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When is Signature Knowing and Voluntary?

July 12, 2019
A recent Family Medical Leave Act (FMLA) case highlights six key factors to keep in mind any time an employer seeks to have an employee sign a release of claims. 
The case arose when a former employee sued under the Family and Medical Leave Act (FMLA) claiming she had been wrongfully terminated and that the employer had failed to inform her of her rights under the law. 
The company argued that the case should be dismissed since it did not need to inform her of her FMLA rights because the employee had signed a waiver as part of a severance agreement that included a release all claims. 
The court ruled that the employer was wrong and that the employee had stated a plausible claim that she had not signed the agreement “knowingly and voluntarily.” The court made it clear that it is incumbent upon the employer to establish that the release was knowing and voluntary.  
The former employee’s allegation forced the court to try to determine what “knowing and voluntary” means. In answering this question, the Federal First Circuit Court of Appeals, which includes Massachusetts, Maine, Rhode Island, New Hampshire and Puerto Rico looked to a six-factor test established in a prior decision by a separate court of appeals for New York and New Jersey: 
  • plaintiff’s education and business sophistication
  • the respective roles of employer and employee in determining the provisions of the [release]
  • the clarity of the agreement
  • the time plaintiff had to study the agreement
  • whether plaintiff had independent advice, such as that of counsel
  • the consideration for the [release].
When the court applied these factors, it found that the former employee plausibly challenged in several areas the argument that she “knowingly and voluntarily” signed the waiver. The court noted that the former employee did not speak English, had no role in drafting the agreement, and did not have the opportunity to get advice of legal counsel. 
The court was dismissive of the employer’s argument that that ‘absent fraud, an individual who signs a written agreement (i.e. a contract) is bound by its terms whether [s]he reads and understands them or not.’
While this view of contract law may work in a setting between two commercial parties or similarly situated individuals, the court made it clear that contract law is “not the appropriate standard with regard to the validity of an employee’s release of claims.”
AIM members with questions about this or any other HR-related issue may call the AIM Employer Hotline at 1-800-470-6277.
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