We Protect Workers

Know your rights when presented with a severance agreement

Age discrimination can be challenging to prove – especially if you have an employer that knows their way around the federal Age Discrimination in Employment Act of 1967 (ADEA). One place where age discrimination (which by law applies to those 40 and older) sometimes shows up is in severance agreements. 

If your company is downsizing or reorganizing, they may be offering older, long-time employees attractive severance packages if they resign. A package that includes continued pay and benefits can be hard to resist if you’re nearing your planned retirement age and would prefer work that will give you more free time. 

If you agree to this package, it’s crucial to thoroughly read and understand your severance agreement before you sign. One thing to look for is an ADEA waiver. If you sign an agreement that includes that waiver, you’re waiving your right to bring an age discrimination suit later.

How does the OWBPA help protect you?

Fortunately, employers are required by law to adhere to certain conditions if they include ADEA waivers in severance agreements. The Older Workers Benefit Protection Act (OWBPA) of 1990 requires the following:

  • The ADEA waiver must be written in understandable language.
  • Employees must get at least 21 days to decide whether to sign the agreement after being presented with it.
  • Employees must be encouraged to get legal guidance before signing the agreement.
  • The employee must have a 7-day “look-back” period in which they can change their mind after signing without legal ramifications.

Your best course of action is to get a legal review of your severance agreement before you sign it. There are state as well as federal laws to consider. 

What about California law?

Under California law, just because an employer is laying off multiple employees, that doesn’t mean they aren’t violating age discrimination law. It states in part that even where a layoff “is job-related and consistent with business necessity, where it is shown that an alternative practice could accomplish the business purpose equally well with a lesser discriminatory impact” it could be considered discriminatory. 

It’s important to do what’s best for you and your family if you’re offered a severance package. However, it’s crucial to fully understand and protect your rights.