How long must we give to review severance package?
Q. How much time must our company allow an employee to review a severance package before accepting or rejecting the release agreement? — Anonymous, Georgia
A. The key law on this topic is the Older Workers Benefit Protection Act (OWBPA), a federal law that sets out certain requirements an employer must follow if it asks an individual to waive his or her right to bring an age discrimination claim. The requirements are mandatory, and if the employer does not follow them exactly, any waiver and release of claims can be set aside by the courts.
One OWBPA requirement is that the individual who is offered a benefit—typically, a severance—in exchange for signing the release must be given what Congress considered a reasonable time to evaluate the proposed terms and to consult an attorney before signing. When a single individual is asked to sign a release, the minimum time he must be allowed to consider the offer is 21 days (although he can sign sooner if he so chooses).
If the individual is being asked to execute a release in exchange for benefits and the individual is part of a group, then the time each individual must be offered to consider signing jumps to 45 days. A “group,” for purposes of the OWBPA, is two or more individuals in the same “decisional unit” who are offered substantially the same incentive to sign the agreement.