Ex-employee had agreed to fully release all claims in exchange for severance payment
In a recent case, an employer successfully asked the court to reject a complaint where a former employee alleged that a release of claims violated section 1668 of the Civil Code, which prohibited pre-dispute releases of liability in certain circumstances.
Xceed Financial Credit Union employed the plaintiff in the case of Castelo v. Xceed Financial Credit Union as its controller and vice president of accounting. In November 2018, Xceed told her that it would terminate her employment effective Dec. 31, 2018.
On Nov. 19, 2018, the parties signed a separation and general release agreement. Here, Xceed agreed to give the plaintiff a severance payment of $137,334.00 less federal and state withholdings in exchange for a full release of all her claims, including potential age discrimination claims under federal and state law.
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In August 2019, the plaintiff sued Xceed for wrongful termination and age discrimination under the Fair Employment and Housing Act (FEHA).
In response, Xceed argued that the release barred the plaintiff’s complaint. It also filed a cross-complaint alleging a breach of the separation agreement. The parties agreed to submit their case to binding arbitration in line with a 2013 arbitration agreement.
The arbitrator issued an award in Xceed’s favor. The arbitrator found that the release barred the...
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