Severance Agreements and Age Discrimination: What You Need to Know

Severance Agreements and Age Discrimination: What You Need to Know

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.

Legal Insights

Our attorneys work hard to distill complex employment law insights for you. With Justice News, we deliver important information that is meaningful and useful to all employees and employers.

Sign up to receive our newest insights.


Picture of Colin Pasterski

Colin Pasterski

Colin Pasterski is a Principal at MSB Employment Justice and a dedicated advocate for employees who have been treated unfairly because of who they are. With a deep commitment to workplace equity, Colin focuses his practice on cases involving discrimination, retaliation, and other injustices that undermine employees’ rights. He believes that no one should be treated differently due to their identity, and he works tirelessly to hold employers accountable when they violate the law.

If you want to learn more, click the button.

MSB Employment Justice does not take walk in appointments. Please contact us via phone or email for a consultation.

If you want to learn more, click the button.