That was the question recently considered by the federal appellate court in Chicago. Collette Hampton signed the agreement, cashed the severance check and sued Ford Motor Company for sexual harassment and discrimination. The agreement stated that she released "any and all rights and claims…relating in any way to my employment or the termination of my employment." In addition, the agreement stated that she was "voluntarily applying for the…payment," but she alleged that she was not allowed to take a copy of the agreement to her lawyer before she signed it.

Was the release ambiguous? By signing it, Hampton released "any and all" claims and claims "relating to her employment or the termination of my employment." However, the release did not mention Title VII or any of the possible claims she had when she signed the agreement. Was her release voluntary and knowing? The court considered a number of factors, including her education and business experience, whether she had any input in the negotiating the terms of the agreement, the agreement’s clarity, the amount of time she had to deliberate whether to sign the agreement, if she read the agreement, whether she was represented by a lawyer and whether the company improperly induced her conduct. In this case, the court ruled that her release was not ambiguous and that it was voluntary and knowing. The court noted that there was no evidence that Hampton did not understand the language of the agreement. In addition, the court stated that she showed a copy of the signed agreement to her lawyer within the time period she had to rescind the agreement. Therefore, the district court dismissed the case and the federal appellate court affirmed. See Hampton v. Ford Motor Co., No. 06 C 6720 (April 6, 2009 7th Cir.).

What are the lessons of this case? The language of the agreements must be clear and not cluttered with unnecessary and overly legalistic language. "Plain language" agreements are the best, clearly explaining to employees their rights and not including inconsistent language. Companies also have to be careful how they obtain the employee's, or former employee's signature. If an employee wants to sign an agreement without reading it, the company's representative has to step in and insist that the employee read the agreement before signing it. Regarding the language of the agreement, some companies correctly want to save the expense of attorneys’ fees, so they use agreements "off the shelf" or agreements they received from their lawyers years earlier. This is dangerous, because the agreement may not comply with the laws of a particular state or there may be different circumstances. Companies should expect a former employee to show the agreement to a lawyer who may tell the employee to sign the agreement, cash the check and use the severance to pay the lawyer to represent him. Therefore, taking just a little extra time to ensure the agreement’s effectiveness will protect the company.