Fedweek Legal

In the employment context, a settlement agreement is a binding contract resulting in the dismissal of an employee’s allegations against the employer, such as an EEO complaint, a union grievances or an MSPB appeal. Informal resolution of complaints through the use of settlements is invaluable to the employee and the agency. If the parties can reach an agreement on settlement terms, settlement is almost always preferred to actual litigation because the parties know exactly what the outcome of the dispute will be. In litigation, the outcome is uncertain until a final decision is issued.

Settlement agreements are critical documents which finalize and complete litigation. As a result, it is important for the parties to know and understand the terms and consequences of signing an agreement. The contract is negotiated between the parties until each is comfortable with the terms of the agreement.

Most settlement agreements include “boilerplate language”–certain terms and clauses that are included in almost every agreement. If the parties do not expect these terms, settlement may be hampered. Anticipating these terms and knowing that they are available usually helps the parties reach an informal resolution.

Under a settlement, each party agrees to give something of value to other party. The agency gives the employee something of sufficient value so that the employee is willing to give up his or her rights under the complaint, appeal or grievance. The employee usually gives up her rights to pursue any claims against the agency up to the date of the settlement. Sometimes, there are other issues pending which the agreement does not intend to address. If this is the case, these other issues should be explicitly identified in the agreement.

Settlement agreements also frequently include language stating that the employer does not admit any fault or wrongdoing. Confidentiality clauses are also often included in settlement agreements, stating that the terms of the agreement (but not necessarily its existence) shall remain confidential.

Settlement agreements should also include the following: complete, well defined terms that reflect the total understanding of the parties; definitions of any important terms in the agreement; exhibits that may be relevant (for example, a supervisor’s reference letter); a clause stating that all the provisions should be read together; a statement of what the either party must do if they feel the agreement has been breached; and signatures of each party.

** This information is provided by the attorneys at Passman & Kaplan, P.C., a law firm dedicated to the representation of federal employees worldwide. For more information on Passman & Kaplan, P.C., go to http://www.passmanandkaplan.com. **