Published: Union Leader
April 19, 2025
Q: I want to enter into a separation agreement with an employee who I am terminating. I am offering severance and covering a portion of the employee's COBRA cost. In exchange, the employee would agree to release any claims they might have against me and my company. I want to get this done quickly. Can I give the employee a deadline of 72 hours to accept the agreement?
A: Not if the employee is 40 years of age or older and you want to ensure that the waiver of their age discrimination claims is valid. In order for an employee to release age discrimination claims under the federal Age Discrimination in Employment Act ("ADEA"), the waiver must be knowing and voluntary. Federal regulations specify the requirements for a "knowing and voluntary" waiver. This includes a requirement that the employee must be provided with at least 21 days to consider the offer.
The employee can choose to sign the agreement containing the ADEA waiver before the 21-day period expires so long as the employee's decision is knowing and voluntary. However, an employer cannot induce an employee to sign before the 21-day period is up by, for example, threatening to withdraw or change the terms of the separation agreement if the employee does not sign sooner or "sweetening the deal" if the employee does sign before the 21-day period.
The timing and implementation of a separation agreement can also be complicated because the ADEA further provides that an employee who signs an agreement with an ADEA waiver be given seven days to revoke his or her signature. So, after the agreement is signed, the employee has seven days to revoke it. This seven-day revocation period is mandatory and cannot be waived by either the employer or employee for any reason.
Given that an employee has 21-days to review an agreement with a waiver of ADEA prior to signing and an additional the nonwaivable 7-day revocation period after signing, unanticipated timing snags are a possibility for the unwary employer. You should consult legal counsel to discuss ways to navigate the timing requirements under the ADEA in the drafting and implementation of any severance agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
