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Could your severance agreement be a form of age discrimination?

On Behalf of | Sep 29, 2023 | Age discrimination |

Age discrimination can be one of the more challenging types of workplace discrimination to prove. Smart employers know how to make their workforces younger without doing things that clearly violate the federal Age Discrimination in Employment Act of 1967 (“ADEA”) and state laws that prohibit discrimination against those who are 40 and older.

One of these is to offer attractive severance packages to older workers to encourage them to retire. Some employees are only too happy to accept such a package if it involves some continued pay and benefits. Others need or would prefer to keep working. 

Whichever camp you’re in, it’s important to read (and make sure you understand) the fine print in any agreement you sign with an employer – even the ones you sign as you’re leaving them. For example, employers often include an ADEA waiver. That’s a clause in their severance agreements in which the employee waives the right to bring an age discrimination suit at any time in the future. 

How does the OWBPA give employees added protections?

So many employers were doing this – and so many employees were unwittingly signing away their rights to claim age discrimination – that Congress passed the Older Workers Benefit Protection Act (OWBPA). This law, passed in 1990, places conditions on any ADEA waivers included in severance agreements. These include the following:

  • The waiver must be written in language that is understandable.
  • Employees need to be given at least 21 days to decide whether or not to sign the agreement – and encouraged to seek legal guidance.
  • The waiver must have a 7-day “look-back” period after an agreement is signed in which an employee can still change their mind.

Further, the Equal Employment Opportunity Commission (EEOC) now prevents businesses from requiring a former employee who later challenges an ADEA waiver in court to “tender back” any money they’ve received as part of their severance package. They may, however, have to pay other costs if they don’t win their legal challenge.

Whether you’ve been presented with a severance agreement or you’re considering taking legal action regarding one you’ve already signed, it’s wise to have experienced legal guidance.



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