Legal Requirements for Negotiating Severance Agreements Containing a Waiver Clause

Under the Older Workers' Benefit Protection Act ("OWBPA"), many procedural requirements must be satisfied before an employee's release or waiver of federal age discrimination claims will be considered enforceable.

1. Releases waiving claims or rights under the federal Age Discrimination in Employment Act must be knowingly and voluntarily executed.

The waiver must be written in easily understandable terms

The waiver must specifically refer to rights and claims existing under the ADEA.

The waiver cannot extend to rights or claims that may arise after the date the release is executed.

The consideration offered in return for the waiver must be unrelated and in addition to whatever the individual is entitled to upon termination under existing company policies. (e.g., If company policy provides for the payment of accrued but unused vacation days upon termination, such sums are not additional consideration capable of supporting a waiver of ADEA rights and claims.)

The individual must be advised in writing of his or her right to consult with legal counsel prior to executing the release.

2. If the individual considering the waiver has not filed any administrative charges of age discrimination with the EEOC, or a lawsuit alleging a violation of the ADEA, the following notice requirements must be observed:

The individual must be given at least 45 days to consider the release. (Note: In individual termination situations where no EEOC charge or ADEA lawsuit has been filed, the employee must be allowed to consider the release for 21 days, and afforded an additional 7 days after execution to revoke the agreement if desired.)

The company must notify the individual, in easily understandable written terms, of any eligibility requirements for participating in the employment termination program and all time limits applicable to the program.

The individual must also be informed, in easily understandable written terms, of the job titles and ages of all individuals who are eligible or being selected for the termination program, and the ages of all individuals in the same job classification or organizational unit who are ineligible or not being selected for the program.

3. If the individual has filed an age discrimination charge with the EEOC, or a lawsuit alleging a violation of the ADEA, the company must provide him or her with a "reasonable" period of time to consider the execution of a waiver of ADEA rights and claims.

4. An individual cannot waive his or her right to file a discrimination charge with the EEOC, or to participate in an EEOC investigation.