An Alabama bank worker sued his employer for race discrimination. A district court ruled against him, he appealed, and appellate judges reversed the lower court. While the suit was still pending, the bank moved to close the employee's department and cut 200 jobs. Between the pending lawsuit and the proffered severance package, things got tricky.

What happened. Dwight Myricks, an African American, worked in the check processing department of a Bank of Atlanta branch in Birmingham. His race bias suit was dismissed by a district court in 2003, but the U.S. Court of Appeals for the 11th Circuit, which covers Alabama, Florida, and Georgia, reversed the ruling in 2005. In the meantime, Myricks' job was eliminated effective March 31, 2005, and the bank tried to prepare laid-off employees.

Those workers willing to waive current and future legal claims against their former employer were offered a year's severance pay; Myricks and other long-term employees were also offered an enhanced pension and extended healthcare coverage. Terminated employees who didn't sign the waiver would be given only 2 weeks' severance. Myricks' waiver made it clear that, to qualify for the better package, he had to drop the pending lawsuit.

He hired an attorney, and the bank corresponded with Myricks and his lawyer starting 60 days before the deadline. But it heard nothing until a week before the deadline, when the lawyer asked for much more money than was on the table. The bank waited a week before countering with a very low offer and additional conditions. It being deadline day, the lawyer said Myricks would sign the waiver, but he still wanted his attorney's fees. Myricks signed. But the bank vetoed any further payouts, and Myricks sued. A federal district court judge again dismissed his claims, and he again appealed to the 11th Circuit.

What the court said. Myricks argued that, because he had rejected the counter-offer but signed the waiver, negotiations should have continued beyond the deadline. He claimed that he hadn't waived his right to pursue the pending suit, which was still under consideration; he'd waived only the chance to sue in the future. Appellate judges didn't see it that way. Myricks was well-educated, had hired a lawyer, and had been given 2 months to consider the package. That meant there was no room for misunderstanding: Once he signed, all other bets were off. Myricks v. Bank of Atlanta, No. 06-11624 (3/7/07).

Point to remember: Those three factors--the employee's ability to understand the waiver language, the right to consult a lawyer, and enough time to think about the options--are crucial to whether such a waiver will stand up in court.