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Former Employers and Potential Employers: What Should Your Legal Agreement Be?

Spell Out Reference Details in Your Separation Agreement

DETROIT (Sept. 20, 2011) - Job separation: most people cringe at the very idea, although most of us have experienced it. And to be fair, it's not always a bad thing. Oftentimes, it occurs for a positive reason; the advancement of a career or a movement to “greener pastures.”

Unfortunately, there is also the circumstance where a separation is initiated by the employer; a lay-off, firing or downsizing. And let's be honest, these are generally unpleasant for the suddenly-out-of-work employee. However, some employer-initiated separations come with a “separation agreement” (sometimes referred to as Termination Agreement, Severance Agreement or Separation Agreement and General Release), which specifies the terms of your termination and severance package. And depending on the circumstances of the separation, these packages can be quite generous. So, when handled correctly, this agreement can be a useful and positive tool for the employee.

Don't miss the key phrase here: when handled correctly. Employees should be aware that these separation documents are drawn up by the employer, and generally favor them; they are also a contract in which the employee relinquishes their legal rights. As such, they need to be reviewed very carefully.

To protect yourself, you must be very careful with the wording of various documents. Have the key details spelled out legally, by an attorney, and make sure you understand the ramifications of the agreement. This is of particular importance if you sued your former employer and are now negotiating a separation package.(Note: In most states, you will not want to use the word “severance” or “severance agreement.” Severance is a term used by both federal and state governments to denote a specific type of payment. It may adversely impact your tax, unemployment and other benefits. A labor and employment attorney can advise you on this subject.)

One key thing that is often overlooked in the negotiation of these packages is the rules about how this (now former) employer will react to a request from a potential employer for reference information. This is an important issue; don't let it fall through the cracks!

So, what should the legal agreement with your former company say about its obligations to provide references to potential employers? (Need specific legal advice and direction here? Allison & Taylor can arrange for an attorney to write a custom clause for your particular situation.)

Here are some tips on what a former employer should NOT be allowed to do or say when asked for reference information:

1. Make a reference to legal action. “Hold on a moment, let me get the legal file to see what I am allowed to say.” There should be NO reference whatsoever that the former employee may have sued - new companies do not want to hire someone who sues former employers.

2. Nothing at all. They MUST return a reference call. After all, what does it say when a former company, boss or the HR department does not return a reference call? It's a very strong hint to a potential employer that there were issues or problems with the employee.

3. Have a bad attitude, or any other type of inflection when interviewed. No negative sound bites. (See some of the unbelievable things former employers have said here.)

4. Offer any other opinions whatsoever. When providing a reference, they need to stick to the facts.

5. Offer any type of personal conversations within the industry. “Off-the-record” conversations which malign a former employee must be taboo as it can be considered “blackballing.”

Here are some tips on what employers/reference providers SHOULD be saying and doing per a legal agreement.

1. They should, in a polite and friendly way, verify title, dates of employment and salary for prospective employer. This verifies the information that is required on most employment applications.

2. They should courteously decline to provide any additional information. When asked other questions, they need to politely say, “Our corporate policy does not allow me to give any additional information.”

Taking the time to clarify these reference requirements in your separation package may make a huge difference in your ability to get a job in the future. Also, don't just assume that the company reference policy will be followed; in many cases, it is not. And a legal agreement on reference conduct can mean the difference between a lukewarm or negative reference, and one that is positive and professional.


About Allison & Taylor:

Allison & Taylor and its principals have been in the business of checking references for corporations and individuals since 1984. Allison & Taylor is headquartered in Rochester, Mich. For further details on services and procedures please visit

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Media Contact:
Jeff Shane
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