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Severance agreements for older workers must meet strict standards

On Behalf of | Oct 13, 2022 | Employment Law |

If your employer has terminated you, is the company providing you with a severance agreement?

If you are 40 years of age or older, the severance agreement must adhere to specific federal requirements.

About the contract

A business may offer a severance agreement to a departing employee that provides compensation for adhering to certain post-employment limitations. For example, the employer may want to deter the former employee from spreading confidential information or from suing the company on certain grounds. An employer must ensure that the contents of a severance agreement for a departing worker aged 40 or older meet specific federal requirements.

EEOC language

The Equal Employment Opportunity Commission (EEOC) requires language that is not “overly broad and misleading.” The content must be easy to read with no legalese. Otherwise, the severance agreement is likely to be unenforceable in court. In addition, the agreement must not infringe on the departing employee’s right to file or participate in a legal proceeding concerning discrimination involving the former employer.

Timing provisions

In addition to EEOC guidelines, the severance agreement for a departing employee aged 40 or older must meet requirements set forth under the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Plan (OWBP). For example, the departing employee must have a minimum of 21 days in which to consider the agreement and another 7 days for revoking the agreement once signed.

Legal guidance

The severance agreement for an older departing employee must also contain a reference to the ADEA. Finally, it must advise the former employee to seek the guidance of an attorney before signing the document.