Author: Daniel A. Lublin
Even “preying” on employee won’t invalidate release
What results if a just-dismissed employee is essentially forced to sign a broad-ranging release, preventing him from taking further legal action? Does it matter if the employer took advantage of the employee’s personal problems, effectively “preying” on his concerns, and even threatening him by stating he would get nothing unless he signed his name? According to a recent Ontario judge, not much!
Just-fired, after 15 years as a sales manager for Pennzoil-Quaker State Canada, Patrick Barr found himself in a pickle. Presented with an offer of severance, Barr was given two weeks to decide his fate: sign his name on the documents, thus accepting the company’s offer, or receive nothing more.
According to Barr, he was told by the HR director several times that the offer was a “very good deal” and that he did not need to consult with a lawyer. The problem was that the HR manager who urged this offer upon him was his long-time trusted friend, who spoke to Barr in a personal capacity, even showing up at his house, and effectively advised him to sign off on the deal.
Barr also claimed that the company, knowing that he had recently been through costly divorce proceedings, “preyed” on his concerns of mounting legal costs by threatening that, if he didn’t agree to its initial offer, he would ultimately get less.
Relying on his friend’s advice and presumably fearful of challenging his ex-employer, Barr signed the documents and was paid according to the terms of the offer. Later on, believing the deal was unfair, Barr sued Pennzoil, claiming that the agreement he signed was substantially one-sided and should be set aside, as it was signed under duress.
But an Ontario court recently disagreed with Barr, dismissing his claim at a preliminary motion, as there was no genuine issue for trial. Barr could have refused his friend’s advice and discussed the deal with a lawyer, the court ruled. In fact, he was given two weeks to do so, even meeting with his financial advisor during this time. The deal was less than what Barr could have received and was “unfortunate,” ruled the court. However, it was not so bad that the court was prepared to set it aside.
This case provides a stark message for employees when confronted with an offer of severance or an ironclad release: fair or not, seldom will a signed document be set aside. Employees can avoid this result by observing the following advice:
- Like any commodity, a termination package is usually negotiable. Seek specialized counsel before signing your name.
- Duress or coercion is not easily proven – especially where the employee is given time to consider the offer and does not immediately protest his or her consent.
- Ask for more time or the opportunity to meet with a lawyer if the terms of an offer or release are unclear.