New Jersey Severance Agreements: Waiver Provisions

Almost every Severance Agreement contains a waiver provision in which the employee agrees to waive their right to sue the company or challenge the validity of the Severance Agreement.  The waiver in a severance agreement is generally only valid when the waiver is done knowingly and voluntarily.  Whether the waiver was done knowingly and voluntarily depends on the Judge making the determination and the facts surrounding the execution of the Severance Agreement. 

The Court's typically look at the following factors to determine if the waiver provisions apply:

1. Whether the Severance Agreement is slear and specific;
2. Whether the Severance Agreement was forced on the employee or they were coerced into signing it;
3. Whether the employee had a sufficient amount of time to review the Severance Agreement (typically 21 or 45 days and a 7 day revocation period);
4. Whether the employee consulted with an attorney and was encouraged to consult with an attorney;
5. Whether the employee had any input into the terms of the Severance Agreement; and
6. The consideration offered to the employee as severance (additional pay, etc.).

However, in the event that an employee decided to challenge the waiver provision in the Severance Agreement, the employee may be required to repay the severance.

Dated: February 1, 2010 - Castronovo & McKinney