15 Minutes Deemed Adequate Time to Review Separation Agreement

Gregory v. Derry Twp. Sch. Dist., 2011 WL 944424 (3d Cir., March 21, 2011) – The Third Circuit Court of Appeals recently held that 15 minutes was a sufficient amount of time for the plaintiff, a public school teacher, to review a separation agreement and release negotiated in connection with her resignation. After signing the agreement, the plaintiff brought suit claiming that she was forced to resign due to racial discrimination. Examining the facts under the “totality of the circumstances” test applicable in the Third Circuit, the court rejected the plaintiff’s attempt to avoid her agreement, finding that she had sufficient time to review the agreement, and that she did not sign under coercion or duress. The court reviewed the seven factors to be considered: 1) the clarity and specificity of the release language; 2) the plaintiff’s education and business experience; 3) the amount of time the plaintiff had to deliberate about the  release before signing it; 4) whether the plaintiff knew or should have known her rights upon execution of the release; 5) whether the plaintiff was encouraged to seek, or in fact received benefit of counsel;
6) whether there was an opportunity for negotiation of the terms of the agreement; and 7) whether the consideration given in exchange for the waiver and accepted by the plaintiff exceeded the benefits to which she was already entitled by contract or law. The plaintiff here focused entirely on the time she had to review the agreement; she did not challenge the other factors.

It should be noted that in this case, the plaintiff’s representative had already approved the agreement before the plaintiff reviewed it, and the plaintiff had specifically negotiated certain benefits in exchange for resigning. Employers should therefore not interpret this outcome as giving permission to rush the employee into a decision. It is still advisable to provide sufficient time for the employee to review the agreement and confer with an attorney or other representative. In addition, releases of claims under the federal Age Discrimination in Employment Act must comply with the minimum review period and other requirements of the Older Workers Benefit Protection Act.