Separation or Severance Agreements

Separation or Severance Agreements

When an employee is terminated or resigns from their job, sometimes employers will present the former employee with separation or severance agreements, which specifies the terms of the employee’s separation from their employment. These agreements release legal claims that the employee may have against the employer, and, in exchange, the employee receives compensation or other benefits that the employee would not normally be entitled to receive.

Oftentimes, separation agreements include terms which reaffirm restrictive covenant agreements that the employee previously signed with the employer or create new restrictions with which the employee must comply.  Moreover, the release of certain claims, such as those arising under the Age Discrimination in Employment Act (ADEA), must meet specific procedural requirements under the Older Workers Benefit Protection Act to be effective against the employee.

For example, an employee must be given twenty-one (21) days to consider the release of claims arising under the ADEA and an additional seven (7) days to revoke after signing the severance agreement. This is why it is imperative that an attorney reviews the severance agreement and any incorporated restrictive covenants, such as noncompetition, non-solicitation, and non-disclosure agreements, before the employee executes the agreement.