Is an Oral Settlement of an Employment Dispute Binding?

When employers attempt to settle disputes involving employment, the circumstances vary greatly as to the formality.  Most employers will not settle an employment claim with significant potential liability, without a formal, written settlement agreement containing certain legally required as well as widely recognized waivers.  For example, specific requirements in settlement agreements which relate in any way to age issues, apply when the person signing the settlement agreement is 40 years old or older.  Such specifics must include a statement that the employee has the right to consult with an attorney, that the employee will have 21 days to consider the settlement, and even seven days to revoke the settlement after signing it.  Additional requirements are necessary if the agreement deals with an employment action affecting other employees as well.  Similarly, employers often like to add provisions on confidentiality, disparagement, rehire, and all the potential claims covered by the settlement.  

But in spite of this general practice, in some cases it is easier and simpler to use a rather short-form settlement document.  Further, some settlements are made that are intended to have an agreement prepared later, that may or may not occur.  

Thus, occasions have arisen as to whether “oral” settlements are enforceable.  The simple answer is “it depends.”  In one recent case, for example, the plaintiff employee accepted a settlement, which included the amount of payment, non-defamation, no-rehire and confidentiality provisions.  The plaintiff also stipulated that the case would be dismissed with prejudice and there would be a full release of all claims.  But after agreeing to settlement terms during a court-annex conference, the plaintiff later refused to sign the settlement agreement, claiming she felt pressured and that some terms were ambiguous. 

In this particular situation, the court found that there was a binding agreement despite the fact that it was not reduced to writing and signed.  Maccarone v. Siemens Industry, Inc., No. 25-01219 (1st Cir., 1/29/26).

This article is part of our March 2026 Newsletter. 

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