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Making severance agreements for older employees enforceable

On Behalf of | Jan 27, 2023 | Employment Law

The severance agreement for a departing employee aged 40 or older must contain specific language.

The agreement must meet certain standards established under the law to ensure that it is enforceable in court.

The EEOC and the severance agreement

The purpose of a severance agreement is to compensate a departing employee in exchange for his or her agreement to abide by limiting conditions, such as waiving the right to sue the company on certain grounds. The Equal Employment Opportunity Commission (EEOC) requires specific language in a severance agreement, stating that it cannot be “overly broad and misleading.” The EEOC cites non-compete and confidentiality provisions as those that often infringe upon the rights of the former employee.

Severance agreements for older employees

A departing employee aged 40 or older must have a severance agreement that follows requirements established under the Age Discrimination in Employment Act (ADEA) as well as the Older Workers Benefit Protection Plan (OWBP). The former employee must have a minimum of 21 days in which to consider a severance agreement. After signing, the departing employee must also have an additional seven days in which to change course and revoke the agreement.

Additional requirements

In order for the severance agreement to stand up in court, it must contain plain language without legalese or complex sentences. It must not misinform in any way. It must also contain a reference to the ADEA. The recipient must be able to clearly understand the rights he or she is waiving under the agreement. To this end, the severance agreement for a departing employee aged 40 or older must contain a recommendation to seek legal counsel before signing.


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