It is not uncommon for an employer to offer a severance agreement to a departing employee who has served in the managerial or executive ranks.

What is not so common is a severance agreement for an employee aged 40 or older, which must meet specific EEOC and ADEA standards.

About the severance agreement

A severance agreement is not required in an “at-will” situation, but an employer may wish to have a departing employee sign this type of agreement. The main reason is to provide the employee with compensation in exchange for exerting a certain amount of post-employment control. The employer may want to keep the departing employee from divulging trade secrets, for example, or prevent him or her from participating in a discrimination suit against the company.

Requirements for older departing employees

A severance agreement for a departing employee aged 40 or older has certain explicit requirements that must meet the standards set forth by the Equal Employment Opportunity Commission. The wording of the agreement must be simple and clear, avoiding both legalese and complex sentences. The language must not mislead or misinform in any way. The agreement must also be in writing and the departing employee must have at least 21 days in which to consider the agreement in accordance with the Age Discrimination in Employment Act.

A recommendation

The severance agreement for a departing employee aged 40 or older must also contain a recommendation for him or her to seek legal guidance before signing the document. An attorney can review the agreement and ensure that it meets all requirements and will hold up in court if legal action should become necessary.