A Cautionary Tale When It Comes to Separation Agreements - Rob Dubault
The Sixth Circuit’s recent decision in McClellan v. Midwest Machining, Inc., No 17-1992 (Aug. 16, 2018), reinforces an old rule when it comes to separation agreements and plows new ground as to whether an employee who signs a separation agreement must return the severance payment before suing. Everyone should know that separated employees must be given a reasonable amount of time to consider and sign a separation agreement. Because Ms. McClellan felt bullied into signing the separation agreement before leaving on the day she was fired, the separation agreement did not bar her subsequent lawsuit. However, because she did not repay the severance before she sued, the trial court dismissed her case. On appeal, the Sixth Circuit reversed the trial court and held for the first time that the “tender back” doctrine does not bar claims under Title VII or the Equal Pay Act. It relied on the laws’ remedial nature, along with the practical fact that requiring plaintiffs to return severance before suing would tempt employers to break the law in hopes the employee could not repay the money. However, the court did hold that the severance must be deducted from any award the employee might recover.
OSHA Memo Clarifies Agency’s Stance on Safety Incentive Programs & Drug Testing
An October 2018 internal memo to regional OSHA administrators and state designees indicates that despite the Obama-OSHA rule prohibiting employer reprisals for employees reporting injuries, the Agency will not penalize well-intentioned efforts by employers to control on-the-job injuries through safety incentive programs or post-incident drug testing. Consistent enforcement of legitimate work rules is important, as is providing incentives to employees who report unsafe work conditions (instead of only penalizing employees for workplace injuries/illnesses), along with informing employees of their injury/illness reporting rights and responsibilities and the employer’s non-retaliation policy. In addition, drug testing of all involved employees to evaluate the root cause of a workplace incident that did or could have resulted in an injury is permissible.
Dust Off Your Loan Procedures to Avoid a Compliance Trap
A 401(k) plan that allows participants to take loans must specify the procedures for applying for a loan and the loan’s repayment terms. These loan procedures are an important plan document, and you should review your plan’s loan procedures regularly to ensure that they reflect the terms of your plan and your current practices for administering loans. If they don’t, you risk walking into a compliance trap, and you should contact your Warner ERISA counsel to discuss updating your plan’s loan procedures.