Over 40 & Considering Severance? Know Your Rights Before You Sign That Release

In addition to protection from age discrimination by the Age Discrimination in Employment Act (ADEA), workers who are over 40 and considering a severance package have safeguards under the Older Workers Benefit Protection Act (OWBPA). If an agreement includes release of age discrimination (ADEA) claims, the OWBPA establishes rules that it must meet to be valid.

In general, release of ADEA claims in any severance agreement must be both knowing and voluntary, but if age discrimination claims are to be released, there are 7 factors that must be satisfied:

1. The waiver must be in writing and understandable. It cannot be a verbal agreement, cannot be vague, and should not be misleading in any way.
2. The waiver must specifically refer to rights and claims under the ADEA, and ADEA must be spelled out as Age Discrimination in Employment Act rather than abbreviated. A general release that is unclear as to the ADEA may not be valid.
3. The waiver must advise the employee in writing to consult an attorney before signing – an informational statement alone (i.e., “you may want to” instead of “we advise you to”) is likely to fall short.
4. The waiver must provide the employee with at least 21 days to consider the agreement before signing. The clock starts with the employer’s final offer and is reset by any material changes to the agreement. Further, employees caught up in a legitimate Reduction in Force (RIF) must be given 45 day to consider and return a waiver.
5. The waiver must include a 7-day rescission period during which the employee can revoke acceptance of the agreement. This cannot be changed or waived by either party for any reason.
6. The waiver must NOT include rights and claims that could materialize AFTER the date the waiver is signed – in other words, it cannot look forward and prevent future claims, it can only look backward and prevent past claims.
7. The waiver must be exchanged for something the employee was not otherwise entitled to – i.e., a waiver in exchange for money earned and owed was not the idea here – there has to be something “extra” in it for the employee, like a severance payment or benefits over and above what the employee would be entitled to receive. Additionally, the employer cannot require return of the “extra” compensation or benefit before a suit can commence.

Additional circumstances that may invalidate an agreement as to the ADEA claims release include fraud, undue influence, improper conduct, material mistake or omission.

Finally, you should also be aware that your severance agreement cannot legally prohibit you from filing a charge with the EEOC (including testifying or otherwise cooperating in their investigation), filing a Fair Labor Standards Act (FLSA) claim (like overtime or minimum wage), or keep you from benefits like unemployment, worker’s compensation, COBRA or ERISA.

If you or someone you know needs help with an ADEA waiver, call the Atlanta Employment Attorneys at Barrett and Farahany today – we can be reached at (404) 487-0922, and our consultations are complimentary!