Severance agreements can be a critical aspect of the employment termination process, especially for workers aged 40 and above. These agreements often require employees to waive certain rights, and federal law mandates specific guidelines to protect older workers from discrimination.
Let’s delve into what these agreements entail and the legal requirements they must meet. Contact PLBH at (800) 435-7542 for a legal consultation.
Key Elements of a Severance Agreement
A severance agreement, or separation agreement, is a contractual arrangement between an employer and an employee at the time of termination, often involving a layoff or reduction in force (RIF). The agreement typically offers severance pay in exchange for the employee agreeing to certain conditions, such as:
- Waiving the right to file legal claims against the employer, including age discrimination or wrongful termination.
- Agreeing not to compete with or solicit business from the former employer.
- Maintaining confidentiality about the agreement and other aspects of their employment.
Federal Requirements for Workers Over 40
Under the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Act (OWBPA), severance agreements for employees over 40 must adhere to specific criteria to ensure that their waiver of rights, particularly under the ADEA, is knowing and voluntary. These criteria include:
- Clear and Understandable Writing: The agreement must be written in plain language, understandable to the average person affected by it.
- Explicit Reference to ADEA Rights: The agreement must specifically mention the rights under the ADEA that the employee is waiving.
- Provision for Consultation with an Attorney: The agreement must advise the employee to consult with an attorney before signing.
- Adequate Review Time: The employee must be given 21 days to consider the agreement if they are the sole person being terminated, or 45 days in the case of a group layoff.
- Revocation Period: After signing, the employee has 7 days to revoke their agreement.
- Value Exchange: The employee must receive something of value in exchange for the waiver, which they are not already entitled to.
Implications of Signing a Severance Agreement
By signing a severance agreement, you agree to waive specific legal claims against your former employer, including potential discrimination claims. It’s crucial to understand the rights you are waiving and the compensation or benefits you are receiving in return.
California’s Stance on Severance Agreements
While federal law governs the overall framework of severance agreements for older workers, California law adds another layer of protection. For instance, certain rights under California state law, such as those under the California Private Attorney General Act (PAGA), cannot be waived in a severance agreement. Furthermore, non-compete clauses common in severance agreements are typically unenforceable in California.
Consulting with a Legal Professional
Given the complexities of severance agreements and the rights involved, consulting with a legal professional is highly recommended. An attorney can help you understand the implications of the agreement, ensure that it complies with both federal and state laws, and advise you on whether it’s in your best interest to sign. Contact PLBH at (800) 435-7542 for help.