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What elements need to be included in a claims waiver associated with a severance agreement?

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in Discrimination and Harassment,Human Resources

Q. We are considering providing an enhanced severance package to a group of employees if they agree to waive all potential claims against the company, including age discrimination claims. Are there any specific steps we need to take in connection with these releases?

A. The Older Workers Benefit Protection Act (OWBPA), which amended the Age Discrimination in Employment Act (ADEA), requires that any waiver of rights provided by the ADEA must be “knowing and voluntary.”

To meet this standard, the following are required:

  • The waiver must be part of a written agreement between the individual and the employer, and must be written in a manner that can be understood by such individual or by the average individual eligible to participate.
  • The waiver must refer specifically to rights or claims arising under the ADEA.
  • The waiver may not apply to claims or rights that arise after the date the waiver is executed.
  • The individual who signs the waiver must do so in exchange for something (generally money) to which he or she would not otherwise be entitled.
  • The individual must be advised in writing to consult with an attorney before signing the agreement.
  • The individual must be given 21 days to consider signing the agreement.
  • The agreement must provide a period of at least seven days after the waiver is signed during which the individual may revoke the agreement. The agreement must not become effective or enforceable until after the expiration of the revocation period.
  • If the waiver is requested in connection with an exit incentive or other severance program offered to a group or class of employees, the individual must be given at least 45 days to consider the agreement. At the start of the 45-day period, the employer must inform each individual in writing of any class, unit or group of individuals covered by the program, any eligibility factors for the program and any applicable time limits. Finally, each individual must be notified of the job titles and ages of all employees eligible or selected to participate in the program.

This is not something you want to do without expert guidance. Have your attorney or another lawyer who has experience with waivers prepare the release.

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