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Severance Agreements and Age Discrimination – What You Should Know

When firing an employee, some employers use severance agreements to avoid potential claims down the line, especially in wrongful termination and discrimination cases. Generally, if an employee signs the dotted line of a release of claims and accepts the severance package, they may lose the right to file any possible claims forever. Before you sign anything, it is imperative for you to understand the ins and outs of severance agreements and your rights under state and federal laws.

Age Discrimination and Severance Agreements under the OWBPA

The Older Workers Benefits Protection Act of 1990 (OWBPA) is a part of the ADEA, which protects employees over 40 years of age from several clauses of severance agreements. This may include early retirement, reductions-in-force, exit incentive plans, firings, and voluntarily resignations. The employers are required to fulfil the OWBPA's requirements to lawfully enforce any release of claims in a severance agreement. These requirements include:

  • Written Agreements: Oral agreements cannot be used to waive age discrimination claims.
  • Release of Claims: This part of a severance agreement contains a release that waives claims, such as those based on the employee's race, age, religion, disability, gender, national origin, and others. However, according to the EEOC, although a severance agreement may restrict an employee from filing a lawsuit against their employer, it cannot keep them from filing a charge of age or any other form of discrimination with the EEOC.
  • Must be Understandable: The agreement must be written in such a manner that it is easily understood by the individual signing it. This means that if an employee has sub-average level of intelligence, the employer must reword the form in a way that is understandable by that employee. Furthermore, if the releases contain exaggerated or misleading components, the entire agreement can be voided.
  • Revocation Period: The employer is required by law to provide a seven-day revocation period when offering a severance agreement to an employee comprising of an ADEA release of claims. This period allows the employee to revoke the agreement after they have signed it. Moreover, the revocation period is mandatory and cannot be waived by either party.
  • Consult an Attorney: The OWBPA requires the employee to consult an attorney before they may sign the agreement. Even if the severance agreement has been written in an easy-to-understand manner, it still must be advised to discuss the case with an attorney. This requirement makes sure that the individual signing the agreement understands what age discrimination claims are being released and/or waived.
  • Time to Review: If a single person is being terminated and they are over 40 years of age, the employer must give 21 days to consider and review the agreement. However, if a waiver is pertaining to an exit incentive or any other termination program offered to a group of employees, the time to review period should be at least 45 days long.

If your employer has wrongfully terminated you based on age-related factors and offered a severance package with a release of claims, you may still have legal recourse. Contact the Law Office of Michael T. Smith today to discuss your case with an experienced Roselle employment discrimination attorney and evaluate your legal options.

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