Louisville Separation Agreement Lawyers Discuss the Importance of Employee Separation Agreements
Disputes with your employee may arise after termination. The disgruntled employee may try to sue you, spread trade secrets, or post negative comments about your company on popular social media platforms, such as Facebook, Twitter, Yelp, Instagram, or on employment sites such as Indeed, CareerBuilder, GlassDoor or Monster.
Louisville Separation Agreement Lawyers could save you from having to deal with these headaches or dealing with potential liability.
What Is a Separation Agreement?
Essentially, the separation agreement sets limits as to what the employee may communicate or do in exchange for something of value, called consideration.
What Is In The Separation Agreement?
Louisville separation agreement lawyers may suggest the following clauses in a separation agreement:
- Release of all claims. This provision protects you from liability and additional expenditures of time and money that may result from employment claims such as:
- Non-disparagement clause. This clause prevents the former employee from bad mouthing your company. The clause should:
- Clearly define “disparagement”;
- Be broad enough to include statements which may not arise to the legal definition of defamation
- Be a material element to the entire separation agreement
- Under certain circumstances, the clause may prohibit the employee from re-entering your business premises even if it’s to visit his or her former fellow employees.
- Agreement to not apply for another job within your company. Under certain circumstances, you may want to include a provision that would prohibit the employee for reapplying for his or her former position or another position within the company. This would prevent the employee from having a new claim of, for example, discrimination, for being denied employment at your company.
- Confidentiality, trade secret and proprietary information clause. This clause prevents the employee from revealing confidential, trade secret and proprietary information. The clause should include:
- Definition of confidential, trade secret and proprietary information;
- Be broad enough to encompass all information you wish to protect;
- Be narrow enough to not include information that is public and need not be protected;
- Return or destroy all confidential and proprietary information;
- Depending on the circumstances, you may also want the employee to keep confidential the circumstances surrounding the termination of employment along with the terms of the settlement.
If this clause is challenged, be sure that you have proof showing:
- Your reasonable efforts to keep the information secret and confidential; and,
- The information gives your business a competitive advantage.
- Non-compete clause. If the employee already signed a non-compete agreement at the beginning of the employment or during the employment, then there should be a clause reaffirming the obligations under the non-compete agreement. Otherwise, there should be a non-compete clause. Learn More.
- Non-solicitation clause. If the employee had already signed a non-solicitation agreement or non-compete agreement that includes a non-solicitation clause at the beginning of the employment or during the employment, then there should be a clause reaffirming the obligations under the prior agreement. Otherwise, there should be a non-solicitation clause that prohibits the employee from soliciting or taking away your employees, current and potential customers, current and potential business deals, etc.
- Survival. The clause should state that if any part of the agreement is found to be illegal or unconscionable, the remaining clauses survive, and are valid, binding and enforceable. This prevents one or two clauses in the separation agreement found to be illegal from voiding the entire contract.
- Consideration. For agreeing to the separation agreement, the employee must receive something of value in return. It is not enough that you pay an employee what he or she is owed up to the last day of employment, including any unused paid vacations, since that is already your legal obligation. Rather, you must make an additional payment. Generally, businesses offer their terminating employee a severance payment. The clause should indicate whether the severance pay is received in a lump sum or in installments over a period of time.
It may be prudent to distribute the severance pay in installments, thereby decreasing the likelihood that the employee would breach the other provisions of the separation agreement during the payout period.
- Breach. There should also be a clause indicating the consequences of breaching or breaking the separation agreement, such as an injunction. An injunction is a judicial order that would restrain the employee from beginning or continuing an action that threatens or invades your legal rights, or compels the employee to do something, such as making restitution to you. The clause could also include a provision where the breaching party would pay the non-breaching party its attorney’s fees.
Should I Have a Separation Agreement?
Depending on the type of duties the employee performed, what information he or she had access to, the type of business you provide, or other circumstances, a separation agreement may be necessary to protect your business.
Our attorneys are available to answer any questions or concerns regarding whether having a separate agreement is right for your particular situation. Contact our knowledgeable Louisville separate agreement lawyers with Patricia A. Abell Law Office at (502) 561-3455 or by filling out the form on this website.