of course, discrimination) against the OPD. The agreement also had the usual language that Taylor knowingly and voluntarily signed it, agreeing to all its terms, including the waiver.

Taylor signed it then and there, fearing he would be immediately terminated if he did not do so.  Unfortunately, his troubles continued. In February 2017 after the EEOC issued a notice of investigation into Taylor’s charge, the OPD forced him to withdraw his EEOC charge (btw, that’s blatantly illegal) and denied his request for a transfer to a different unit.

In July 2017 the supervisors accused Taylor of falsifying time sheets, and, threatened “severe consequences” if he didn’t agree, to have two weeks’ pay docked. They offered him an amended settlement whereby he agreed to be suspended for 9 days without pay, contrary to protocols. In this meeting, he again did not have counsel.

Taylor sued almost two years later, under the NJ Civil Rights Act, the NJ Law Against Discrimination, and common law torts, including emotional distress and civil conspiracy. The OPD moved to dismiss, based on the waiver. and argued he didn’t allege sufficient facts on which to base a claim or damages. The trial judge agreed and found that Taylor signed the agreement knowingly and voluntarily and that he waived his claims in that agreement.

The Appellate Division reversed, reinstated and remanded the case to the lower court to conduct proceedings consistent with its ruling.

Here was the Appellate Division’s reasoning, in a nutshell: In deciding a motion to dismiss the court must accept all facts pleaded by the plaintiff as true, and then determine whether the pleased facts suggest that the plaintiff signed the waiver involuntarily. Applying that standard, the court found that Taylor had pleaded sufficient facts. (It also found that the lower court applied the wrong standard in that it relied on a previous case that involved a summary judgment motion, to which a different standard applies. I won’t bore you with the legal analysis here. You can read the opinion here if you are interested, though.)

The court cited Taylor’s lack of opportunity to consult an attorney. Taylor being an attorney did not matter as he was a criminal attorney, not an employment attorney. The court also noted the detailed allegations of repeated “sadistic” retaliation by the OPD supervisors. Based on the totality of the circumstances, the court found that the agreement could well have been signed involuntarily, rendering it unenforceable.

OK, great. What does this case mean to the rest of us?

The actual claims really aren’t relevant here. This ruling was really about the waiver in the separation agreement and the way in which the NJ OPD offered the agreement to its employee.  Here’s the key point: Merely having a waiver of claims signed by an employee does not in and of itself protect an employer from being sued.

Furthermore: An employer that treats an employee the way this one allegedly did is all but asking for an employee to sue and declare such a waiver invalid and unenforceable. You cannot blatantly violate anti-discrimination laws and then strong-arm an employee into signing a waiver of discrimination claims while firing them — unless of course, you don’t mind being sued. In that case, don’t bother with the waiver.

Enough said. I think I’ve made my point.

Are you an employer interested in proactively addressing workplace challenges and company culture? Visit my website, www. to contact me for a complimentary 20-minute consultation. 

Watch the latest video clip in my series, “Ask the Employer’s Lawyer: My Employee Has Exhausted All Her FMLA Leave Time. What do I do?

Watch my television interview on Stop My Crisis with Vivian Gaspar.

Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.

Before choosing an attorney, you should give this matter careful thought. The selection of an attorney is an important decision. If you find this communication to be inaccurate or misleading, you may report it to the Committee on Attorney Advertising Hughes Justice Complex, CN 037, Trenton, NJ







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