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Age-related severance agreements must meet certain requirements

Posted by Anita F. O'Meara, Esq. | Aug 19, 2021 | 0 Comments

Severance agreements for departing employees aged 40 and older must adhere to certain requirements or risk being unenforceable in a court of law.

If you are among this group, what is your next step once you have a severance agreement in your hands?

About severance agreements

A severance agreement is a contract that provides a departing employee with monetary compensation or another type of benefit in return for something that is of value to the employer. For example, the company may wish to limit the former employee's ability to sue or to share proprietary information with a competitor.

For older employees

Severance agreements for departing employees aged 40 or older must adhere to requirements set forth by the Equal Employment Opportunity Commission as well as the Age Discrimination in Employment Act (ADEA). Under EEOC rules, the agreement must contain language that is not “overly broad or misleading.” The employer risks liability if the contract interferes with the recipient's right to file a charge of discrimination against his or her former company.

Timing matters

Along with the Older Workers Benefit Protection Plan (OWBP), the ADEA ensures that an older departing employee has a minimum of 21 days to review a severance agreement. There must be an additional seven days during which the recipient can revoke the agreement if desired.

Requirement for legal review

The ADEA also requires that the severance agreement contain a specific reference to the ADEA and, in addition, that it provides a recommendation for the recipient to seek legal counsel before signing. If you are a departing employee aged 40 or older, this is your next step. It will ensure that the severance agreement has been properly prepared and that, if necessary, it will stand up in court.

About the Author

Anita F. O'Meara, Esq.

PRACTICE AREAS: Estate Planning, ADministration and litigation, and Commercial litigation Biography:  Anita Fulwiler O'Meara concentrates on providing estate planning and probate services throughout Southeaster Pennsylvania, including Chester, Delaware, Lancaster, and Montgomery, counties, wit...


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