Chuck

The strength of a severance agreement containing a nondisclosure agreement and release is always a question that businesses raise with me too. To improve the businesses chances of not getting into litigation, I suggest that any severance payment be made over time rather than in a lump sum. That gives the business the opportunity to stop payment if there is a problem and the former employee is not likely to sue if he is still owed money. I try to spread the payments out past the limitations period of filing an EEOC complaint, if possible. Repaying the money if you sue would be great; however, the tender back of consideration is problematic under the Older Worker Benefit Protection Act provisions of the ADEA. Sometimes, I will allocate some money to the nondisclosure portion of the severance agreement and provide that it must be repaid as liquidated damages if there is a breach or suit is filed.

One of the biggest problems with litigating breaches of nondisclosure agreements is that it can place customers in the middle of a legal battle which is really bad for business. Businesses should know this risk is there.