Employment Separation Agreements

UniServ Directors occasionally assist members in negotiating a separation agreement from a school corporation. The agreements can take many forms, sometimes in writing and sometimes just oral. They frequently include provisions such as resignation by the member, compensation until the end of the school year, continued payment of fringe benefits, a favorable or at least neutral recommendation to future employers, and confidentiality. These agreements often contain a waiver of the member's due process provisions and any further claims of any sort against the school corporation and its agents. It may even include the latter as it relates to any further claims of any sort against the Association and its agents.


Generally these agreements are negotiated with the administration or school board attorney, and signed by that person as well as by the member. Occasionally such agreements are also signed by the UniServ Director, although ISTA discourages that practice.


Decisions from both Indiana courts, and federal courts interpreting Indiana law, make it crystal clear that none of these agreements is enforceable against the school board, UNLESS the school board has taken formal action to adopt and execute the agreement.


In one case MSD Southwest Allen School Board authorized and budgeted for a position of Director of Administrative Information Services. An employee held the position for over six years, but a majority of the members of the school board never approved a contract with him. When he was terminated, he filed suit for back pay under an oral contract of employment. The Indiana Court of Appeals rejected his claim stating that the school board had never approved any action specifically regarding his employment. The Indiana Court of Appeals quoted at length from a decision of the Seventh Circuit Court of Appeals involving a school principal in South Bend.


The South Bend principal filed suit claiming discrimination based upon race. After the EEOC became involved, the principal negotiated an agreement with the superintendent, the director of employee relations, and the school board attorney. The agreement provided that the principal would remain at principal's salary, that the school board would expunge from its files all references to the charge of discrimination, and that the principal would not be penalized in the future because of his charge. The director of employee relations asked the superintendent if he had the votes on the school board; the superintendent said that he did, but he didn't. The school board refused to go for the deal, and the principal filed suit to implement the negotiated settlement.


The Seventh Circuit Court of Appeals held against the principal and stated that the authority, under Indiana law, to make and modify contracts of employment is confided in the school board, not in the superintendent or the school board attorney. It cited an Indiana statute (I.C. 20-5-3-8) as well as earlier Indiana cases.


The court concluded with the warning that:

"A decision can be binding only on the school officers to do what the statute authorizes, in the manner prescribed, and all who deal with such school officers do so at their peril and take notice of the extent of their authority..."

Consequently, agreements simply are not enforceable against the school board unless the school board has approved them. One solution is to have the school board approve the agreement, but this course has obvious risks. A school board can only act in public session, and all contracts executed by the school board are subject to public scrutiny. Therefore, it is impossible to keep confidential the action of a school board in voting to continue a teacher's salary or to give a favorable recommendation, etc.


Often it is in the member's best interest to negotiate an amicable separation of employment rather than simply relying on state law. However, in the process of discussing these types of agreements with members, it is critical that ISTA staff NOT represent that the agreement will be binding, unless the school board has formally adopted it. Good practice and fair dealing probably requires the ISTA staff member affirmatively disclose to the member that none of the terms of the agreement can be enforced, if the school board or the administration reneges. It is okay to advise the member that the overwhelming majority of these agreements are never contested, but the possibility for that occurring does exist.

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