Didn’t Abide by Severance Agreement

I was “Laid Off” 3-4 months back and given severance. Included in the agreement were conditions that I wouldn’t sue and the organization would provide “Neutral ” references. Upon hiring a reference checking Agency, I found one manager giving a positive reference and another one giving an extremely negative one. How should I proceed and how much will this cost?

Signed–Severance Neutral

Dear Severance Neutral:

Your question appears to be one that will benefit from legal advice. Our site states upfront that we provide communication, not legal advice. I forwarded your question to two individuals with expertise related to your question. One is Mark Mindell, Ph.D. with years of experience as a corporate Vice President and Human Resource management in major companies. He responded promptly with guidelines.” I know you will find them helpful:

I am also assuming your signed agreement also indicates that if there are any problems, binding arbitration will be used instead of the courts.  If you can prove that the negative reference occurred, I would suggest that you do the following:

1.  Immediately notify Human Resources and Legal, if there is a Legal department at the company from whom you were laid off, send it certified and make it extremely clear that you have received a negative referral from a company manager, you need that to stop immediately as per your signed agreement and you will be taking action as a result of the damage that’s occurred.

2.  Meet with a labor attorney for a free consultation and explain the circumstances (bring all relevant information with you).

3.  The attorney might take your case on contingency (you pay a fee only if there is a settlement where you are paid by the company).

4.  Either way, though, the most important thing is to get the letter out to the company so that negative referrals stop.  Companies are only allowed to give a prospective employer your dates of service — there is to be no referral at all (particularly a negative one).  I believe that after receiving your letter, you may hear back quickly from HR and/or Legal with both an apology and a potential offer.

5.  In the end, you will likely receive some payoff only to the extent you can prove you were damaged by the negative referral and and quantify that damage.  Again, talking to an attorney, along with getting out that letter, is your best next step. If you can see an attorney immediately for a consultation, do that first and seek advice on how to best word the letter.  If the attorney believes there is a case, he/she may well send the letter for you. 

If and when my second individual responds, I will forward that too, but I’m sure Dr. Mindell’s guidelines provide steps to take immediately.

Please stay in touch. Update us on what you do and how it works out. Working together with hands, head, and heart takes and makes big WEGOS. I trust you will soon find employment that has plenty of Wego. –William Gorden


This is additional opinion to the severance question you submitted. It’s by Terence Oben, an attorney friend who has specialized in compliance in banking  

Issue: Whether a person has legal recourse against a former employer for alleged  ‘negative’ employee references made in possible violation to a Separation Agreement? 
Answer: A person may be entitled to certain damages/injunction for breach of contract depending on the specific language of the agreement and the definition/interpretation of the term “negative” reference. I would suggest they consult with an attorney to get clarity.
RuleRelease of Claims GenerallyRelease of claims provisions are perhaps the most important part of a separation agreement. This provision provides that the employee—broadly defined to include the individual and his or her heirs, representatives, and agents—will dismiss and waive all potential or pending causes of actions, claims, charges of discrimination, complaints, etc. against the employer, whether known or unknown—broadly defined to include the company, its affiliates, employees, agents, representatives, and assigns.Discussion: In this instance, the analysis would hinge on the exact language of the agreement. And unfortunately, in most cases, this language tends to be drawn intentionally broad, and almost always favor the employer. Generally speaking, the language would say what types of claims can still arise if conditions of the agreement are alleged to be broken. If the agreement defines the terms “neutral, positive, or negative,” that would also be very instructive. Otherwise one can infer a definition of what a reasonable person would consider to be – Negative – having the effect to negatively portray the employees performance, competence, ethic, etc,…
In some cases, the agreement would also determine how/where to bring an action for relief if you feel a condition has been violated. Many times they are ‘Arbitration’ clauses in these agreements. 
Another point to consider is how has this alleged violation damaged/harmed the individual? Damages is an essential part to any contract liability claim. That is, have they lost a potential job or are they going to be negatively impacted from getting future jobs. There could also be damage in terms of a person’s reputation or whether the alleged violation rises to a level of defamatory conduct. These inquiries are important because it will determine what potential financial damages can be sought if the person had a legitimate breach of contract claim. 
Conclusion: So, my suggestion would be to look at the agreement to understand the points mentioned above. I would also suggest that they try to ascertain to the best of their knowledge whether that’s through writing the exact nature/language of the negative reference. This will be helpful for them in determining whether it rises to the scope described in the agreement. Armed with this information, they will know how to proceed based on the language. In some case, the attorney can advice if they can bypass the arbitration or if it is a binding requirement.
Finally, please note, this is not legal advice and the response is merely hypothetical considerations based on the generalizations and some assumptions. So you cannot and should not consider this legal advice.
Terrence Oben has shared this analysis to assist what you do next.  Please let us know what you do. Working together with hands, head, and heart takes and makes big WEGOS –William Gorden