When being terminated, what do you do if you are asked to sign a document whereby you are asked not discuss company business and waive your right to sue the company at any time?

UPDATED: Sep 30, 2022

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When being terminated, what do you do if you are asked to sign a document whereby you are asked not discuss company business and waive your right to sue the company at any time?

I have overheard statements from management that someone who was fired refused to sign a contract that states that they would not sue the company. What is the advise to someone being terminated if asked to sign such a contract? Either a promise not to sue or a contract not to provide information for someone suing the company. Is there a difference if you are asked to sign an agreement not to sue, disclose or discuss company business if laid off or transferred and then moved to a lower paying position or for severance payment?

Asked on July 2, 2017 under Employment Labor Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

What you do is what makes sense for you, economically. First, bear in mind that you do NOT have to sign any such agreement when they are terminating you--there is no legal obligation to sign any disclosure agreement or waiver of your right to sue. Signing any such agreement is purely voluntary on your part. That in turn means that they have to make it worth your while--such as offering you severance, whether in the form of salary continuation, a lump sum payment, continued benefits (e.g. health care) for some period of time, etc. Use the opportunity to negotiate for something; only sign if what they offer you is worth your giving up the right to potentially sue and/or living under confidentiality/nondisclosure agreements. Obviously, what is worth your while depends on the situation: if you were discriminated against due to a protected characteristic, like age over 40, race, sex, religion, national origin, or disability, you may have a viable lawsuit; in that case, they'd have to offer you more to give up your right to sue. On the other hand, if you were not discriminated against, you may have no viable claims; in that case, since you are not actually giving up much of value, even a small amount of severance may be worth signing.

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