In today’s ever-changing workplace, layoffs, reduction-in-forces, and organizational restructuring are common. For employees, this often comes with a severance agreement—an offer from the employer that typically includes compensation in exchange for a waiver of potential legal claims. While these agreements are routine, employees over the age of 40 should be particularly cautious. That’s because severance agreements can implicate age discrimination laws and may waive rights under the Age Discrimination in Employment Act (ADEA).
Understanding the ADEA and OWBPA
The Age Discrimination in Employment Act (ADEA) prohibits employment discrimination against individuals who are 40 years of age or older. Separately, the Minnesota Human Rights Act prohibits an employer from using a person’s age as a basis for a decision (e.g., hiring, firing, or discipline) if the person is over 18 years old. If a severance agreement asks an employee to release claims under the ADEA, it must comply with strict requirements under a federal law known as the Older Workers Benefit Protection Act (OWBPA).
The OWBPA is designed to ensure that older employees do not unknowingly waive their rights. Under the OWBPA, any waiver of ADEA claims must be “knowing and voluntary.” That means the agreement must meet several conditions, including:
- Written in clear, understandable language (no legal jargon or confusing terms).
- Advise the employee to consult with an attorney before signing.
- Give the employee at least 21 days to consider the agreement (or 45 days in group termination situations).
- Provide a 7-day revocation period after signing.
- In group layoffs, the employer must also provide detailed information about the job titles and ages of those affected and not affected by the layoff.
Failure to meet these requirements can render the waiver unenforceable.
Red Flags to Watch For
While many severance agreements are legitimate and offer fair terms, some may attempt to discourage older employees from asserting their legal rights. Here are a few red flags:
- Overly broad waivers that include future claims or attempt to limit participation in EEOC investigations.
- Pressure tactics, such as pushing an employee to sign before the 21-day review period ends.
- Disparate treatment, such as targeting older employees for layoffs while retaining less-experienced, younger staff.
If any of these arise, it’s a good idea to consult with MSB’s skilled employment attorneys before signing.
Why This Matters
Age discrimination can be subtle but damaging, and severance agreements can complicate an already emotional transition. While the promise of additional pay may be appealing, signing away your rights without fully understanding the implications can be costly in the long run.
Final Thoughts
Whether you’re an employee facing a layoff, reduction in-force, or reorganization, understanding the intersection of severance agreements and age discrimination laws is essential. Take the time to review agreements carefully, ensure compliance with the OWBPA and other discrimination laws, and seek legal advice when needed. Working with a severance agreement attorney at MSB Employment Justice is the best way to ensure that you receive the benefits and compensation you deserve after contributing positively to your workplace. If you have questions, contact MSB Employment Justice today to speak with our legal team.
