When an employee receives a severance offer, they are often shocked to see in the agreement that the employer is telling them to consult a lawyer, that they have 21 days (or sometimes 45 days) to consider the agreement, and that they have seven days after they sign the agreement to change their mind.
Why do employers do this? Are they just trying to be nice to the employee that they are firing?
Employers do this because if the worker is over 40 years of age and the employer wants the employee to waive claims of age discrimination, federal law says they have to do these things.
Specifically, the Older Workers Benefits Protection Act (OWBPA) part of the Age Discrimination In Employment Act requires seven things.
- The waivers must be drafted in plain language geared to the level of comprehension and education of the average individual(s) being terminated.
- An OWBPA waiver must expressly spell out the Age Discrimination in Employment Act (ADEA) by name.
- A waiver must advise the employee in writing to consult an attorney before accepting the agreement.
- A waiver must provide the employee with at least 21 days to consider the offer. The 21-day consideration period runs from the date of the employer’s final offer. If material changes to the final offer are made, the 21-day period starts over. If it is a mass layoff, the employee must have 45 days to consider the offer.
- A waiver must give an employee seven days to revoke his or her signature.
- A waiver must not include rights and claims that may arise after the date on which the waiver is executed.
- A waiver must be supported by consideration in addition to that to which the employee already is entitled.
If a waiver of age claims fails to meet any of these seven requirements, it is invalid and unenforceable. In addition, an employer cannot attempt to “cure” a defective waiver by issuing a subsequent letter containing OWBPA-required information that was omitted from the original agreement.