No Future Employment Clauses in Severance Agreements Explained
The “no future employment” clause is a pretty standard clause that people get needlessly bent out of shape about. Here’s the deal – employers are not required to rehire former employees. Employers certainly may rehire former employees, but they do not have to. This is true regardless of a “no future employment” clause or not.
WHY BOTHER WITH A “NO FUTURE EMPLOYMENT” CLAUSE IN A SEVERANCE AGREEMENT?
“No future employment” clauses protect employers from failure to rehire/retaliation claims. Consider this scenario: an employee was terminated from her job and then accused the employer of discrimination. She and the employer work out a severance agreement (without a “no future employment” clause). Several months after receiving severance, the employee reapplies for a job with the company and is rejected. Theoretically, she can allege that the reason she was not rehired is unlawful retaliation for previously alleging discrimination. Had she signed a severance agreement with a “no future employment” clause, the employer could (successfully) argue that she signed away her right to any expectation of rehire when she signed her severance.
SO DOESN’T THAT PRECLUDE RE-EMPLOYMENT?
No. Remember, while the employer does not have to re-hire you, there is nothing in the agreement that prohibits the employer from doing so. It just has to be a good fit – as with any other job.
SAMPLES:
“Employee expressly releases Employer from any obligation to employ Employee in any capacity, and agree that if Employee knowingly or unknowingly applies for a position and are offered or accept a position with Employer, the offer may be withdrawn and Employee’s employment or contract may be terminated without notice, cause or legal recourse. Moreover, should Employee apply for future employment as an employee, consultant, temporary worker, agent, broker, independent contractor, or any other remunerative relationship with Employer in violation of the terms of this provision, the parties agree that Employer shall incur no liability by virtue of their contractual rights herein if they refuse to hire or consider Employee for such employment, or otherwise refuse to engage Employee’s services, or if they terminate Employee’s employment, contract, or services thereafter at any time. Employee further acknowledges that such representations constitute material inducements for the parties to enter into the Agreement.
“No Future Employment. Employee waives any right to re-employment with Employer and agrees not to apply for employment with it at any time in the future. If Employee does apply for employment with Employer, the parties agree that Employee’s application for employment may, on the basis of this Agreement, be rejected without explanation or liability.