The Unhappiness of Divorce

Amazon.com flap shows that separation agreements, in business as in marriage, can breed discontent.

Like divorces, severance agreements between companies and laid-off employees have a certain amount of unhappiness built into them—for all parties concerned.

But the separation pact Amazon.com offered the employees it recently let go seems to have bred more—and certainly more visible—discontent than is usual.

Did the agreement create a bigger stir than was necessary—blowing up in the employer’s face and producing excessive pain among the severed workers?

Did the company make missteps, or was the pain inevitable?

With layoffs in general mounting daily, especially in the dot-com world, the Amazon separation agreement is a cautionary tale for senior executives about to seek severance agreements along with their labor cutbacks.

After the online retailer announced January 30 that it would cut 1,300 jobs, or 15 percent of its overall workforce, it offered a portion of its employees the option of an “Enhanced Severance Package” on top of a basic package, including two weeks of severance pay. (The company also reportedly put $2.5 million of company stock into a trust fund to be cashed out in 2003 and distributed among laid-off workers.)

The enhanced package includes 10 weeks of added severance pay plus $500. But to get that, laid-off employees must sign a separation agreement. At first, workers had a little over a week to decide whether to sign the agreement, which included a “nondisparagement clause.”

Under that non-trash-talk clause, as such language is colorfully referred to, workers agree “to not make any derogatory comment in any format, whether written, oral, to the press or any individual or entity regarding the company that relates to the company’s business or related activities or the relationship between the parties.”

The tight deadline and the clause made certain laid-off workers and the Washington Alliance of Technology Workers, which had sought to organize the Seattle office, see red.

Apparently responding to the flap, Amazon reversed course. A few days after issuing the agreement, it told hourly workers (but not management and salaried workers) to delete the non-disparagement clause, said a story in the Seattle Post-Intelligencer. A few days later, Amazon extended the deadline for deciding whether to sign the agreement through May 4 or May 25, the termination dates for the employees.

For its part, Amazon, which could not be reached for comment, was left with egg on its face. A Feb. 1 headline in CNET.com, for instance, read “Amazon backpedals on trash-talking clause.” The company seemed to be acknowledging it had made the wrong move.

The union, while applauding the changes, still objects to two clauses in the agreement in which the employee would waive past legal claims against the company and agree not to sue Amazon in the future.

Among other things, the union claims that surrendering the future right to sue is unenforceable and that the agreement illegally interferes with the Equal Employment Opportunity Commission’s authority to investigate workplace discrimination, says Marcus Courtney, a co- founder of the union, which has 250 dues-paying members.

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