An Administrator's Guide to California Private School Law

Chapter 4 - Employment Contracts And Separation Of Employees

accomplished by agreeing by contract that the employee would be paid a sum of money that would constitute a certain number of weeks or months of the employee’s compensation in return for the separation from employment and/or the release of claims for past violations. The contract should note that the school is not required to pay severance in the event that the employee is, in fact, terminated “for cause.” Proposing a severance agreement to an employee during discussions about separating an employee mid-year or mid-contract should be done carefully and strategically to avoid an impression that the employer has done something wrong and fears a legitimate legal challenge to the action to separate the employee. Paylor v. Hartford Fire Insurance Company 422 Blanche Paylor worked as a Disability Analyst for an insurance company. Between January 2008 and September 2009, Paylor requested and received 390 hours of leave under the Family Medical Leave Act (FMLA). In September 2009, Paylor received a performance evaluation that criticized her job performance. Hartford provided Paylor the following choice: she could accept 13 weeks of severance benefits in exchange for signing a severance agreement under which she waived any claims she might have under the FMLA, or Paylor could agree to a performance improvement plan that would require her to meet performance benchmarks or face termination of her employment. Paylor signed the severance agreement. Paylor then filed a complaint alleging that her employer had interfered with her FMLA rights and had retaliated against her for exercising her rights. The district court denied Paylor’s claims. On appeal, Paylor argued that she did not waive her FMLA rights because the FMLA does not permit employees to waive “prospective rights” without Department of Labor or court approval. The Court of Appeal disagreed. The employer did not ask Paylor to waive claims for any future FMLA violations but asked her to release any claims she might have regarding past FMLA violations. The conduct Paylor complained about occurred before she signed the severance agreement. Therefore, Paylor settled claims based on past employer conduct.

Schools should consult legal counsel when preparing or negotiating a severance agreement for an employee. Since a severance agreement is another type of contract and typically offered in exchange for the release of all of an employee’s claims, it needs to be carefully drafted. Also, special rules apply to severance agreements seeking waiver of liability for age discrimination claims.

LCW Practice Advisor

K. R ENEWAL O F C ONTRACTS A ND N O G UARANTEE O F F UTURE E MPLOYMENT An employment contract may contain a provision explaining the options for renewal of the contract. In some faculty contracts, for example, the school may provide a notice period within which it may provide notification of its intention to renew or not renew the contract. If the school will make a decision about whether or not to offer an employee a renewed contract at a

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