A corporation in California may offer a severance agreement to an employee at the end of the employment relationship. According to the Equal Employment Opportunity Commission, if the employee is over the age of 40, the Age Discrimination in Employment Act provides protection against age discrimination through its regulations regarding severance contracts.
Employee mays have the option to accept a severance package in exchange for an agreement that they will not file a claim of age discrimination. However, the EEOC explains that this agreement only protects the employer from an ADEA claim if the following four elements are present.
- Clear language
Legal jargon can cloud the meaning of a contract, but the severance agreement must not have any language that an average individual would have trouble understanding. The employer must use simple, short sentences to explain the positive and negative aspects of accepting the benefits offered without downplaying them. There should be no exaggerations, omissions or misleading statements.
- Recommendation to speak to a lawyer
The employer must specifically advise the employee to show the contract to an attorney before he or she signs it.
- Time limits
The employee must have at least 21 days in which to make the decision whether or not to sign the contract. The day the employer makes its final offer is the first day, and if the offer changes, then the clock starts over.
There is a seven-day period after the employee signs during which he or she can revoke the signature.
- The exchange
The employer has to offer the employee something of value in exchange for the right to sue, and it cannot be benefits currently owed to the employee. For example, the contract cannot offer previously earned vacation pay to the employee as a benefit because it already belongs to the employee. The severance benefits must compensate the employee beyond what he or she is already entitled to.