Strict rules apply to severance agreements for older workers

| Sep 30, 2020 | Firm News |

If your former employer has offered you a severance agreement, does it meet the requirements that would allow it to stand up in court?

If you are 40 or older, your severance agreement can only be legally binding if it is properly drafted.

About the severance agreement

An employer creates a severance agreement that compensates a departing employee for leaving his or her position in the company. In exchange for the compensation package, the usual goal is to place certain limitations on the former worker, including the avoidance of possible litigation.

Requirements for older employees

If the departing employee is 40 or older, the severance agreement must adhere to certain requirements. For example, the language cannot be “overly broad and misleading” according to the Equal Employment Opportunity Commission or EEOC. The Age Discrimination in Employment Act or ADEA also requires that the older employee have 21 days in which to consider signing the document, plus another seven days during which he or she can revoke the agreement. The language used in the contract must be free of legalese and sparing in the use of complex sentences. The document must also include a reference to the ADEA and a recommendation for the departing employee to seek the advice of an attorney before signing.

An agreement in good standing

Employers have a responsibility to prepare severance agreements for departing employees age 40 or older according to EEOC and ADEA guidelines. Follow the recommendation to seek legal guidance to ensure that the document you are about to sign conforms to requirements and is enforceable in court should a lawsuit ever develop.

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