Severance agreements for older employees include special content

On Behalf of | Nov 22, 2022 | Employment |

If you are 40 years of age or older, the severance agreement your employer gave you must adhere to strict federal standards.

As an older departing employee, your agreement must contain provisions established under the EEOC, ADEA and other government agencies.

About severance agreements

A severance agreement is a contract between a company and its departing employee. The agreement confirms compensation in some way in return for the former employee abiding by certain post-employment limitations. Those limitations might include waiving the right to bring a lawsuit against the company or to prevent the departing employee from spreading confidential company information.

EEOC requirements

The Equal Employment Opportunity Commission (EEOC) requires that the language used in a severance agreement for an employee aged 40 or older must not appear “overly broad and misleading.” The agreement must be well-drafted, especially with respect to non-compete or confidentiality provisions, or it will not stand up in court.

More from the ADEA and OWBP

Severance agreements for older departing employees must also adhere to the special requirements set forth under the Age Discrimination in Employment Act ADEA) and the Older Workers Benefit Protection Plan (OWBP). Timing is important here. The requirements specify a federal minimum of 21 days for the employee to consider the severance agreement, plus another 7 days after signing to change course and revoke the agreement.

A legal review

To be enforceable, the severance agreement for an employee aged 40 or older must contain plain language so that the recipient clearly understands the waiving of rights. The contract must also contain a reference to the ADEA. Finally, it must recommend that the employee seek the guidance of an attorney before signing.