Agreements not to Reapply

As part of a separation agreement and release in exchange for severance, many employers include a provision that the separated employee will not reapply or be re-employed.  Such a provision can protect an employer from retaliation or other claims in the event the employer declines to rehire the separated employee if s/he reapplies.  It is important that "employer" in the context of a no-reemployment clause be defined to reflect properly the understanding of the parties - which entities are covered?  The clause should properly protect the employing entity but not be too broad.

The Equal Employment Opportunity Commission recently filed suit against AT&T, Inc. accusing it of retaliation against older workers for refusing to rehire them.  This suit is consistent with the EEOC's position that no-reemployment clauses can be per se retaliatory, even where they are consideration for a release agreement.  

In order to protect themselves in the event of a challenge, employers should make sure that no-reemployment clauses do not have a disparate impact on any protected group (such as older workers) and include a severability clause in any separation agreement to prevent invalidation of the release in the event one clause is stricken.