Waive and save: Reducing exposure through collective action waivers

Seasoned HR professionals understand that employers typically cannot obtain a valid waiver for non-payment of wages owed to an employee. As discussed below, there may be a different tool in the toolkit that can reduce such risks.

Class by itself

In Illinois and across the country, employees separating from companies are sometimes offered compensation in exchange for signing a separation agreement. From the employer’s perspective, a key benefit of the separation agreement is what’s known as the “release.” In a typical release, the employee will waive discrimination and other potential claims they may have against the company. Through the separation agreement, they can receive some compensation, and the employer can receive some assurance it won’t face a lawsuit from the employee going forward.

This otherwise straightforward exchange, however, has some complications in one frequently litigated area: wage claims. As described below, some courts have held that employees cannot privately—i.e., without the approval of a court or the Department of Labor (DOL)—release their wage claims.