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I got let go today but my company (based in NYC) still owes me money, about $12,000 after tax, roughly. Shortly after letting me go, the company asked me to sign a general release. This, in theory, would release them from having to pay me my salary. This seems to me to be an extremely morally suspect move.

Am I right in thinking this? How should I proceed? I am asking law friends to recommend some employment lawyers, but other than this, can I do anything else? I want to claim unemployment ASAP and start working elsewhere ASAP, but I obviously cannot afford to sign a general release and let go of my claim to unpaid salary. Any advice is greatly appreciated. Please let me know if there are any clarifying questions.

This is related to this question on Personal Finance StackExchange and this question on Law StackExchange.

Scott Skiles
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  • People on here are likely going to complain that if something is moral is not a legal question, so I am commenting instead of answering, but yeah don't sign it. – Putvi May 08 '19 at 19:25
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    What is the company offering in return for you signing this release? – brhans May 08 '19 at 19:29
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    I'm being released from restrictive covenants, but they can't enforce them anyway since they can't pay them. In return I release all legal claims and agree to "make myself available" to answer questions arising from my work. Forget that! – Scott Skiles May 08 '19 at 19:32

1 Answers1

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How should I proceed? I am asking law friends to recommend some employment lawyers, but other than this, can I do anything else?

You definitely don't need an employment lawyer for this. From a legal standpoint, the matter is very simple: If you grant their request (whether by signing or otherwise expressing your acceptance), you would be waiving any remedies currently available to you for their breach of contract.

The company's attempt to override its contract with you is quite naive, but the company can always (and evidently does) try to get away with its liability nonetheless. I would not be surprised if the company subsequently tries harder to intimidate you, but that does not change your legal position & merits unless you sign the waiver the company is pursuing.

Asking for your post-termination availability reinforces the notion of company's poor planning and subpar management.

Iñaki Viggers
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    Could OP offer to sign the release on condition of payment of the $12,000? – phoog May 08 '19 at 22:41
  • @phoog $12,000 is a floor below which the request is laughable. OP can (and probably should) ask for more. – emory May 08 '19 at 23:11
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    @emory Sure. Most companies do sweeten these deals with a nice severance package. But my question is really about the legal implications of explicitly offering to sign subject to such a condition. – phoog May 09 '19 at 01:07
  • @phoog Although lawful, it is risky and gives no added value to the OP. That is tantamount to the company saying "If you sign this new contract, I will comply with my obligations on the one of which I am in breach": the company owes the OP that amount anyway. And having defaulted in the previous contract suggests that the company is likely to breach also this one, with the difference that with the new [post-termination] contract the OP would needlessly open the door to (1) possible counterclaims pursuant to that new contract, and/or (2) make it easier for the company to legally skip payment. – Iñaki Viggers May 09 '19 at 10:48
  • @phoog This is a tricky one, but I think Iñaki Viggers makes a compelling argument which I will simplify as if OP does not think the company can honor the existing contract, then why would they honor a new contract. – emory May 09 '19 at 14:45
  • @IñakiViggers I think OP really needs a lawyer on this one. This is way above my level. However, assume that the company is acting in good faith but just can not make the payments. Assume that OP will eventually have to accept fractional payment. Would it be possible for OP to negotiate (1) the amount upward 50% of $24,000 is more than 50% of $12,000? and/or move the debt to a higher priority class? These are questions for which I do not know the answer, not suggestions to OP. – emory May 09 '19 at 14:48
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    @emory As I understand it, if OP says "I'll sign if you pay the wages you owe me" that is not a contract, but an offer. Iñaki Viggers: the release is the company asking the employee to undertake not to sue. In a normal case, the consideration would be the severance package, wouldn't it? I doubt the back wages can be consideration, since the company already owes those. If the employee signs the release without some consideration, how could the company even enforce it? – phoog May 09 '19 at 15:06
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    Bingo, @phoog. Past consideration as well as any act a party is already legally obligated to perform cannot serve as consideration for any new contract. That said, and I'm only speculating now as I do not have enough info from OP to come to a conclusion, but the doctrine of promissory estoppel may be relevant here. – A.fm. May 09 '19 at 15:24
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    @phoog The OP's comment reflects the company's consideration being a release "from restrictive covenants". Conflating in a new contract (1) the release of the OP from covenants, (2) the amount owed to the OP, and (3) the requirement that the OP "make [him]self available to answer questions [about the OP's work]" can only complicate the OP's recovery of his overdue wages, because hitherto unrelated matters now are intertwined in that new agreement. – Iñaki Viggers May 09 '19 at 16:59