Employment & Labor Insider

Happy Friday the 13^th, aka Valentine’s Day Eve.

I don't love what this employer did, so I'm going with Friday the 13th.

A legal assistant in Santa Fe, New Mexico, who was pregnant (we’ll call her “Nikki”), allegedly was not a stellar employee. She allegedly messed up an important project when she was about seven months along. On a Tuesday afternoon soon afterward, her boss (we’ll call her “Rhonda”) told Nikki on a Zoom conference that she had two choices: (1) staying with the firm, with the risk of termination at any time, or (2) resigning on the spot and getting a six-week payout.

Nikki said she needed to talk over the options with her husband, since she was close to her due date and this was a big deal. Rhonda said she would have to give her answer the next morning. 

Later that same day, Nikki texted Rhonda and asked whether she could have the weekend to make up her mind. Rhonda replied that she couldn’t guarantee the offer would be available after Wednesday morning.

Since Nikki had to work that Tuesday until 5 p.m., and since she was directed to give the firm her decision the next morning, she didn’t have a reasonable chance to talk with a lawyer about her options.

On their Wednesday morning Zoom call, Nikki told Rhonda fine, she’d quit and take the six weeks’ pay.

While they were on the call, Rhonda emailed to Nikki a “paper” and told her that she needed to sign and return it immediately before she was removed from the firm's email system. The “paper” wasn’t long, but it did say that Nikki was would not take legal action against the company.

Nikki electronically signed the “paper” and emailed it back while still on the Zoom call. The firm paid her for the six weeks.

The “paper” was a separation agreement with a very short and very general release of claims. And you thought I was exaggerating.

As you can see, the release didn’t mention any specific legal claims that Nikki was having to waive. And, of course, because she was seven months pregnant, she was soon going to be entitled to maternity leave under the Family and Medical Leave Act, and paid leave under state law. And protected against discrimination because of her pregnancy.

Lose some, win some

Nikki sued for pregnancy discrimination, breach of contract, fraud, and a bunch of other things. The firm tried, but failed, to get her lawsuit dismissed on the ground that she had released her claims. The case was tried last week, and a jury found in the law firm’s favor on most of the claims: No pregnancy discrimination, no FMLA interference, no breach of contract, no fraud, etc.

But the jury did find that the firm breached the covenant of good faith and fair dealing and had to pay Nikki in excess of $41,000.

Bad luck, or bad faith on the law firm’s part?

There seems to be no dispute that Rhonda never mentioned on Tuesday afternoon that Nikki would have to sign an agreement to get her six weeks' pay. It also seems crummy not to let Nikki take the weekend to make up her mind about whether to quit or to stay.

Again, the jury did not find that the firm breached its contract with Nikki. But it did find that the firm didn’t deal with her fairly, and in New Mexico, “good faith and fair dealing” is implicit in all contracts. Presumably, this is what the jury thought showed the firm's less-than-good faith:

• Rhonda didn’t say anything to Nikki in their Tuesday afternoon discussion about having to sign an agreement or release her potential legal claims against the firm.
• On Wednesday morning, Rhonda refused to leave the offer open through the weekend, despite Nikki’s request.
• Rhonda called the document a “paper” and apparently did not explain what it was, or its significance. And she pressured Nikki to sign it on the spot before she was locked out of the firm systems.
• The title of the "paper" contained no reference to a release of claims.
• The release itself was very bare-bones and didn’t specify the claims that Nikki was giving up by signing.
• Nikki was not advised to confer with an attorney before she signed, nor was she even given enough time to consult with an attorney.

Never assume

Rhonda probably assumed that a legal assistant, of all people, ought to know and expect to have to sign an agreement with a release of claims to get six weeks of severance pay. And, in my opinion, that assumption would not have been unreasonable on Rhonda's part.

But you know what they say . . .

Formerly known as "U" and "ME."

When two lawyers are negotiating on behalf of their clients, it’s understood that any settlement will include a release agreement. But that may not be the case when non-lawyers are negotiating, or when a lawyer negotiates with an individual who isn’t represented by an attorney. In all situations, it’s prudent to summarize the key terms, and it’s especially prudent to do that in writing. Here is an example of what Rhonda could have sent Nikki in an email (this would need to be customized depending on the circumstances):

Hi, Nikki. This will confirm what we discussed this afternoon. Your job performance has not met our standards, and I offered you the options of (1) continuing employment as we address your performance issues with the possibility of involuntary termination of employment, or (2) voluntary resignation with six weeks’ pay.

If you resign, the resignation will take effect on the date that you sign the agreement described below. In the meantime, you will be placed on [a paid/an unpaid] leave of absence.

You will sign a separation agreement with a release of all legal claims you may have against the firm. I will send you a proposed agreement shortly. Once you receive it, you are welcome to review it with an attorney before you sign. If you follow through on the resignation option, we will need get your signed agreement back in the next seven days.

[cover any other important information here]

Love,

Rhonda

(OK, I wouldn't really include the "Love" part, but it is Valentine's Day Eve.)

Even when I’m negotiating with another lawyer, I specify in writing that the deal will require the client to sign an agreement “with a full release of claims.” Plaintiffs' lawyers are like, “Yeah, yeah, yeah, understood. So tell me again how much is your client willing to pay, and can they put it all on a 1099?”

AGE DISCRIMINATION DISCLAIMER: I have assumed here that Nikki was under age 40. If she were 40 or older, the firm would have been legally required under the federal Older Workers Benefit Protection Act to advise her in writing of her right to consult with an attorney and take up to 21 days to consider whether to sign the agreement, and also that she has seven calendar days to revoke her signature after she signs. Among other things. If the firm didn't do that, any waiver of claims under the Age Discrimination in Employment Act would have been invalid.