Employee Releases in ERISA Disputes: Minimizing Claims With Effective Release Provisions

Severance or settlement agreements often include employee releases to limit plan participants from pursuing ERISA claims against fiduciaries. ERISA counsel and plan sponsors must ensure that release provisions satisfy ERISA requirements and implement adequate procedures to enforce such provisions.

Generally, releases are enforceable if executed by the plaintiff knowingly and voluntarily based on a totality of circumstances of a variety of factors the courts take into account. With ERISA claims, counsel must consider whether or not benefits have vested, what applications are being waived, and if the claim is on behalf of the individual or the plan.

In Innis v. Bankers Trust Co. of South Dakota, the court entered summary judgment against the plaintiff because she signed a severance agreement and received severance pay and job-transition services, which barred her claims against the ESOP trustee based on the broad language of the release. However, under similar circumstances, the same claim could be pursued against a fiduciary by the benefit plan itself.

Overly broad or ambiguous language can cause a release to be unenforceable. ERISA counsel and plan sponsors must understand the strict requirements of release language in severance or settlement agreements and methods to enforce them to minimize claims.

Listen as our panel discusses critical factors considered by courts in the application of employee releases for ERISA claims and drafting effective provisions in severance agreements and similar documents, as well as offers litigation techniques in the enforcement of employee releases.