The Massachusetts Appeals Court last week issued a quick reminder on the effect of general releases in severance agreements. This particular opinion came down after four years worth of employment litigation concerning one man's severance agreement.
First, what's a "general release"? In the context of a severance agreement (sometimes called a separation agreement), if an employee signs one, he or she is releasing all potential claims against the released parties, i.e. the employer. In other words, if an employee had a claim, after signing the release, that claim will be waived. It will be extinguished. Gone. Bye-bye.
The reminder by the Appeals Court is this --
We have a policy in our Commonwealth of giving effect to general releases, even if the parties did not have in mind at the time all of the matters that might be covered. See Leblanc v. Friedman, 438 Mass. 592, 598 (2003), quoting from Schuster v. Baskin, 354 Mass. 137, 140 (1968) ("General releases dispose 'of all claims and demands arising out of any transactions between the parties'"); Eck v. Godbout, 444 Mass. 724, 732 (2005) ("[T]he mere fact that a release as worded extends to matters that the parties did not specifically have in mind at the time execution does not operate to exclude those matters from the scope of the release").
In other words, even if the parties did not anticipate the particular claim or issue at the time of signing, or specifically anticipate the release extending to it, if the release is broadly worded and signed, that claim is nevertheless released. Any exceptions to the general release must be stated clearly and expressly.
It's important to know and keep this in mind when contemplating signing a general release in any sort of agreement in Massachusetts.
Doorways Employment Law is a virtual employment law practice, leveraging the power of technology to connect with clients in the most efficient and convenient way possible. It specializes in employment law counseling, strategic advice and representation to individuals and businesses across Massachusetts, including on severance agreements and general releases. Contact Doorway Employment Law for an employment law consultation.