Here’s what workers over 40 should know about severance contracts

On Behalf of | Sep 19, 2019 | employment law | 0 comments

The federal Age Discrimination in Employment Act provides protection for workers who are 40 or older against age discrimination, the Equal Employment Opportunity Commission explains. This includes firing as well as other aspects of employment.

However, there are times when a Texas employer may offer a benefit such as a severance package to the employee in exchange for the agreement that he or she will not file an age discrimination claim.

Per the EEOC, in order to legally be released from the potential for an ADEA claim, an employer must include these elements in the severance agreement.

  1. Language that is easy to understand

The severance agreement is a legal contract, but it should not be full of legal jargon or other professional language that is not easily understood by the average individual. Sentences should be simple and short, and there should not be anything left out or misleading. The agreement has to explain the pros and cons of accepting the severance benefits without exaggerating or making light of them. There must be a reference to the ADEA in the contract.

  1. Recommendation to speak to an attorney

The agreement must specifically advise the employee to speak to a lawyer before signing the contract.

  1. Time constraints

The employer must give the employee no fewer than 21 days to consider whether or not he or she wants to accept the agreement. The clock starts running on the day the employer makes the final offer. If the employer changes any of the offers in the contract, the clock starts over and the employee has 21 days from that date.

After the employee signs the agreement, there is a seven-day grace period during which he or she can revoke the signature.

  1. Consideration

A consideration, in legal terms, means something of value that is exchanged for something else. In the case of the consideration offered in the waiver in exchange for the employee’s agreement, the benefits that the employer lists must not be benefits that the company already owes the employee.

So, for example, the contract cannot offer the employee overtime pay or vacation pay that he or she has already earned. The severance benefits must be in addition to these.