Many severance agreements contain “waiver” language that releases or purports to release the employer from age discrimination claims under the Age Discrimination in Employment Act (the “ADEA”).
- For employees 40 years of age and older and their employers, the validity of that waiver is vital. For many employers such a waiver is the prime reason that severance is offered. Conversely, an employee who has unthinkingly signed such a waiver to get an immediate severance payment has lost a valuable potential right if the waiver is later invoked against him.
- The Equal Employment Opportunity Commission has provided, by regulation, requirements that need to be met for an ADEA waiver to be valid:
- The waiver must specify that the employee is waiving his right under the ADEA – a blanket waiver of discrimination claims is not sufficient.
- The waiver language must advise the employee to consult with an attorney; saying simply that the employee has had the opportunity to consult with an attorney before signing is not sufficient.
- The waiver must provide the employee with 21 days to consider the offer; this requirement must be stated clearly in the waiver.
- After the waiver is signed, the employee must be given a 7-day rescission period in which the employee can rescind the agreement; this also must be clearly stated.
- A waiver cannot purport to waive discrimination claims that arise after signing.
- The waiver must be supported by consideration (i.e., some sort of financial benefit that the employee would not otherwise be entitled to).
- Finally, or perhaps first and foremost, the waiver must be written in a clearly understandable manner. In writing such a waiver, the employer must tailor the language to the average person the waiver is intended to apply to.
One final note, a valid ADEA waiver protects an employer only against a private lawsuit by the affected employee or employees. Nothing can stop an employee from filing discrimination charges with the EEOC.
— Rod Fluck