The tender-back rule, also known as the tender-back doctrine, is a rule that is commonly associated with waiver or release agreements in an employment context. The tender-back rule requires any consideration given to an employee to be given back if the employee wishes to litigate any issue that was supposedly waived. For example, where an employer issues a severance package with an agreement stating that acceptance of the package waives all of the employee's rights to future claims against the employer, the tender-back rule requires that the employee return the severance amount received prior to commencing a lawsuit.
The tender-back rule is commonly used as a defense by employers. Indeed, the tender-back rule imposes an obligation on potential plaintiffs to prevent them from taking the benefit of the agreement and then pursuing additional compensation through litigation, and courts have held that any consideration received must be tendered back strictly before (i.e., not concurrent with) the commencement of any claim or counterclaim. The tender-back rule applies even if the validity of the contract is questionable, following the general contract principle that contracts "tainted by mistake, duress, or even fraud are voidable at the option of the innocent party," but that party must first "tender-back any benefits received under the contract."
However, the tender-back rule does not necessarily apply to all claims. For example, the Sixth Circuit has held that claims brought under the Equal Pay Act (EPA), Title VII, and Age Discrimination in Employment Act (ADEA) do not trigger the tender-back rule, and that plaintiffs asserting violations of these acts do not have to tender-back any consideration to commence litigation.
[Last updated in October of 2021 by the Wex Definitions Team]