Is Your Separation Agreement Missing Any of the Required Elements for an Age Release?

29 May 2012 Labor & Employment Law Perspectives Blog

Can you name all four of the components needed in a separation agreement in order to release federal age discrimination claims?

  • Must provide 21 days to consider the agreement
  • Must provide seven days to revoke the agreement (after it is signed)
  • Must advise the employee to consult with an attorney
  • Must specifically identify the federal Age Discrimination in Employment Act (ADEA) as a released claim

Courts treat all four of these components as “magic words” that must be written into the agreement. If your agreement lacks one or more of these elements, the release will not be effective for purposes of releasing federal age discrimination claims.

All other types of claims can be waived even without this language. For example, race, sex, and disability discrimination claims arise under Title VII and the ADA, which do not require any magic words in order to effectuate a valid release. Likewise, age claims arising under state law also can be released without use of these four components. The “magic words” requirement comes from the Older Worker Benefit Protection Act (OWBPA), which amended the ADEA. This is the only law that requires these four components for purposes of effectuating a valid release.

There are several other OWBPA concepts worth noting. Even though these are not required to be specifically written into the release, they are principles that courts take seriously, both with respect to waivers of age discrimination claims and releases of other claims as well:

  • Agreement must be clearly understandable to the average worker receiving it. (Suggest not including heretofores and thereinafters and other lawyerly lingo.)
  • Agreement must be knowing and voluntary. (Suggest making sure the employee understands the implications for retirement benefits and when other benefits end.)
  • Agreement must not purport to release rights arising after the date the agreement is executed. (Suggest that the employee should not be permitted to sign the release until the very last day of work, so every moment of work time is covered by the release.)
  • Agreement must provide consideration that is in addition to anything to which the employee is already entitled. (Suggest that vacation pay, accrued bonus, mandatory severance, and other required payments should not be identified as consideration for the release. For a release to be valid, employees must receive some consideration above and beyond anything to which they are already entitled.)

Remember to check state law, too. For example, California has special magic words that should be included in a release. Minnesota has a 15-day revocation period needed to effectuate a valid release of certain state law claims.

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