She signed a severance release, collected her benefits, and then sued anyway. The Sixth Circuit just explained why that didn’t work – and why the employer’s paperwork made all the difference.
TL;DR: The Sixth Circuit affirmed summary judgment for an employer after finding that a former employee’s severance release was knowing and voluntary under all five factors the court applies, rejecting her claims of racial discrimination, gender discrimination, retaliation, and hostile work environment. The decision is a practical checklist for any employer that uses severance releases.
The Release That Held
The employee was laid off in June 2023 along with other employees of a chemical company. The employer sent her severance documents on June 1, advising that the release could not be signed until her separation date but that she had 45 days to consider it and 7 days to revoke after signing. The release advised her to consult an attorney before signing. The front page was titled “TERMINATION GENERAL RELEASE.” She signed it on or shortly after her termination date.
She later sued for racial discrimination, gender discrimination, retaliation, and hostile work environment. The employer moved for summary judgment on the ground that the signed release barred all claims. The district court agreed. The Sixth Circuit affirmed.
Five Factors. Five Wins for the Employer.
The Sixth Circuit weighs five factors to determine whether a release was knowing and voluntary. The employer cleared all five:
- Experience, background, and education. The plaintiff held a master’s degree and had years of professional experience – sufficient to understand what she was signing.
- Time to consider the release. She had 45 days to review and 7 days to revoke after signing. She didn’t use either window, but the court was clear: failing to take advantage of adequate time doesn’t make the time inadequate.
- Clarity of the release. The release unambiguously covered all claims relating to her employment, including federal and state discrimination claims. The court found it left no room for doubt.
- Adequacy of consideration. Severance benefits and medical coverage were adequate consideration – and she did not argue otherwise.
- Totality of the circumstances. She identified no action the employer took to pressure her. Her signature created a strong presumption she understood what she was signing.
She also argued the release was an unconscionable adhesion contract – but forfeited that argument by not raising it below.
Employers outside the Sixth Circuit should verify their own circuit’s standard, but the steps that made this release hold up are sound practice anywhere.
Steps to Take Before Your Next Layoff
- Label your release as a release. “Separation Agreement” and similar labels invite challenges. Call it what it is.
- Give employees meaningful review time. Forty-five days and a 7-day revocation period are required under the ADEA for group layoffs involving employees over 40. Otherwise, the ADEA requires that employees over age 40 be given up to 21 days to consider the agreement. For everyone else, there is no statutory minimum, but more time is harder to challenge.
- Include language advising employees to consult an attorney. It’s one sentence, and it does significant legal work.
- Let the document speak for itself in the termination meeting. Verbal representations about what the release does or doesn’t cover create problems the written document can’t fix.
Note: If your RIF involves employees over 40, the ADEA’s Older Workers Benefit Protection Act (OWBPA) imposes additional requirements for a valid waiver – including the 45-day review period and 7-day revocation window used here. The EEOC has published detailed guidance on compliant severance waivers worth reviewing before your next layoff.
A signed severance release is only as good as the process behind it. This employer built one that held up. Not every employer does.