Wednesday, March 5, 2014

Confidentiality in Settlement Agreements Not Just Show

As recently reported by CNN the former head of a private school lost an $80,000 discrimination settlement by simply revealing the settlement terms to his daughter. The settlement agreement contained a common confidentiality provision under which the employee and his spouse could only discuss the terms of the agreement with the employee’s attorneys or other professional advisors.

In violation of this agreement, the employee and his wife told their daughter about the terms of the agreement and the daughter then took to Facebook with the results. She posted: "Mama and Papa Snay [the employee] won the case against Gulliver [Preparatory School]. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT." The school quickly found out about the post and advised the former employee that he had breached the confidentiality agreement and would not receive the $80,000 settlement.

The employee sued to enforce the agreement and won at the lower court level, but the appellate court reversed, finding that the employee breached and confirming that the school did not have to pay the settlement amount.

There is a simple take-away here for both employers and employees: The terms of settlement and severance agreements are not just there to fill up space on the page. Each provision, even common and boilerplate language, has a meaning and a purpose and employers can and will enforce those provisions.

By: Ethan Don
First Published: The Law Firm of Paley Rothman Law Blog