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Friday, July 31, 2009

When Your Employer Offers You a Severance Agreement

What to Do When Your Employer Offers You a Severance Agreement

Repirint O&A News 07/26/09

In economic downturns it is good that both employers and employees understand what can and can not be included in a valid Severance and Release Agreement:

Make sure that you understand the agreement
If you are 40 or older, inform your employer that the law requires your agreement to be written in a manner that makes it easy to understand. Usually this means that your agreement should not contain technical jargon or long, complex sentences, or tiny type.
Check for deadlines and act promptly
The moment you are given a severance agreement, check to see if your employer gave you a deadline for accepting, or declining, the agreement. If you are 40 years old or older, federal law requires the employer to give you at least 21 days to review the agreement and make up your mind.

If you are being rushed, ask for more time. Put your request in writing. If you are 40 or older and your employer is asking you for a decision in fewer than 21 days, remind the employer that the law requires you to be provided at least 21 days. (If you and at least one other person are being laid off in a reduction in force (RIF) at the same time, you must be given 45 days to consider the agreement.)
Consider having an attorney review the severance agreementEven if you are parting amicably with your employer, you may want to ask for advice about whether you should sign it, whether the terms are reasonable, and whether you should ask your employer to change any of the terms.
If you are at least 40 years old, the agreement must advise you to consult with an attorney.
Make sure you understand what you are giving up in exchange for severance pay or benefits
The main benefit to signing an agreement is that you will receive a cash payment or benefits in exchange for signing away your right to bring certain legal claims against your employer.
Make sure that the agreement offers you something of value to which you are not already entitled.
Review the agreement to ensure that it does not ask you to release non-waivable rights
Confirm that your employer is not asking you to waive your right to file a charge, testify, assist, or cooperate with the EEOC.
Make certain that the agreement is not asking you to waive rights or claims that may arise after the date you sign the waiver.
Make sure that your employer is not asking you to release your claims for unemployment compensation benefits, workers compensation benefits, claims under the Fair Labor Standards Act, health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), or claims with regard to vested benefits under a retirement plan governed by the Employee Retirement Income Security Act (ERISA). See all the new EEOC guidance published on July 15, 2009 at

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at