When an employment relationship ends, it is common for an employer to offer a severance agreement or settlement agreement if certain claims have been alleged against the employer. This document, which typically provides a departing employee with a sum of money, can offer a welcome financial cushion during a period of transition. However, these agreements are not gifts; they are legally binding contracts. In exchange for payment, an employee is typically required to give up something of significant value: the right to bring legal claims against their former employer.
While many employees are aware they are releasing claims for things like wrongful termination or discrimination, they are often unaware of the full, sweeping scope of the rights they are surrendering. A recent federal court decision, Gonzalez v. JPMorgan Chase Bank, N.A., provides a cautionary illustration of how signing a release can inadvertently lead an individual to forfeit valuable, and potentially substantial, claims related to the mismanagement of their retirement funds under the Employee Retirement Income Security Act of 1974 (ERISA). This case underscores a critical piece of advice we give every client: never sign a severance agreement without first consulting an experienced employment attorney. While many employees are aware they are releasing claims for things like wrongful termination or discrimination, they are often unaware of the full, sweeping scope of the rights they are surrendering. A recent federal court decision, Gonzalez v. JPMorgan Chase Bank, N.A., provides a cautionary illustration of how signing a release can inadvertently lead an individual to forfeit valuable, and potentially substantial, claims related to the mismanagement of their retirement funds under the Employee Retirement Income Security Act of 1974 (ERISA). This case underscores a critical piece of advice we give every client: never sign a severance agreement without first consulting an experienced employment attorney.
A Cautionary Tale: The Gonzalez v. JPMorgan Case
The facts of the Gonzalez case are straightforward and, for many employees, unsettlingly familiar. Alexandro Gonzalez was a former employee of JPMorgan and a participant in the company’s 401(k) Savings Plan. In January 2025, upon the conclusion of his employment, he entered into a “Confidential Negotiated Settlement Agreement & General Release.” In exchange for a monetary payment, he agreed to settle various employment-based claims against the company.
A few months later, Mr. Gonzalez filed a putative class-action lawsuit against JPMorgan under ERISA. He alleged that the fiduciaries of the company’s 401(k) plan had breached their duties of prudence and monitoring by investing plan assets in an underperforming stable value fund. The lawsuit, brought on behalf of all plan participants, sought to recover the investment losses the plan suffered due to this alleged mismanagement.
JPMorgan responded with a motion to dismiss the lawsuit, arguing that Mr. Gonzalez had already given up his right to bring the lawsuit when he signed his settlement agreement. The court agreed, and the case was dismissed before it could even begin.
The Court’s Decision: A Promise Is a Promise
The U.S. District Court for the District of New Jersey focused its analysis on several key provisions within Mr. Gonzalez’s severance agreement. The document contained not only a broad “General Release” of claims but also two other critical clauses: a “Class and Collective Action Waiver” and, most importantly, a separate paragraph titled “Promise Not to Sue.” Unfortunately, the agreement’s specific terms are confidential and not publicly available.
According to the court’s opinion, the plaintiff’s “Promise Not to Sue” was a specific, affirmative covenant in which Mr. Gonzalez promised not to initiate any legal action, including any claims under ERISA. The court found this language to be “clear and unambiguous.” In effect, Mr. Gonzalez had contractually barred himself from filing the very lawsuit he initiated.
The court determined that this promise mooted his case, meaning he no longer had a live controversy for the court to resolve. By signing the agreement, he had relinquished his legal right—his “standing”—to bring these claims on behalf of the plan. His case was dismissed not because his ERISA allegations were weak, but because he had already contracted that right away.
“Release” vs. “Covenant Not to Sue”: A Distinction with a Major Difference
One of the takeaways from the Gonzalez opinion is the court’s treatment of the “Promise Not to Sue” as distinct from the general release provision. While these concepts are similar, their presentation in a legal document can have profound consequences.
- A Release is typically understood as the relinquishment or extinguishment of a known or knowable claim that exists at the time the agreement is signed.
- A Covenant Not to Sue is an affirmative promise that one party will not pursue a specific type of legal claim against another in the future.
In Mr. Gonzalez’s severance agreement, the “Promise Not to Sue” was located in a separate paragraph from the general release. The court interpreted this structural separation as evidence of a clear intent to create a distinct and independently enforceable obligation. This seemingly minor detail in document drafting was pivotal. It allowed the court to enforce the covenant as a standalone promise, effectively blocking the courthouse doors to Mr. Gonzalez and the entire class of employees he sought to represent. An untrained eye would likely see these clauses as redundant legal boilerplate. An experienced attorney, however, could immediately recognize the danger the provision could have to future, unreleased claims.
The Hidden Dangers in Your Severance Agreement
The Gonzalez case is a reminder that a severance agreement is a document drafted by your employer’s lawyers for the sole purpose of protecting your employer. The language used is intentionally broad to eliminate as much future legal risk for the company as possible.
When you sign a standard severance agreement, you may be waiving rights you didn’t even know you had. This includes the right to sue for breaches of fiduciary duty under ERISA. A fiduciary breach can have a devastating impact on your retirement savings. For example, if your 401(k) plan fiduciaries imprudently invest in excessively expensive or poorly performing funds, your account balance could be thousands, or even hundreds of thousands, of dollars lower than it should be.
By signing a general release, you could be trading the right to recover those substantial, life-altering retirement losses for a comparatively modest severance payment. This is a trade that very few employees would knowingly make, yet it happens every day.
Why You Must Consult an Experienced Attorney Before Signing
The time to protect your rights is before you sign on the dotted line. Once signed, a severance agreement is extremely difficult to undo. The lesson from Gonzalez is that proactive legal counsel is not a luxury—it is a necessity.
An experienced Employment attorney, and in particular one with deep knowledge of ERISA is incredibly important when reviewing a severance agreement. At The Garner Firm, our attorneys can provide the critical guidance you need. When reviewing a proposed severance agreement, our attorneys will:
- Scrutinize the Language: We meticulously analyze every clause, identifying overly broad language, hidden waivers, and dangerous provisions like the “Promise Not to Sue” that proved fatal to the Gonzalez lawsuit.
- Negotiate Carve-Outs: We can negotiate with your former employer to insert specific “carve-out” language into the agreement. This language explicitly preserves your right to bring certain claims, such as claims for vested retirement benefits or for breaches of fiduciary duty under ERISA if such a carve out may be necessary.
- Explain the Full Scope of Your Rights: We ensure you understand exactly what you are giving up and what you are getting in return. We advise you on the potential value of any ERISA claims you may have, so you can make a fully informed decision about whether the severance payment offered is fair compensation for the rights you are being asked to surrender.
- Protect Your Financial Future: Our ultimate goal is to protect your long-term financial security. We work to ensure that a short-term severance payment does not come at the cost of your hard-earned retirement savings.
Contact The Garner Firm Today
The Gonzalez v. JPMorgan decision is a warning to all employees. A severance agreement is a high-stakes legal document with lasting consequences. Signing one without a full understanding of its terms can lead to the unintentional forfeiture of your most important financial protections.
The attorneys at The Garner Firm have decades of experience litigating complex employment and ERISA cases and counseling individuals on employee benefits and severance agreements. We have seen firsthand how carefully worded documents can strip employees of their rights. We are dedicated to ensuring that does not happen to you.
If you have been offered a severance agreement or suspect that your 401(k) or pension plan has been mismanaged, do not sign away your rights. Contact the experienced ERISA attorneys at The Garner Firm today for a consultation to protect your financial future.