Your Employer CANNOT Force You to Sign a Severance Agreement
Texas strongly favors parties' freedom of contract. BMG Direct Mktg., Inc. v. Peake, 178 S.W.3d 763, 767 (Tex. 2005); In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 129 (Tex. 2004) ("As a rule, parties have the right to contract as they see fit as long as their agreement does not violate the law or public policy.").
[P]ublic policy requires . . . that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice. Therefore, you have this paramount public policy to consider-that you are not lightly to interfere with this freedom of contract.
BMG Direct, 178 S.W.3d at 767 (quoting Wood Motor Co. v. Nebel, 238 S.W.2d 181, 185 (Tex. 1951)). Freedom of contract allows parties to bargain for mutually agreeable terms and allocate risks as they see fit. Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 912 (Tex. 2007). Contracts require mutual assent to be enforceable. Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007). Since lack of voluntariness would negate mutual assent, a necessary predicate to the formation of a contract, it would also negate the underlying contract. Sw. Underground Supply & Envtl. Servs. v. Amerivac, Inc., 894 S.W.2d 15, 18 (Tex. App.—Houston [14th Dist] 1994, writ denied).
Simply put, in Texas, an executed severance agreement is not enforceable as a contract when the employee does not sign it voluntarily. For example, an employer cannot pressure or rush an employee to sign a severance agreement immediately after being informed of his termination. This would demonstrate a lack of voluntariness, entailing a lack of mutual assent–which is required for a contract to be enforceable under Texas law.
If you have any questions about severance agreements, please schedule a consultation today. Consultations are completely confidential. Do not rely on this post as legal advice. This post does not create an attorney-client relationship between the firm and the reader. Do not act in reliance on the contents of this post without seeking the advice of counsel.