8/22/2017 Settlement Agreements and Negotiating Exit Agreements Joseph A. Ernst Rachel K. H. Miyashiro What do you need for an effective settlement agreement? Introductory Provisions Preamble Recitals Settlement Provisions Releases Confidentiality No Rehire Non-disparagement Covenant not to sue Indemnification Choice of law Severability Introductory Provisions Preamble Identifies all parties to the agreement Includes signatories and non-signatories Date Sometimes identifies an “Effective Date” Helpful if you want to sign the agreement prior to the final day of work or make it retroactive 1
8/22/2017 Introductory Provisions Recitals Some agreements use recitals Typically very formal Consider the employee Provides employment history Identifies any governing agreement – employment contract, independent contractor agreement, etc. Identifies underlying litigation (if any) Introductory Provisions Sample Recital Clauses This Settlement Agreement and General Release (“Agreement”) is made and entered between Employee (“Plaintiff”) and Employer (the “Defendant”). WHEREAS, Plaintiff filed a lawsuit against Defendant pending in the Circuit Court of _____ entitled Employee v. Employer, Civil No. 17-1-0459 (the “Lawsuit”); WHEREAS, Defendant contests all of Plaintiff’s claims and denies any wrongdoing; and WHEREAS, the Parties desire to compromise and resolve all disputes Plaintiff has with Defendant. Main Settlement Provisions Dismissal of pending litigation, if any Generally states that on the date of execution, counsel for plaintiff will execute a voluntary stipulation to dismiss the case with prejudice Also states that plaintiff will assist in ensuring dismissal if needed Attach proposed order as an Exhibit Warrants no other claims, charges, or lawsuits 2
8/22/2017 Main Settlement Provisions Sample Dismissal of Lawsuit Provision Upon the Effective Date of this Settlement Agreement, the Parties shall immediately file with the District Court/Circuit Court/etc. an agreed motion to dismiss lawsuit with prejudice in the form of the attached Exhibit A, which is made a part hereof and incorporated herein by reference. Main Settlement Provisions Settlement Payment Provision Describes the settlement In consideration for the agreement, defendant will deliver payment, job recommendation, etc. Includes classification of payment General damages Wages Withholdings or Form 1099 Disclaims tax advice Main Settlement Provisions General Release Typically identifies that plaintiff and all of plaintiff’s family, representatives, heirs, etc. waive claims against defendant/employer , related entities, directors, officers, employees, etc. Includes specific provisions of employment law Title VII ADA FMLA Hawai ʻ i Employment Practices Act ADEA General waiver of any other federal, state, or local statute and common law 3
8/22/2017 Main Settlement Provisions General Release Note regarding ADEA/OWBPA Waiver must include “additional consideration” No waiver of future rights Must advise plaintiff/employee to consult with an attorney of their choosing Must provide set time limits for consideration 21 days for most separations 45 days for early retirement or incentive programs offered to a group Must provide 7 day revocation period Main Settlement Provisions General Release LIMITATIONS Can never waive: Rights under the agreement Vested benefits in any retirement plan Claims that cannot be waived Can not prevent plaintiff/employee from filing a charge or providing accurate information to a government agency, court or entity as required by law Main Settlement Provisions General Release Express statement that plaintiff will be responsible for the payment of their attorney’s fees Waives right to make a claim for those fees Workers’ Compensation Offset Settlement sum offsets any amounts found due under Hawai ʻ i Revised Statutes Chapter 386 for work related injury 4
8/22/2017 Main Settlement Provisions Joint Tortfeasor/Obligor Release Protects both parties against the cost of defending any claims related to the subject matter of the agreement by persons not a party to the agreement Shares potential exposure Made pursuant to the provisions of the Uniform Contribution Among Joint Tortfeasors Act, Hawai ʻ i Revised Statutes Sections 663-11 through 663-17, and the Uniform Joint Obligations Act, Hawai ʻ i Revised Statutes Chapter 483 Main Settlement Provisions Lien Release Plaintiff/employee agrees to defend, indemnify, and hold the defendant/employer harmless in the event that any lien holder asserts a claim against the employer for satisfaction of a lien arising from the benefits or payment to employee Main Settlement Provisions Waiver of damages and relief from third party claims Waives the employee’s right to recover any damages or relief based on any claim brought on their behalf as part of a class If given damages or relief, agrees to provide it back to employer 5
8/22/2017 Main Settlement Provisions Confidentiality and Non-disparagement Cover the agreement’s terms as well as negotiations Include liquidated damages for breach Carve-out for employee’s lawyers, tax advisor, and spouse State that confidential nature of agreement was material part of settlement Breach will cause irreparable harm Plaintiff/employee will make no adverse or disparaging comments Defendant/Employer has the right to enforce Main Settlement Provisions Sample Confidentiality and Non-disparagement Clauses Plaintiff agrees that she will maintain the fact of settlement and the terms of this Agreement in a private and confidential manner, and will never disclose them to any person or entity except to the extent to carry out this Agreement or for due legal process, provided that Plaintiff may disclose this Agreement to her spouse, tax advisors, and legal counsel, provided such recipients of this information are informed of and agree to be bound by this confidentiality provision. Plaintiff will make no adverse or disparaging comments about the Released Parties, that may impugn or injure their reputation, goodwill, and relationships with their past, present, and future employees or employers and with the business community. Main Settlement Provisions Reemployment or Application Consider whether you want to limit plaintiff/employee’s right to future reemployment This can be a sticking point for some agreements Be creative 6
8/22/2017 Main Settlement Provisions Return of Company Documents and Property Require return upon execution List all materials specifically and include a catchall Include any non-privileged work product documents if in litigation including deposition transcripts Or create obligation to destroy as a last resort Main Settlement Provisions Integration/Merger Clause States that the agreement supersedes all other oral or written agreements Sample: This Agreement constitutes the entire Agreement of the Parties, and supersedes all prior and contemporaneous negotiations and agreements, oral or written. All prior and contemporaneous negotiations and agreements are deemed incorporated and merged into this Agreement and are deemed to have been abandoned if not so incorporated. No representations, oral or written, are being relied upon by either party in executing this Agreement other than the express representations of this Agreement. This Agreement cannot be changed or terminated without the express written consent of the Parties that is executed by the Parties and that unequivocally indicates the Parties’ intention to modify this Agreement. Miscellaneous Settlement Provisions Cooperation Clause Cooperate fully with any pending or future litigation, arbitration, business or investigatory matter Amendment or Modification Agreement cannot be amended or modified orally No waiver of any breach shall be construed as an implied amendment or agreement to modify 7
8/22/2017 Miscellaneous Settlement Provisions Severability If any provision of the Agreement is held invalid, illegal or unenforceable in any respect, then to the fullest extent permitted by law, such invalidity shall not affect the validity of any other provision Miscellaneous Settlement Provisions No Assignment Notwithstanding any other clause, the plaintiff/employee cannot assign any right or obligation without written consent Governing Law Exclusively governed and construed in accordance with the laws of Hawai ʻ i, without regard to its conflicts of law, except where preempted Miscellaneous Settlement Provisions Venue Hawai ʻ i is the exclusive venue Execution in Counterparts Agreement may be executed in one or more originals, photocopies or telecopied or electronic counterparts Each counterpart shall be binding and enforceable 8
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