How much time should we give a departing employee to review/sign a release agreement tied to severance benefits?
Quick Answer
Employees under 40 must be given enough time to adequately consider the agreement, which depends largely on the agreement’s complexity but typically ranges from a few days to several weeks. Employees 40 or older must be given 21 days to sign and seven days to revoke their signature. For group layoffs of employees 40 or older, the 21-day period is extended to 45 days.
Legal Perspective
Fuller Law Group
San Diego, California
Giving an employee ample time to evaluate the agreement can help you refute claims that you coerced the employee into signing it, should the person later make those claims in court, says employment law attorney David Monks (dmonks@fullerlawgroup.co).
What’s enough time? Federal law — the Older Workers Benefit Protection Act — says you must give an employee 40 years or older 21 days to review the agreement if you want the employee to give up a claim for age discrimination. The person must then be given seven days after signing the agreement to revoke their acceptance of it.
But employers should also consider giving workers under 40 at least five to seven days to review release agreements — and two to three days to revoke them. State law may require such a period. For example, since 2022 California has required that an employer (1) notify a departing employee that they have the right to consult with an attorney and (2) give the employee no less than five days to do so.
Relevant Case Law
Bryant v. Liberty Mutual Group, Inc.
Paradowski v. Tomball Texas Hospital Co., LLC
HR Insight
ERC
Jacksonville, Florida
Employers must consider several factors with respect to the Age Discrimination in Employment Act (ADEA), Older Workers Benefit Protection Act (OWBPA), and even state laws, says Anna Ratcliff, a Senior Director of HR in Florida.
The ADEA protects employees who are 40 years or older from employment discrimination. And the OWBPA drives the grace period that employees have to sign, as well as revoke their signature from a severance agreement. General provisions under these laws require that employees who are 40 years or older must be given at least:
- 21 days to sign the agreement if it is an isolated separation, or
- 45 days to sign the agreement if it is a group separation, and
- a period of seven days to revoke their signature regardless if it is an isolated or group separation.
Although there are no established grace periods for those under 40, providing them with the same periods of time could demonstrate that a good faith effort was made to be fair and consistent. Let’s not forget that state laws should be reviewed carefully since different requirements and/or factors may come into play.
Key Takeaways
- For employees under 40, there is no federally prescribed minimum specific time period for employees to consider severance agreements.
- Employees under 40 must be given adequate time to consider the agreement so it is clear that the agreement was signed knowingly, voluntarily and without coercion or duress.
- The appropriate amount of time for employees under 40 will depend in large part on the complexity of the agreement, and can range from a few days to several weeks.
- Employees 40 or older must be given at least 21 days to sign the agreement.
- If more than one employee aged 40 or older is let go at the same time and for the same reason, they must be given at least 45 days to sign the agreement.
- Employees 40 or older have seven days to revoke their signature on a severance agreement.
- The seven-day revocation period cannot be changed or waived by either party.
- In all cases, a waiver in a severance agreement must be knowing and voluntary.
- State laws may set additional specific requirements.
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