Why does my severance agreement tell me to consult a lawyer?

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Question:

My company has had to downsize several times in the last few years, and now my number has come up. My department is being eliminated, and our work (accounts and payroll) will be outsourced to a third party vendor, to save money. We've known this change was coming for a while. And, our company has offered a pretty generous severance package, especially considering that it's struggling financially. The company has always treated me well, and I had no reason to doubt their good faith -- until I read over my severance agreement. It says I'm giving up my right to sue the company, which is fine with me. But it also tells me I should consult with a lawyer before I sign and talks a lot about age discrimination claims. What is this about?

Answer:

Most likely, your employer is just following the law. The Age Discrimination in Employment Act (ADEA), the federal law that prohibits workplace age discrimination, requires employers to include certain language in releases. A release is an agreement not to sue; sometimes, it's also called a waiver. Employers often ask employees to sign a release as part of a severance agreement. In exchange for the money, benefits, or other things the employee will receive in severance, the employee agrees not to bring a lawsuit against the employer. 

It's legal for employers to ask employees to waive discrimination claims, as long as the waiver is knowing and voluntary, and the employee receives something in exchange for the waiver. When it comes to age discrimination claims, however, Congress decided to require more. A waiver of ADEA claims will be considered knowing and voluntary only if it:

  • is part of a written agreement between the employer and the employee
  • is written in language the employee can understand
  • specifically refers to the employee's rights or claims under the ADEA
  • does not require the employee to waive any rights or claims arising after the agreement is signed, and
  • gives the employee something of value in exchange, above and beyond any benefits to which the employee is already entitled. 

In addition, the waiver must advise the employee, in writing, to consult with an attorney before signing. The employee must receive at least 21 days to consider the agreement (or 45 days, in some circumstances) and allow the employee to revoke the agreement for at least seven days after signing it. 

These last few requirements are unique to age discrimination claims. It's fair to wonder why Congress thought older workers might require additional time and assistance to decide whether to waive their rights. Reading between the lines, it seems that Congress felt older people might more easily be taken advantage of or tricked into giving up legal claims, a belief that doesn't quite gibe with the basic idea behind the ADEA that age shouldn't make any difference in the workplace. But regardless of the reasoning behind this protection, the fact remains that employers who want older employees to give up their right to sue must include this language in the waiver to make it valid. 

Especially if you are a long-term employee, it's always a good idea to speak to a lawyer before signing a severance agreement. A lawyer can make sure the agreement is fair and legal, and review your employment history to determine whether you might have any legal grounds to negotiate a sweeter deal. Even if you end up signing the agreement presented to you, talking to a lawyer will set your mind at ease that you have been treated fairly and have not inadvertently given up any valuable rights. 

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