Severance Agreement Timing
Employees do not need to use their entire 21 or 45 days to review the agreement and can sign it earlier (but do not have to sign before leaving the termination meeting; they must take the document with them). The balance of an unused reference period shall be considered invalid. How do employees convince a judge to invalidate a declassification agreement they have signed? Mainly by proving that the employer forced the worker to sign or otherwise coerced the worker. Or by showing that the worker did not fully understand the authorization and therefore did not "knowingly" and "voluntarily" exempt the rights against the employer. Employers should ensure that workers have time to consider whether to sign a redundancy agreement, a time frame that varies depending on the age of the workers. This particular legal requirement must be met to allow for the application of a release of rights from the Age Discrimination in Employment Act (ADEA), as amended by the Older Workers Benefit Protection Act (OWBPA). If you are offering severance pay to a dismissed employee, it is advisable to give the employee some time to consider whether to accept. Finally, the employee generally waives important rights (such as the right to sue the company) in exchange for severance pay. If you give the individual time to review the offer, the company can prove that an agreement has not been imposed or forced if necessary. But how much time should be made available? Practical tip: Severance pay policies or plans requiring severance pay should also require the former employee to sign an exemption agreement in exchange for severance pay. Rights under the Age Discrimination in Employment Act (ADEA) may be removed in an exemption agreement, but the exemption agreement must meet all the requirements of the Older Workers Benefit Protection Act ("OWBPA").
Unfortunately, violations of the OWBPA remain some of the most common mistakes made by employers in designing termination agreements. Some employers offer severance pay, but do not use severance and release pay. At some level, this is a business decision, depending on the culture of the workplace. However, offering severance pay without authorization may not always be a proven method. Avoid these arguments by giving the employee enough time to decide whether to enter into the release agreement. Indeed, the federal law - the Older Workers Benefit Protection Act (OWBPA) - requires such a period (21 days to be precise) if the employer wants a worker aged 40 or over to be able to waive a right to age discrimination. Then, the employee must be given 7 days after signing the agreement to revoke his acceptance. (The OWBPA also sets out other requirements that can be found here.) For example, the Eighth Circuit Court of Appeals (which includes Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota) recently rescinded a waiver agreement because it was confusing to the employee. As the court suggested, the OWBPA requires that an unblock be drafted in clear and clear terms – not legally! In this case, the worker attempted to obtain clarification from the employer`s lawyer on two apparently contradictory provisions - authorization and the obligation not to pursue the provisions. However, the lawyer was "not comfortable" to see clearly. Thus, the court rescinded the authorization and stated, "It seems axiomatic that while an agreement needs to be clarified, it is not written in a manner calculated in such a way as to be understood." In light of this decision, employers should carefully consider whether their termination and severance agreements should still contain the agreement known not to bring legal action. If you need help negotiating the terms of your termination agreement, Livelihood Law can help.
Contact us today so we can help you maximize your benefits....