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Severance Package Negotiations:

Minnesota is an employment “at-will” state. At will employment means an employee can quit for any reason and the employer can terminate an employee for any reason as long as that reason is not illegal. However, there are many exceptions to the at-will rule doctrine. The exceptions include when a contract is in place that states an employer cannot terminate without cause, an handbook or policy that limits the firing abilities of the employer, a union collective bargaining agreement that limits the firing abilities of the employer, whistleblower claims, federal and state anti-discrimination or retaliation laws and numerous other federal and state employment laws.

Every state’s laws on wrongful termination are different. There are both federal and state laws that give protections and rights to employees who have been terminated by a Minnesota employer and employers who are not aware of these laws can be sued for wrongful termination of an employee for various reasons. Minnesota employment laws and federal laws are constantly changing and there are new court rulings that affect the employer and employee’s rights and it is important to understand these laws in determining whether there is a wrongful termination claim.

Under federal law, it is illegal for an employer to terminate an employee based on a protected classes. Federal law prohibits employers from firing employees based on race, color, national origin, sex (including pregnancy), religion, age (if the employee is at least 40), disability, citizenship status, or genetic information. Each federal law requires an employer have a certain number of employees before the law applies to the employer.  Most law applies to employers with at least 15 employees. However, the minimum is 20 employees for age discrimination and four employees for discrimination based on citizenship status.

Minnesota law prohibits employment discrimination based on race, color, national origin, sex (including pregnancy), religion, age (18 to 70), physical or mental disability, genetic information, marital status, sexual orientation, gender identity, or receipt of public assistance. All Minnesota employers, even those with only one employee, must comply with the state’s discrimination laws.

These anti-discrimination laws also make it illegal for an employer to retaliate against an employee for asserting their rights as well. For example, an employee complains to your company’s HR department that they believe they were disciplined unfairly because of their race, the employer may not discipline or terminate that employee for making that complaint. Likewise, an employer cannot terminate an employee for participating in an investigation of a discrimination complaint (no matter who made the complaint), testifying in court, or making other efforts to stop discriminatory practices.

If an employer commits an unlawful employment practice against an employee the employee can take legal action against the employer as well. Unlawful employment practices include discrimination based on the protected classes discussed above and retaliation claims. They also include an employer that takes action against employees who retaliate against or deny leave that falls under the Minnesota Parental Leave Law (MPLL) or the Family Medical Leave Act (FMLA), Workers’ Compensation and various other laws. Legal action can also be taken against an employers when an employee blows the whistle on improper or illegal conduct within the company.

If an employee is threatened with being fired or laid off from their employment, I can assist the employee with the process of negotiating a severance agreement.  A Minnesota Severance Package is offered for various reasons, but some of the reasons include:

  1. The Employer has a policy of offering employees a Minnesota Severance Package
  2. The Employee has claims that would give them leverage to negotiate a Severance Package
  3. The Employer wants to obtain a Release for peace of mind to avoid costly litigation
  4. The Employee has an Employment Contract that entitles them to a Severance Package
  5. The Employee falls under a union contract that entitles them to a Severance Package

Severance Agreements and Releases:

An employment severance agreement attorney can review, discuss, negotiate and often improve upon a Severance Package.  You should understand the Severance Agreement and Release and always consult with an attorney before signing a Severance Agreement and Release.  The first thing to discuss when you meet with an employment attorney is the reason for your employment termination. Was the termination for some wrong doing; elimination of the position; or some other reason. An attorney can discern if the employee has possible claims against the employer, and if an employee is releasing potential claims by signing the Severance Agreement and Release.

The decision to terminate an employee is a serious matter and the employer must provide a legitimate and truthful reason for the termination.  Minnesota Statute, Section 181.933 states,

An employee who has been involuntarily terminated may, within 15 working days following such termination, request in writing that the employer inform the employee of the reason for the termination. Within ten working days following receipt of such request, an employer shall inform the terminated employee in writing of the truthful reason for the termination.

A Minnesota employer must also provide a former employee a copy of his or her “personnel records” upon written request.  Minnesota Statues Section 181.960 states,

Upon written request by an employee, the employer shall provide the employee with an opportunity to review the employee’s personnel record. An employer is not required to provide an employee with an opportunity to review the employee’s personnel record if the employee has reviewed the personnel record during the previous six months; except that, upon separation from employment, an employee may review the employee’s personnel record once each year after separation for as long as the personnel record is maintained.

A Minnesota employer must also pay all wages and compensation actually earned and unpaid at the time of termination, pursuant to Minnesota Statutes, section 181.13.  If the employee’s earned wages and commissions are not paid within 24 hours after demand, whether the employment was by the day, hour, week, month, or piece or by commissions, the employer is in default.

In addition to recovering the wages and commissions actually earned and unpaid, the discharged employee may charge and collect a penalty equal to the amount of the employee’s average daily earnings at the employee’s regular rate of pay or the rate required by law, whichever rate is greater, for each day up to 15 days, that the employer is in default, until full payment or other settlement, satisfactory to the discharged employee, is made.

The termination of an employee can result in a lawsuit for discrimination, retaliation, breach of a contract, defamation or some other employment law related claim if the employment termination is not handled correctly. The employer needs to establish a documented legally justifiable reason for the termination of an employee or there may be a potential claim that an employee can bring against the employer.   A Severance Agreement and Release can provide closure for both the employee and the employer and allow the parties to move on in an amicable way.

Once it is determined that a Severance Agreement and Release is the proper way to conclude the employment relationship, the agreement can be reviewed in detail.  Some of the items that should be reviewed in a Minnesota Severance Agreement are:

Terms of Termination and Severance Payments:

  1. Lump sum severance payment or salary continuation (when the severance payments will be made)
  1. Resignation or involuntary separation (this will affect whether you qualify for unemployment benefits)
  2. Relieved of duties vs. immediate termination of employment
  3. Unpaid bonus
  4. Unpaid commissions
  5. Expense reimbursements
  6. Accrued vacation or sick pay
  7. Stock options or purchases
  8. Repayment of outstanding loans
  9. Leased automobile
  10. Taxation of payments

Health Benefits:

  1. COBRA issues: continuation of coverage under medical and/or dental benefit plans
  1. Continuation of coverage under other benefit plans: disability, life, malpractice, directors and officers

Post Termination Concerns:

  1. Outplacement services: dollar amount and provider
  2. Contents of reference letter, if this can be agreed upon
  3. Response to unemployment compensation claim
  4. Can the employee apply for re-employment
  5. Non-disparagement clause
  6. Confidentiality of separation agreement

Agreements within the Agreement:

  1. Release of claims
  2. Non-competition agreement
  3. Agreement regarding confidential business information and trade secrets
  4. Non-solicitation of employees
  5. Return of company documents and property; computer equipment, credit cards, manuals
  6. Agreement to cooperate and assist with ongoing business
  7. Non-admission clause

Other Provisions to Consider:

  1. Employee’s non-assignment of agreement
  2. Rescission period(s), if applicable
  3. Voluntary and knowing action by employee
  4. OWBPA-required language
  5. Complete agreement between the parties
  6. Governing law

You should contact an experienced employment severance agreement attorney to review your Minnesota Severance Agreement and Release. Contact Holden Law Firm and ask John Holden to review your Minnesota Severance Package or to determine whether you are eligible for a Minnesota Severance Package.  If your job is being threatened or your have been placed on a performance improvement plan, John Holden can discuss your leverage to negotiate a Minnesota Severance Package.

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