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Does your severance agreement comply with ADEA requirements?

If you are age 40 or older and the company you work for terminated you, what kind of severance agreement did they offer?

An older departing employee must have a severance agreement that conforms to EEOC-approved requirements and complies with the ADEA and the OWBPA.

What it is

A severance agreement provides compensation to a departing employee, often an executive. Although an employer can terminate an "at-will" employee at any time, it may behoove the company to offer a severance agreement to exercise some control over the employee's post-employment conduct. For example, a signed severance agreement may be the best option a company has to keep the employee from filing a discrimination lawsuit.

The severance agreement for older employees

The company must approach drafting a severance agreement for a 40-plus departing employee carefully, or it will be unenforceable in court. The document you received for review must comply not only with EEOC requirements, but it must also comply with the specific requirements set forth by the Age Discrimination in Employment Act in accordance with the Older Workers Benefit Protection Plan. The following are the main elements:

  •         The severance agreement must contain clear, easy-to-understand language.
  •         It must clearly explain the rights the recipient waives.
  •         The content must be free of complex sentences and legal jargon.
  •         The document must not misinform or mislead.
  •         The agreement must contain a reference to the ADEA, or it will be unenforceable.
  •         It must recommend that the recipient seek legal guidance before signing.
  •         The severance agreement must be in writing.
  •         The departing employee must have 21 days to review the agreement.

Going for review

As a departing employee aged 40 or older, you should consult with an attorney to ensure the agreement is in order and that you understand what you are signing. Remember that to be enforceable, the document must conform to EEOC standards and follow the special ADEA and OWBPP requirements precisely.

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Law Office of David F. Simons
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Honolulu, HI 96813

Phone: 808-536-3255
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