Special requirements needed for age 40-plus severance agreements

On Behalf of | Mar 3, 2021 | employment law | 0 comments

If the company you work for is terminating you, they may offer a severance agreement.

And if you are age 40 or older, that agreement must contain special wording along with other requirements in order to be valid.

About severance agreements

An employer may wish to provide a departing employee with a severance agreement. The company may feel it needs to offer some form of compensation in return for asking the former employee to adhere to certain post-employment limitations. In this way, the employer often seeks to prevent the former employee from participating in litigation against the company.

EEOC language

If the departing employee is age 40 or older, a severance agreement must contain language approved by the Equal Employment Opportunity Commission. The language must be easy to understand and not ”overly broad and misleading” or the agreement may not be enforceable in court.

ADEA and OWBP compliance

The severance agreement for an older employee must also conform to the requirements in both the Age Discrimination in Employment Act and the Older Workers Benefit Protection Plan. For example, age 40 and older departing employees must have seven days after signing in which to revoke the agreement. The contract must avoid the use of legal jargon and complex sentences. It is important that the departing employee understand the agreement and what rights he or she is waiving by signing it.

Recommendation for review

You should be aware that the severance agreement for older employees must contain a reference to the ADEA. It must also include a recommendation for the recipient to seek legal guidance before signing. This is the time for a professional review to ensure the document contains no legal missteps in the event a court action is ever needed.