General Release Woes

I was recently laid off with 60% of my department. I got 3 months of severance pay by signing a General Release that basically said I won’t sue the company for any reason, and I can’t work there for 6 months. I’ve tried to find out why this “6-month rule” is part of the General Release. Two hiring managers want to hire me back, but are hitting the 6-month rule roadblock.

Before I signed my General Release, I was chosen as the top candidate for a position in another department, but there was a sudden hiring freeze in that department just before the hiring manager could offer me a position. The position may open back up (at about 3 months into my 6 months), and I probably can’t be hired now, because of this dumb 6-month rule. Not only does this hurt me, the manager can’t get the employee he wants, and has to go farther down his list of applicants and/or re-open the time-consuming interview process.

A second position opened up (due to someone leaving that job for another job) that was absolutely perfect for me, in my old re-organized department. I was an excellent match for skills, and I had great connections within the group. I actually found out that the hiring manager had already inquired about hiring me, but he was told by HR that I can’t be hired because of the 6-month rule. Instead of filling his position ASAP, he now has to spend time interviewing lots of people.

This is very frustrating. I’ve talked to several HR people who are uniformly adamant that the 6-month rule cannot be waived (yet I know exceptions ARE made), and nobody in HR can explain the purpose of the 6 month rule. The 6-month rule can’t be about “double dipping” because there’s already a clause in the General Release that anyone re-hired before the severance pay runs out has to give money back (e.g. if you had 9 months of severance pay and were rehired at 6 months, you give back 3 months pay).

If I could figure this out, it might aid me in circumventing what appears to be a dumb, arbitrary and harmful rule.

I would love, love, love to help you figure this rule out, but alas, I cannot. It's not because it's a secret HR rule, it's because I think it's about as stupid as they come.

Now, I can give you some insight into a few other things. When you layoff someone you want to make a couple of things clear. First, that they aren't entitled to the next vacant position that matches their skills. Two, that they can't come back as a contractor in a similar role. Three, no double dipping.

My guess is that the six month prohibition against returning is related to the first point. Companies don't want to get involved in a "failure to hire" lawsuit. These lawsuits are where the candidate argues that the only reason he/she wasn't hired was an illegal one--race, gender, age, pregnancy status, etc. These are hard to prove (normally numerous candidates), but still expensive for the company.

My lawyer friends can chime in, but I actually think prohibiting someone from coming back for 6 months actually increases your chance of a failure to hire lawsuit. Why? Because you imply that they are eligible for rehire after that 6 month time period expires. I prefer to see a clause that states that your relationship with the company is severed and that the company has no obligation to rehire you at all.

Now, this statement doesn't mean that the company can't rehire you, it just means that when you sign the release you acknowledge that they are under no obligation to rehire you. And furthermore, that you will not be treated differently than other candidates.

When you put time frame prohibitions in your releases you are asking for problems, in my opinion. The goal of a reduction in force should be related to making the business more effective. Not just cutting heads. (Lots of companies have bloat and sometimes a mass layoff can help with that--proceed with caution though. Lots of potential problems, but that's a topic for another post.) If you are just obsessed with getting your headcount down, you are doing it wrong.

Managers should be able to hire the best candidate. This is what is best for the company. Remember the company? The company that was supposed to be more effective after a reduction? Yeah, that. So, stop prohibitions against hiring any particular person and just train your managers on how to hire.

If someone else could explain to me why 6 month or a 1 year prohibitions exist in releases, I'd be happy to know. And yes, I know that some releases prohibit employees from ever applying again. I know why this is: We don't want you back. (Companies that do this to everyone are just plain dumb, by the way. These clauses should be added to your low performers or problem causers, not everyone.)

The second prohibition I listed above was to prevent you from coming back in a contractor role. While this may seem as silly as the 6 month delay, there are actually legal reasons behind it. If you come back as a contractor 3 months after I lay you off, you can argue that you really are an employee and your job never was eliminated because, look! you're still doing this. Employees have rights under federal and state laws that contractors do not. For instance, if you successfully argue in court that you are an employee not a contractor then I have to give you the same benefits all my employees get.

The third, which your contract has, is a prohibition against double dipping. This also makes sense. We should not be paying you severance while we are paying you a salary. Repayment clauses are fine, in my book.

I realize this didn't solve your problem at all, but it was fun for me to muse on and I really do want someone to explain the logic. (Of course, I left out the most likely answer--someone high up wants it in there, so there it is and HR thinks it's stupid, but we're stuck with it.)