Employment Claims In Release Agreements: California

This article was first published in Practical Law Company.

A Q&A guide to release of claims agreements for private employers in California. This Q&A addresses statutory and common law claims that may be released in a valid and enforceable written agreement as well as employment claims or specific contract language that should be included or excluded. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions.

EMPLOYMENT CLAIMS THAT SHOULD BE RELEASED

1. What state-specific employment-based claims (statutory and common law) should be included in a release of claims agreement?

   STATUTORY AND COMMON LAW CLAIMS

   A release can require an employee to waive most state statutory claims and common law claims, including:

   Wrongful termination in violation of public policy (Tameny claims). Breach of contract. Breach of the implied covenant of good faith and fair dealing. Privacy violations. Defamation. Intentional infliction of emotional distress. Discrimination and harassment claims under California's Fair Employment and Housing Act. (Skrbina v. Fleming Cos., Inc., 45 Cal. App. 4th 1353 (1996).)

   Employees may also validly waive potential claims unknown to the employee when signing the release, if the employer has inserted specific language mentioning Section 1542 of the California Civil Code in the release (see Question 5). If the employee agrees to release unknown claims and later learns of grounds for a claim of wrongful termination arising from incidents occurring before the release is signed, the employee's claims are barred.

   GENERAL RELEASE OF "ANY AND ALL" CLAIMS

   It is common practice in California for employers to use a general release of claims. In addition to relevant federal claims, the wording of the general release waives and releases:

   All known or unknown claims based on state, municipal, or local employment discrimination statutes, laws, regulations or ordinances, including, but not limited to, claims based on: age; sex; race; religion; national origin; marital status; sexual orientation ancestry; parental status; handicap; disability; veteran status; harassment; retaliation; and attainment of benefit plan rights. All known or unknown claims, actions, causes of action or liabilities arising under any other state, municipal, or local statute, law, ordinance or regulation. Any other known or unknown claim, including, but not limited to: claims for severance pay; claims based on breach of contract; wrongful termination; defamation; intentional infliction of emotional distress; tort; personal injury; invasion of privacy; violation of public policy; negligence or any other common law, statutory or other claim whatsoever arising out of or relating to employment with or separation from employment with the employer. Scope of General Release

   Generally, releases worded in this way are permitted and have the effect of releasing "any and all claims," even if not specifically listed. A general release can also be construed as not applying to nonwaivable statutory protections, even if those nonwaivable claims are not expressly excepted in the general release (Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008)). For more information about nonwaivable claims, see Question 2.

   Specific Exceptions to General Release

   In practice, employers often insert disclaimer language confirming that the release will not:

   Preclude the filing of an administrative charge with the federal Equal Employment Opportunity Commission (EEOC) or the state Department of Fair Employment and Housing. Waive claims under workers' compensation or unemployment law and other claims that cannot legally be waived. WAIVER OF REEMPLOYMENT RIGHTS

   A release of claims should specify that the employee waives any rehire or reemployment rights and will not apply for future employment with the employer in order to:

   Eliminate ambiguity over whether the employee is eligible for rehire. Foreclose claims of retaliation if the employee is not rehired. EMPLOYMENT CLAIMS THAT SHOULD NEVER BE...