Best Practices for Drafting Your IHE's Severance Agreements

5 min

Severance agreements outline the rights and responsibilities of both the employer and employee at the point that an employee separates from their job. These contracts summarize the benefits the employee will receive upon separation (e.g., severance payments, continued insurance coverage, vesting of stock options, etc.) and set forth the promises the employee must give to be eligible for those benefits. Additionally, they provide a detailed explanation of the other ongoing, post-separation responsibilities that each party owes to the other.

Institutions of higher education (IHEs) must take special care when drafting severance agreements because of their responsibility to protect their reputation, their rights as employers, and their students' rights. By way of example only, some separated employees may have access to key confidential information of the IHE based on their role, including information about donors, financials, personnel, etc. Additionally, the Family Educational Rights and Privacy Act (FERPA), which applies to all IHEs that receive federal financial assistance, prohibits the disclosure of a student's education records to others without consent from the student or their parents. IHEs must ensure that separated employees continue to abide by the IHE's policy for safeguarding all confidential information.

Maintaining the privacy of student records and confidential institution information are only two examples of "must have" standard clauses in your IHE's severance agreements. The following are key sections that your IHE should always include in your severance agreements for faculty and staff:

  • Return of Property: Severance agreements should include a provision requiring the employee, shortly after separation, to return all IHE property (i.e., laptops, desktops, cell phones, keys and key cards, documents, passwords, etc.) in their possession or control. This section should also notify the employee that the property must be returned "as is" and may not be wiped or reset to factory settings, effective as of the date of separation.
  • Expectations of Further Work: In situations where the employee is expected to finish out the semester or academic year, the severance agreement should include a clause stating the expectations for any further work or behavior on the part of the employee. It should also provide clear terms that state how the employee should end their residency of IHE-provided housing once that final work is completed. If the employee resides on school grounds, include clear move-out instructions with important dates regarding the employee's official departure from the campus.
  • Privacy of Student Information: Depending on the employee's job title and responsibilities, they may have access to confidential student records. To protect the privacy rights of your students, the severance agreement should require the employee to agree to return any and all copies of confidential student information that they had access to during their employment, including written documents, electronic files, and visual media (i.e., photos or video). It is important to include this provision for all employees who may have encountered confidential student information at any point during their employment with the IHE, even if only for a brief time.
  • Confidentiality: A confidentiality clause restricts an employee's ability to disclose sensitive information, including confidential institution information. It may also prevent the employee from disclosing the existence and terms of the separation agreement itself to any person except those who need to be informed, such as an attorney or financial advisor. Confidentiality clauses should be tailored to the specific role of the employee and drafted broadly to include all relevant information that the employee may have been aware of or had possession of anytime during the entirety of their employment with the IHE.
  • No Disparagement: Your IHE should include non-disparagement language in every employee's separation agreement. This provision serves to prevent a party from speaking negatively about the other, within the confines of applicable law. Non-disparagement clauses often ask the employee to agree not to criticize or denigrate the IHE, in verbal or written communication, to the public, the press, students, parents of students in the IHE, other employees, or business affiliates of the IHE or the employee. IHEs should be aware that there may be specific limits on these clauses in certain states.
  • Continued Cooperation: If the employee is leaving employment immediately, but the IHE envisions the need for their future cooperation to wrap up or transition responsibilities, the IHE should consider including a future cooperation provision to ensure the employee's commitment to same. Additionally, after an employee has moved on, your IHE may face legal challenges that require the participation of former and present employees. The severance agreement should ask the employee to agree to cooperate with the IHE in any court proceeding involving the IHE or about which the employee has knowledge. This clause should be broad in scope, and should include investigations, litigation, and court proceedings involving your IHE and the duration of enforceability.

Dealing with an employee separation may be difficult, depending on the circumstances under which the employee is leaving. To ensure a smooth transition for both the employee and the IHE, and that you maintain reasonable positions in the negotiations, you should consult with counsel to draft a detailed and individualized severance agreement that protects the interests of the IHE and its community. Should your IHE have any additional questions regarding severance agreements, please contact the authors of this article or any other member of Venable's Higher Education or Labor and Employment Group.

* The authors of this article thank Samantha Furman, law clerk, for her assistance in its preparation.

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