There are specific rules to follow when drafting a severance agreement for a departing employee aged 40 or older.
The content must satisfy standards established under certain government agencies or the agreement will be unenforceable in court.
Understanding the severance agreement
A severance agreement is a contract between an employer and a departing employee. The contract provides the employee with some form of compensation in return for limits placed on his or her post-employment activities. In many cases, the goal of a severance agreement is to keep the departing employee from suing the company.
Following guidelines for older employees
Severance agreements for departing employees aged 40 and older must contain specific language that is well-written and easy to read. According to the Equal Employment Opportunity Commission (EEOC), it cannot be “overly broad and misleading.” Non-compete provisions cannot infringe on the rights of the employee, or the agreement will not stand up in court.
Setting time constraints
The employer must allow sufficient time for the older departing employee to review his or her severance agreement. According to rules set by the Age Discrimination in Employment Act (ADEA), the recipient must have 21 days in which to consider the agreement plus another seven days after signing in which to possibly revoke the agreement.
Recommending legal help
To be enforceable, the severance agreement for a departing employee aged 40 or older must also contain a specific reference to the ADEA. In addition, it must include a recommendation for the recipient to seek consultation with an attorney before signing. An attorney can review the agreement to ensure the writer used clear language that does not mislead or misinform in any way.