There are special requirements for a severance agreement given to a departing employee 40 years of age or older.
Such an agreement must be well drafted, or it may not stand up in court.
About severance agreements
An employer may provide a departing employee with a severance agreement that offers some form of compensation. In return, the employee agrees to certain limitations on his post-employment conduct. The goal of the agreement might also be for the former employee to waive his or her right to bring suit against the employer for certain reasons.
The Equal Employment Opportunity Commission (EEOC) states that the content of the severance agreement cannot be “overly broad and misleading,” or the contract will be unenforceable in court. Non-compete or confidentiality provisions are especially sensitive. They cannot be too broad in scope or infringe upon the employee’s Title VII rights. The Age Discrimination in Employment Act (ADEA) requires that the severance agreement for the older employee use plain language in simple sentences with no legal jargon. This is where the written word becomes especially important, or a court will find the agreement unenforceable.
The ADEA has other special requirements related to severance agreements for departing employees aged 40 or older. For example, a recipient must have a minimum of 21 days in which to consider the provisions. After signing, the employee must have another seven days during which he or she can revoke the agreement. In addition, the agreement must contain a reference to the ADEA and a recommendation for the departing employee to seek legal counsel before signing.