Mutual Non-Disparagement Clauses in Severance Agreements

You may think you want a mutual non-disparagement clause in your severance agreement, but you probably don't need it.

Why You Should Never Sign a Severance Agreement Right Away

It has to be tempting to sign a severance agreement right away.  You were just terminated, you are probably wondering about how you are going to pay bills, make ends meet, find your next job, etc.  The severance you’ve been offered seems like a lifeline.  Maybe it is...

But You Should Never Sign a Severance Agreement Right Away.

Your severance agreement was written specifically to help your employer – not you.  Thus, your severance agreement makes you give up nearly every right you have under federal, state and city law, like claims for discrimination, breach of contract, defamation, unlawful termination, human rights violations, and certain wage payment laws.  The agreement may also prevent you from working for a similar employer, from contacting your former co-workers or clients, and making certain statements about the company.

Your employer also drafted the severance agreement to protect itself in the event that you breach.  For example, your agreement probably permits your employer to seek “injunctive relief” or to seek attorney’s fees in the event of a breach of the agreement (but does not permit you to seek attorney’s fees if the company breaches).

Your employer also drafted the severance agreement with an offer of payment.  That offer may not properly value the claims you are giving up, your contribution to the company, or your personal circumstances.  When I used to advise companies about how to draft severance agreements, I would always give them the following advice:

“You should offer the minimum amount that this person would accept to shut up and go away forever.”

Still Think You Should Sign Right Away?

Why not speak to a severance lawyer?  Granovsky & Sundaresh specializes in severance agreements.  We offer two services in this regard.  First, we can review your agreement with you paragraph-by-paragraph to make sure that, at a minimum, you are an educated consumer.  For some clients, however, we also negotiate severance.

Our Pricing For These Services is 100% Transparent:

  • For review and consultation, we charge a flat fee - $600.  This fee includes a complete review of your agreement, assistance with revising the agreement if necessary, and a bank of time for issues that arise in the future (e.g., if a non-compete issue comes up in the future, we will consult with you on this as well).
  • For negotiation of severance agreements, we charge a contingency fee of 1/3 of the monetary improvement we attain for you.  There is no fee unless we improve your severance.

Yes, You May be Able to Improve Your Severance

We specialize in negotiating severance agreements.  We have improved our clients’ severance agreements in 91% of our cases (as of April 1, 2017).

You owe it to yourself and to your career to understand and improve your situation. 

Contact us today.  Call 646-524-6001. You will be speaking to an specialized severance attorney within 24 hours.

Work Off The Clock Must Be Compensated

If you work off the clock – you have to be paid for it.  It is just that simple.

Examples of work off the clock includes the below (and more).  If you believe that you are performing work off the clock – and not getting paid, contact us today.  Generally speaking, you are entitled to pay for all time during which you are subject to the control of the employer.

  • Pre-shift meetings;
  • Startup activities, like “opening” a store or restaurant, starting up computers or other equipment;
  • Calls, voicemails, e-mails, and texts while you are off the clock (like at home or commuting);
  • Closing activities like locking up, shutting down equipment, etc.;
  • Clocking out for short breaks;
  • Being required to clock out for travel time when the travel is related to your work;
  • Being required to put on special uniforms.

Other issues related to work off the clock include:

  • Failing to pay employees for the entire time they are performing work, not just the time they are “clocked in”;
  • Automatically deducting a meal period from an employee’s hours when no meal period was actually taken;
  • Deducting break time(s) from an employee’s work hours;
  • Not paying for unanticipated time – like when an employee has to return to work;
  • Requesting that employees work on some nights or weekends without clocking in; and
  • Failing to compensate employees who bring work home and continue to work outside of their “regular” workday.

If you believe you or someone you know is not being paid for every hour they work, please do not hesitate to contact us and discuss your potential claim.  We generally work on a contingency fee basis – meaning we only get paid if you get paid.  Contact us today by email or call 646-524-6001

Checklist for Negotiating Severance Agreements

Our firm specializes in negotiating severance agreements for recently terminated employees.  We’ve negotiated severance agreements all over the country from our offices in New York City and Cleveland.  Since we formed our firm, we have improved severance for over 93% of our clients.  You can read our reviews on Google, Avvo, and Yelp.

When we talk to our clients about severance, we generally go through the below checklist.  We don’t always discuss every bullet point with every person, but this should provide a general overview. 

·         Is it Fair?  Here’s the basic transaction:  in exchange for severance (money) the company is getting you to promise not to sue them (and sometimes a bit more).  Are you getting fair value for your promise?  That depends on what your promise is worth – in dollars and cents.  It also depends on common sense.  How much did you give your company in blood, sweat and tears?  Is that being valued (it does not have to be – but it should)?   We work with clients to help them better understand if their offer is fair and help them work towards a more equitable deal whenever possible.

·         Reason for Termination.  This is a big one.  If you believe that the company terminated your employment for an illegal reason (e.g. discrimination, retaliation, etc.), the claims that the company is asking you to release can be quite valuable.

·         Potential Claims.  Like your reason for termination, if your employer violated the law, you have viable claims against the country.  We discuss whether each employee was properly compensated for all time worked, and also explore whether the employee has viable claims under OSHA or Dodd-Frank.

·         Confidentiality.  Map out what is and what is not confidential.  While a company certainly wants to keep its trade secrets (and secrets generally) private, you need to be free to describe your work to potential employers, etc.  Plus there may be certain aspects about your employment that you want to be kept confidential.

·         References.  Severance is about your future, so working out how your references are going to be handled is critical.  A neutral reference usually covers this, but, sometimes, you can iron out a reference letter from your former employer which you can then present to potential employers.  These are fairly rare, but that does not mean you should not look into it in certain circumstances.  Here is an article on neutral references.

·         Personnel File.  You may want an opportunity to review and/or copy your personnel file for your records.  A personnel file would typically contain information about your pay, benefits, and performance.  Even if you cannot get access to your entire file, there may be some information about your employment (salary, benefits, accrued vacation, etc.) that you may want to know.  Think through what information you want.

·         Return/Retention of Company Property.  Most severance agreements require employees to return all company property.  But what if you’ve grown attached to your company-issued laptop or smartphone?  Do you have important personal information on your work e-mail account?  Think through what you might want to keep.

·         Restrictive Covenants.  As noted above, severance is about your future.  Restrictive covenants (non-competes, non-solicits, etc.) can have a major impact on what you are allowed to do after your employment has ended.  If you are subject to a restrictive covenant, your severance agreement may be a good place to revisit the issue.  But you have to be delicate when you address this issue – nothing says “I intend to compete with the company” quite like saying “I want to talk about my non-compete agreement.”

·         Other Pay.  Don’t leave any money on the table.  Make sure all of your earned wages, commissions, vacations, sick leave, etc. have been paid.  Figure out your pension, 401K and benefits.  Make sure that you get everything that you’ve earned.

·         Stock Options.   When are your stock options exerciseable?  Separation from the company may accelerate the time.   Also, if you have acquired stock, majority shareholders may owe you a fiduciary duty to disclose material info about the company stock. You may be able to force the company to repurchase the stock.

·         Future Relations.  Can the company hire you back?  Can you be a consultant, or independent contractor for the company?  Does getting another job (with the company or another company) impact your severance? 

·         Taxes.  Talk to an Accountant.  Figure out how your severance is going to be taxed.    Typically, severance payments are taxed as wages, but not always.  Clever accountants are great at coming up with creative solutions to tax issues related to severance.

If you think you might want to talk to a lawyer about negotiating your severance, please contact us – this is what we do.

What is Disability Discrimination in New York?

What is Disability Discrimination in New York?

What Laws Apply to Disability Discrimination in New York?

If you work in New York, you are protected from disability discrimination at the workplace by both federal and state law – the Americans with Disabilities Act (ADA) and New York State Human Rights Law (NYSHRL).  If you work in New York City, you have an added layer of protection under the New York City Human Rights Law (NYCHRL).

What are Your Rights?

Discrimination on the basis of disability is illegal.  If you have suffered an adverse employment action (e.g., you have been fired, laid off, suspended, subjected to a hostile work environment, demoted, etc.) and you believe that your disability played a role in the decision to take such adverse employment action, you should contact an employment lawyer. 

How is a Disability Defined?

ADA

Under the ADA, to qualify as “disabled,” a person must have “a physical or mental impairment that substantially limits one or more major life activities of such individual,” have a “record of such an impairment,” or be “regarded as having such an impairment.”

In 2008, the ADA Amendments Act was passed and added the following guidance to how “disability” should be defined such that:

·        “The definition of disability in this chapter shall be construed in favor of broad coverage … to the maximum extent permitted by [law].

·        “An impairment that substantially limits one major life activity need not limit other major life activities in order to be considered a disability.”

·        “An impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.”

·        “The determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures such as (I) medication, medical supplies, equipment … prosthetics … hearing aids and cochlear implants … mobility devices, or oxygen therapy equipment and supplies; (II) use of assistive technology;  (III) reasonable accommodations or auxiliary aids or services; or (IV) learned behavioral or adaptive neurological modifications.”

What is a Major Life Activity?

“[M]ajor life activities include … caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.”

The term “major life activity” “also includes the operation of a major bodily function, including … functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.”

What is it to “Be Regarded as Having an Impairment”?

“[a]n individual meets the requirement of ‘being regarded as having such an impairment’ if the individual … has been subjected to [discrimination] … because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity.”

NYSHRL

The NYSHRL defines disability as “ (a) a physical, mental or medical impairment resulting from anatomical, physiological, genetic or neurological conditions which prevents the exercise of a normal bodily function or is demonstrable by medically accepted clinical or laboratory diagnostic techniques or (b) a record of such an impairment or (c) a condition regarded by others as such an impairment, provided, however, that in all provisions of this article dealing with employment, the term shall be limited to disabilities which, upon the provision of reasonable accommodations, do not prevent the complainant from performing in a reasonable manner the activities involved in the job or occupation sought or held.”

Note that this definition is a bit more limited than the ADA because it requires an employee to show that his or her disability can be reasonably accommodated.  On the other hand, the definition is a bit broader in that it does not exclude temporary or transitory conditions.

NYCHRL

The NYCHRL offers the broadest definition of disability.  Under the NYCHRL, disability is defined as “any physical, medical, mental or psychological impairment, or a history or record of such impairment.”

Physical, Medical, Mental or Psychological Impairment

“Physical, medical, mental, or psychological impairment” is defined as “an impairment of any system of the body; including … neurological … musculoskeletal … sense organs and respiratory organs… cardiovascular … reproductive … digestive and genito-urinary … hemic and lymphatic … immunological … the skin … endocrine system … or a mental or psychological impairment.”

What Damages Are Available?

Plaintiffs can recover damages for the following: reinstatement, compensatory damages (damages to compensate the employee for lost wages), punitive damages (damages to punish the employer for its act(s) of discrimination), injunctive relief (a court order forcing the employer to do – or not do – something), attorneys’ fees (the amount that a Plaintiffs’ attorney would be paid based on a reasonable hourly rate and the amount of time put in by the attorney) and costs (hard costs for litigation, e.g., filing fees, depositions, court costs, photocopies, mail, etc.).

What Other Laws Are at Play?

Wage Payment Laws – Are you sure you are being paid for all of your time worked?  Even if you are paid a salary or have a “manager” or “supervisor” title, you may still be entitled to overtime or other wages.  The laws at play here are the federal Fair Labor Standards Act (FLSA) and the State New York Labor Law (NYLL)

Workers’ Compensation – If you suffered an injury at work, you may have a workers’ compensation claim.

Medical Leave Laws – Certain employees are entitled to unpaid leave under the federal Family Medical Leave Act (FMLA).  If you suffer an adverse employment action based upon taking or requesting leave (for yourself or a family member), you may have a claim under the FMLA.

What Should You Do?

If you have suffered an adverse employment action, and you believe that it is related to your physical condition and/or disability, you should absolutely call an employment lawyer.  We respond to all inquiries within 24 hours and offer free initial consultations.  Contact us today.

Granovsky & Sundaresh PLLC Can Help

Granovsky & Sundaresh is a boutique labor and employment law firm with offices in New York City and Cleveland that helps employees with all aspects of employment law.  Our practice specializes in discrimination, severance negotiations, employee wages, medical leave and non-compete/non-disclosure agreements.  We offer free consultations and have a proven track record of results.  If you need help, call us to set up a free consultation today.

What’s the deal with the 21 and 7 day provisions in my severance agreement?

If you have a severance agreement, it probably contains a paragraph that says something like this:

You further acknowledge that you have been offered at least twenty-one (21) days to consider this Agreement, and that you have signed it voluntarily and of your own free will prior to the expiration of that 21-day period.  In doing so, you now have seven (7) days from the execution to revoke this Agreement. At the expiration of this seven (7) day period, your right to cancel this agreement shall cease. This Agreement will not become effective until after the expiration of the seven (7) day revocation period.

 

1.       What does it mean?

Employees have 21 days to consider the agreement (the “Consideration Period”) and then 7 days to revoke it (the “Revocation Period”). 

Consideration Period:  The 21 days are waivable by the EMPLOYEE only.  Meaning, the employee gets 21 days to consider an agreement.  If he/she decides to sign it on day 2, that is fine.  If he/she wants to wait 21 days to sign, that is allowed too.  On day 22, the agreement is technically null and void (of course, the employer can always choose to keep it on the table).

Revocation Period:  The 7 day Revocation Period means that, no matter what, for 7 days after the employee signs the agreement, he/she has the right to revoke his/her signature. On day 8, it is a binding agreement.  The Revocation Period is not waivable; even if the employee signs the agreement in blood and swears that he/she will not revoke the agreement, that employee still has the option to revoke for 7 days.

2.       Why is it there?

Employees over 40 are protected by the Older Worker Benefit Protection Act (“OWBPA”).  To ensure that employees over 40 are not unduly pressured to sign certain agreements, the OWBPA requires that such agreements contain the 21 and 7 day periods.  The 21 days are to consider the agreement and the 7 days are to revoke the agreement.

While this clause is only required for employees 40 or older, it has become a fairly common occurrence in all settlement agreements.  This is probably because employers use forms they download for free, instead of using a law firm to make custom-made forms on a flat fee basis.

 

Questions, comments, want to chat with an employment lawyer, contact us.

Why Hire a Lawyer When I Can Get Free Employment Law Forms Online?

A lot of people avoid paying an attorney for employment law forms in favor of getting free forms online.  The advantage of this is obvious – it’s cheaper.  But this tactic is penny wise and pound foolish – you save money in the short term, but it might cost you a lot more in the long term.

There are two reasons that employers use certain forms:  (1) because the employment law forms are legally mandated (like certain wage forms in New York) or (2) to protect the company in case something goes wrong down the road.   While it is definitely cheaper to pull your documents off a website, if you want to accomplish (1) or (2), you are probably doing yourself a disservice.

Using Free Online Employment Law Forms Because They Are Legally Mandated

Using free online forms to fulfill your legal obligations as an employer is dangerous.  First, unless these forms come from a highly reputable website (like an official government website), you have no way of knowing if the document complies with the law or not.  Employment laws are constantly changing.  The employment law form you get online may no longer be legally compliant – or perhaps it was never compliant to begin with. 

Second, most employment law forms are state-specific.  What satisfies the law in one state may not in another.

Third, without an experienced employment lawyer on your side, how are you going to know that you’ve accumulated all the documentation that you need? 

Finally, even if you get a legally compliant document, you may need guidance in precisely how to fill out the form to best suit your business’s needs.

Using Free Online Forms to Avoid Future Litigation

If you are using employment law forms in order to avoid litigation, it would be very foolish to use free forms that you find on the internet.  If you use an outdated or unenforceable employment law forms, not only is your document unreliable and unenforceable, it may actually create liability for your business.  Examples abound – a poorly drafted offer letter can be read as a contract, an overbroad non-compete might invalidate an entire agreement, an otherwise discretionary bonus might become mandatory.  Worst of all, you might use a document you found online which violates your state’s wage and hour laws.

The whole point of using employment law forms to avoid litigation is to be prepared in the event things go wrong.   And when things go wrong is precisely when you need to have an attorney available.  Here, even a legally compliant free online form leaves you out on a limb. 

Hiring an Attorney to Prepare Your Employment Law Forms

More often than not, you are better off hiring a law firm.  Yes, it costs money – but, as with all things, you get what you pay for.  Besides, it is probably less than you think – we offer flat fees and transparent pricing. 

If you hire an attorney, you know that your employment law forms are legally compliant.  You also know that the documents you use will be customized to suit the unique needs of your business.  Employment law is not a one-size-fits-all business.  Every business is different, and the documents that each business uses, like employee handbooks, can and should be customized.  Also, when you hire an attorney, you can make smarter decisions about what your business actually needs.  For example, most business owners think that they want non-compete agreements, when what they really need are non-solicit agreements (and many don’t even know the difference between the two).   Third, if something ever does go wrong down the road (and something always goes wrong), you know who to call.  Follow-up is a critical part of our practice.  If you have a problem, you can speak to one of our attorneys, probably the attorney who drew up your documents personally.  Every client who hires us to prepare their employment law forms gets a bank of hours to use for follow-up. 

Contact us today for a free initial consultation.

Flat Fee Employment Law Forms

Whether you have been in business for generations or are just starting up, it is probably a good time to reevaluate your employment practices and forms.  We can help.  Our firm offers flat fee services to prepare some of the most important documents you need to successfully run a business and – perhaps more importantly to avoid expensive, time consuming and potentially devastating employment lawsuits.

Of course, many of the forms that we can prepare for a flat fee are available for free online.  But, as with anything you get for free online, you get what you pay for.  While you might get a good form, how do you know if the form you get online is not out of date or not compliant with the law in your state.  When you use our flat fee form services, you know you are getting an up-to-date, legally compliant form that we will custom-tailor to your unique business needs.

Below is a list of the forms that we can prepare for you on a flat fee basis:

  • Personnel Handbooks ($1,000-$1,500, depending on complexity)
  • Application Forms ($250)
  • Performance Improvement Plans ($250)
  • Offer Letters ($350)
  • Termination Letters ($350)
  • Severance Agreements ($500)
  • Restrictive Covenant Agreements ($500), including:
  •    Non-compete
  •    Non-solicit
  •    Non-disparagement
  •    Non-disclosure
  • Arbitration Agreements ($500)
  • Wage Payment Forms (legally mandated in New York) ($250)
  • Consent for Drug Testing ($350)
  • Consent for Background Checks ($350)

When you retain our firm to prepare your employment law forms, you automatically receive a two hour bank of consultation follow-up should any issues arise in the future.  When you purchase multiple forms at once, each additional document, after the first, is half price.  If you are making a large order, we can always work out a deal.  

We offer transparent pricing, extensive follow-up and your matter will be personally handled by one of our attorneys – we never pass off the work.  Contact us today to get started.

Not Getting Paid Enough? 3 Dirty Tricks Employers Use to (Illegally) Rip You Off

If you are not getting paid enough, it could be because your employer is breaking the law.  This article explores three of the most common dirty (and illegal) tricks that employers use to rip off their employees.

Not Getting Paid Enough?  You Might be Misclassified as Exempt.

Most employees are entitled to time and a half for hours worked over 40 in a week.  These employees, who are entitled to overtime, are called “non-exempt” employees.  First, let’s explain the vocabulary, because it comes up in a lot of the literature about overtime:

Exempt Employees.  Exempt employees DO NOT get overtime.  They are exempt from overtime laws.  Most employees fall outside of this category.  These employees are called …

Non-Exempt Employees.  Non-Exempt employees GET OVERTIME.  They are not exempt from the overtime laws, and therefore should get overtime payments.

Whether you are exempt or not depends on what you actually do.  It has nothing to do with your title.  Exempt status also has nothing to do with whether you are paid a salary.  Generally speaking, employees are exempt if they have higher-level jobs, make enough money (over $47K starting December 2016), or perform certain kinds of specialized work.

Many employees – incorrectly – assume that because they receive a regular salary, or have a “manager” title, that they are not entitled to overtime.  Unscrupulous employers exploit this misconception – just because you are paid a salary, it does not mean that you are exempt from overtime.  If the duties you actually perform qualify you as a non-exempt employee, you are a non-exempt employee and are entitled to overtime compensation regardless of the fact that you are paid a regular salary (and regardless of your title).

Not Getting Paid Enough?  You Might be Misclassified as an Independent Contractor

Another common misconception that employers exploit is classifying someone as an “independent contractor” rather than an employee.  An independent contractor is, by definition, independent and works for him/herself.  An independent contractor is not an employee. 

Generally speaking, independent contractors are cheaper for employers.  An employer does not have to pay overtime, taxes, unemployment insurance, workers compensation insurance, etc. for an independent contractor.  Similarly, an independent contractor is afforded fewer anti-discrimination rights than an employee.

Without getting into the details, an independent contractor truly works for himself/herself.  Independent contractors use their own materials, set their own prices and schedules, etc.  An employee, on the other hand, uses an employer’s materials, works on the employer’s schedule and for a rate of pay set by the employer.  The IRS’s website includes three questions in determining the degree of control and independence that must be examined in making an employee/independent contractor determination:

1.     Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

2.     Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

3.     Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

The key, as noted by the IRS, is to look at the entire relationship and consider the right to direct, control and document each of the above factors.

Not Getting Paid Enough?  You Might Not Be Getting Paid for All Hours Worked.

Another dirty trick that some employers use is to simply not pay their employees for all hours worked.  Even where employers classify their people as non-exempt employees, this is still a common practice that employers use in several ways. Below, we briefly detail a few of the more common techniques employers might use:

  • Not paying for pre or post-shift work.  You are supposed to be paid for your time worked, not based on your schedule.  So if you are required to come in 15 minutes before your shift, you must be paid for that time.  Similarly, if you have to stay late, you have to be paid for that time –even if it is not reflected on the schedule.  With e-mail and text messages becoming increasingly commonplace in the workplace, employers often use these to communicate with employees during non-business hours and expect that the employee will not be paid for these hours either.
  • Deducting “downtime.”  Unless you are totally free to do whatever you want (a bona fide break), you should be getting paid for your time.  But, in many jobs, there are times when there is nothing to do.  That does not mean that you are off the clock and not working, rather, you are “engaged to wait” (i.e. being paid to be prepared in the event that there is something to do).
  • Unlawful deductions.  Most deductions, even with your approval, are illegal.  Unless the deduction is for your benefit, and with your approval (e.g. insurance, pension, 401K, etc.) it is probably illegal.  Some employers deduct for poor performance, broken/lost inventory, etc.  This is generally illegal.

Not Getting Paid Enough?  You Might Just Have a Lousy Job

Sometimes, the problem is not a legal one.  Sometimes, you are just being underpaid.  The solution here is the simplest of discuss (but the hardest to implement):  get out there and find a better job.  Easier said than done, of course, but if you have a lousy job, get out there and look for a better one.

Not Getting Paid Enough?  The Bottom Line

If you are not being paid enough, consider whether you are being paid correctly.  It is entirely possible that you have been misclassified as an exempt employee or independent contractor.  It is also possible that you are not being paid for all of your time worked.  If any of these are the case, you should contact an attorney immediately – we can help.  At the same time, it is possible that you just have a bad job.  Figure it out and make the call.

Why is Fox Giving Roger Ailes Severance?

Roger Ailes, the former Chairman and CEO of Fox News Channel and Fox Business Network resigned in the wake of the lawsuit filed by Gretchen Carlson and allegations from other Fox employees.  The allegations, while unproven, are ugly.  Yet many news outlets have reported that he received a $40 million severance from Fox.  This begs the question – why would Fox pay this guy $40 million to quit?

Here are our best guesses…

1.       It may be required by Ailes’s employment agreement.

Many high level executives like Mr. Ailes have employment agreements which contain specific provisions for severance.

It is possible that such an agreement would have an “out” if the employee engages in gross misconduct or is convicted of a felony he will not receive severance, but, again, the allegations against Mr. Ailes have not been proven. 

In light of that, Fox may be contractually required to pay Ailes a severance. 

2.       It is a fair compromise.

There is a saying that goes “the right settlement” is one that makes both sides equally unhappy.  And it is easy to see why paying out $40 million would make Fox unhappy.  But consider the fact that Ailes is reported to have earned approximately $20 million per year.  $40 million is a lot of money, but it is only two years’ worth of his salary.

3.       It keeps Ailes on Fox’s side.

Most severance agreements contain a “cooperation clause.”  A “cooperation clause” requires a departing employee to cooperate in the event that the company gets sued and that employee has potentially useful information. 

This is very important for high-level employees like Ailes.  He is the person most knowledgeable about scores of things at Fox News, and his continued cooperation with the company is very valuable.

Similarly, if he is not required to cooperate, Ailes suddenly becomes a dangerous, and potentially very costly, wildcard.  Big companies hate wildcards.

4.       It keeps Ailes quiet.

Most severance agreements contain a “confidentiality clause.”  A “confidentiality clause” typically keeps two categories of information confidential:  First, a confidentiality clause likely requires the departing employee to keep the terms of his/her severance confidential.  Due to the high-profile nature of Ailes’s departure, that consideration has gone out the window. 

The second category of confidential information often covered by a “confidentiality clause” is more generally aimed at curtailing an employee’s ability to discuss his/her employment at all.  These sorts of clauses contain exceptions which would allow the employee to testify truthfully, but otherwise considerably curtail what he or she can say about his or her employment.

By paying Mr. Ailes a severance, Fox has essentially, paid for his silence.  Mr. Ailes has been in charge of Fox News for 20 years.  He knows where all the skeletons are buried and a media war against Mr. Ailes would cause damage for all involved.