Terminating the Employment Relationship

c. Civil Code Section 1542 A general release does not, by itself, release and waive claims about which an employee or ex- employee is not aware of. California Civil Code section 1542 prevents a general release from doing so. It provides that:

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

However, parties can waive section 1542. For instance, an agreement might state, “The Parties agree that the releases contained in Paragraphs ___ and ___ of this Agreement include a waiver of all rights under California Civil Code section 1542.” The best practice is to specifically cite section 1542 in an agreement and make it clear that the agreement’s general release extends to claims that may exist but are not yet known to a claimant.

d. Age Discrimination Claims (ADEA)

i. Individual ADEA Waivers The ADEA 322 prohibits discrimination against individuals who are age 40 or over. It also does not allow a party to an agreement to simply waive potential ADEA claims. In order to waive an actual or potential ADEA claim, parties must include specific language in the agreement.

The ADEA requires a valid waiver to be “knowing and voluntary.” 323 In order to be knowing and voluntary, the waiver must:

Be in writing and be understandable to the average individual;

Specifically refer to ADEA rights or claims;

Not waive rights or claims that may arise in the future;

Be in exchange for valuable consideration;

Advise the individual in writing to consult an attorney before signing the agreement; Provide the individual at least 21 days to consider the agreement; and Provide the individual at least 7 days to revoke the agreement after signing it. 324

In most instances, an agreement with an employee, age 40 or over, that includes a general waiver and release should also contain ADEA waiver language. There may be circumstances whereby an employer may decide not to include the language because the seven-day revocation period allows a fickle claimant to back out of a deal. Although this is a valid concern, an employer should consult with legal counsel before deciding not to include the ADEA waiver language.

Terminating the Employment Relationship ©2019 (s) Liebert Cassidy Whitmore 99