Severance Agreement Over 40: Your 21-Day Review and 7-Day Revocation Rights

Who gets OWBPA protection in a severance agreement over 40?

The ADEA protects workers who are 40 or older from age discrimination and applies to employers with 20 or more employees, including most private employers, state and local governments and employment agencies. The OWBPA rules apply whenever such an employer asks a worker aged 40 or over to waive ADEA claims, which almost every general release does, whether it names the ADEA or not.

The protection is about the waiver, not the severance amount. The law does not require the employer to pay severance or set how much. It sets the conditions a release must meet for your waiver of age claims to be "knowing and voluntary." If the conditions are not met, the waiver of age claims does not hold, even though you signed it.

What must a valid release include under the OWBPA?

For an individual severance offer, the statute and the EEOC's regulation at 29 CFR 1625.22 require all of the following. Missing any one of them can make the age claim waiver invalid.

• Plain language: it must be written in a manner calculated to be understood by you, or by the average person eligible for the offer.
• Specific reference: it must refer by name to rights or claims under the Age Discrimination in Employment Act.
• No future claims: it cannot waive claims arising after the date you sign.
• Extra value: it must give you something in addition to what you are already entitled to, such as pay beyond your final wages and accrued benefits.
• Advice to consult a lawyer: you must be advised in writing to consult an attorney before signing.
• Time to consider: at least 21 days, or 45 days if the offer is part of a group exit incentive or termination program.
• Time to revoke: at least 7 days after signing, and the agreement does not take effect until that period ends.

How does the 21-day review period work?

The 21 days run from the date the employer gives you its final offer. You do not have to use all of it. The regulation allows you to sign early, which starts your 7-day revocation period sooner, as long as your decision is knowing and voluntary and not pushed by fraud, a threat to withdraw or change the offer, or better terms for people who sign fast. A message like "the offer expires Friday" when you have not had 21 days is a warning sign.

If the terms change during negotiation, the clock may restart. Under 29 CFR 1625.22(e)(4), material changes to the final offer restart the 21 or 45 days, and immaterial changes do not. The parties can agree that changes, material or not, will not restart the period, and many agreements include that language. If you negotiate a better package, read whether the deadline moved.

Can you take back a severance agreement after signing it?

Yes, for at least 7 days. The OWBPA requires a revocation period of at least 7 days after you sign, and the employer cannot shorten it, even with your agreement. The agreement does not become effective or enforceable until the period ends without a revocation. That is why many employers pay severance only after day 7 has passed.

Follow the agreement's revocation instructions exactly: who to send it to, how (email, letter or both) and by when. Keep proof of delivery. If you revoke, you give up the severance, and you keep your right to bring claims.

What changes in a group layoff (45 days and the disclosure)?

When two or more employees are offered severance under a standardized package, such as a reduction in force or voluntary exit program, the rules get stricter. You get at least 45 days to consider, not 21, and the employer must give you written information so you can judge whether older workers were singled out.

That disclosure must describe the "decisional unit" (the part of the organization from which people were chosen), the eligibility factors and time limits for the program, and the job titles and ages of everyone selected or eligible, plus the ages of everyone in the same unit who was not. Ages must be given individually, not in broad bands. Read it. If most people selected are older than most people kept, that pattern is exactly what the disclosure exists to show, and it is worth discussing with a lawyer before you sign.

Linda, 58, is one of eleven people laid off from a 60-person department. Her agreement offers ten weeks of pay for a general release and gives her 21 days to decide. Because two or more people received the same standardized package, this is a group program: she should get 45 days and a disclosure listing the job titles and ages of everyone selected and everyone kept in the decisional unit. She asks HR for the disclosure. When it arrives, it shows that eight of the eleven people selected are over 50, while most people kept are under 40. Linda takes the agreement and the disclosure to an employment lawyer, who uses the remaining time to negotiate a larger package. Had she signed the 21-day version without the disclosure, her waiver of age claims would likely not have been valid.

What are the most common OWBPA mistakes in severance agreements?

Many releases are drafted from templates written for younger workers or for a different state, and small omissions are common. Check yours for these problems before you sign.

• A general release of "all claims" that never mentions the Age Discrimination in Employment Act by name.
• A signing deadline shorter than 21 days, or 21 days in what is really a group layoff that requires 45.
• A revocation period shorter than 7 days, or wording that makes the agreement effective on signing.
• No written statement advising you to consult an attorney.
• A group layoff with no age disclosure, or one that lists ages in bands rather than individually.
• Severance that is no more than what you were already owed, such as accrued vacation pay your state requires anyway.

What if the employer does not follow the OWBPA rules?

The waiver of age discrimination claims is not valid, and the employer carries the burden of proving that it complied. You can still bring an ADEA claim. In Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998), the Supreme Court held that an employee who signed a release that did not meet the OWBPA could sue under the ADEA without first returning the severance pay; keeping the money did not ratify the defective release. EEOC regulations also bar employers from requiring repayment as a condition of challenging the waiver, though a court may offset any recovery by the severance you received.

Two limits matter. First, the OWBPA only governs the release of age claims. If the agreement fails the OWBPA but is otherwise valid, your waiver of other claims, such as race or disability discrimination or contract claims, may still hold. Second, a defective waiver gives you the right to bring a claim, not proof that you were discriminated against.

What can you still do after signing?

Even a valid release cannot stop you from filing a charge with the EEOC or taking part in an EEOC investigation; the statute says no waiver may interfere with that right. You may give up the right to recover money personally through the charge, but the agency can still act. Releases also cannot waive claims that arise after you sign, such as retaliation for something that happens later.

Settlements of an existing EEOC charge or lawsuit work a little differently: the law requires a "reasonable period of time" to consider rather than a fixed 21 days. If you have already filed a charge, ask how the agreement handles it.

How should you use the 21 or 45 days?

To see how a balanced release is usually structured, compare your document with a severance agreement template. Our general severance agreement red flags guide covers the other clauses worth checking, and an employment lawyer can tell you whether your situation suggests a claim worth more than the package.

• Check the basics first: the agreement names the ADEA, advises you in writing to see a lawyer, and gives you the right number of days to consider and 7 days to revoke.
• Confirm what you are owed anyway, such as final pay and any accrued vacation your state requires to be paid, so you can see what the severance actually adds.
• In a group layoff, read the age disclosure and compare who was selected and who was kept.
• Look beyond the release: non-disparagement, confidentiality, cooperation duties, clawbacks, benefits continuation and any non-compete that is revived or extended.
• Negotiate if you have leverage. Common asks are more weeks of pay, paid health coverage for a longer period, accelerated vesting, a neutral reference and a mutual non-disparagement clause.