Why “We Reserve All Rights” Can Be Useful in a Termination Letter

Last week, I talked about how smart arbitration drafting allowed the company to recover its attorneys fees in successfully defending a claim by a former CEO. But there’s another lesson from Golden v. WorldQuant that company should know: how four simple words in a termination letter can save employers from a legal trap.

The Post-Termination Discovery Problem

Here’s a scenario that happens more often than you’d think: You fire an employee for legitimate reasons and send a professional termination letter. Months later, you discover evidence of serious misconduct that occurred while they worked for you but wasn’t uncovered until after they left.

Maybe it’s expense account fraud discovered during an audit. Perhaps it’s a competing business they were secretly running. Or data theft that comes to light during IT cleanup.

In some instances, discovering misconduct after termination can create a waiver problem for employers. If an employer doesn’t cite specific grounds in a termination notice, courts sometimes (though not always) say the company waived the right to rely on those grounds later, even if it genuinely didn’t know about the problems when it made the decision.

Golden’s Failed Legal Strategy

This is exactly what Golden tried to argue when WorldQuant discovered his undisclosed consulting work during the arbitration. While serving as CEO, Golden had (according to the court’s opinion) provided consulting services to another company and received $115,000 — a clear violation of his employment agreement requiring full-time work and disclosure of outside activities.

Golden argued that WorldQuant waived any right to pursue claims based on this conduct because it didn’t specifically mention the consulting payments in his termination notice, even though the company had some general knowledge of his outside relationship.

The Four Words That Made the Difference

WorldQuant’s termination letter included this language:

“Please be advised that [WorldQuant] reserve[s] all of its rights under the [e]mployment [a]greement . . . at law or otherwise, and nothing in this letter shall be construed as a modification, release or waiver of any rights or claims.”

The arbitrator found this reservation of rights clause preserved WorldQuant’s ability to pursue additional claims related to the underlying employment agreement. The key finding was that Golden’s undisclosed consulting work “related to the reasons given for the termination,” which included general “policy violations in breach of the employment agreement.”

The arbitrator specifically noted that “unlike some cases where courts have held that by failing to assert a specific reason for termination, the party waives its rights to do so later, here [WorldQuant] reserved its rights.”

Why This Matters for Your Company

This protection becomes essential in common scenarios:

• Expense fraud discovered during post-termination audits
• Competing businesses uncovered after departure
• Data theft revealed during system reviews
• Policy violations that surface during investigations

Without reservation of rights language, discovering serious misconduct after termination might not help your company’s legal position.

What to Include in Termination Letters

Based on Golden, effective termination notices for alleged misconduct or breaches of an employment agreement should consider:

• Using broad misconduct categories rather than limiting yourself to specific incidents. Reference “policy violations,” “breach of employment agreement,” or “conduct inconsistent with company standards.”
• Including comprehensive reservation language that goes beyond just “we reserve our rights.” Specify that you’re preserving rights “under the employment agreement, at law, or otherwise.”
• Connecting to stated reasons by ensuring newly discovered misconduct relates to the general categories mentioned in your notice.

The Practical Protection

Golden shows how small details in routine documents can have major consequences. In today’s business environment, where post-termination discoveries are common and former employees increasingly challenge company decisions, this kind of protection is important. The lesson for companies is straightforward: In some termination letters, consider including a reservation of rights language and make that language clear and broad. A few carefully chosen words can preserve legal options you might not even know you need at the time. When that problematic document or concerning pattern surfaces months later, you’ll be glad you kept your options open.