Why Are You Giving Fired Employees 21 Days to Consider Severance?

by Jay Marshall Wolman

Plenty of employers let go of an employee and give them some prefabricated separation/severance agreement, hoping to pay the now disgruntled former employee to go gentle into that goodnight.  They go online and download a model or ask their payroll company or just use what they used last time, without considering what’s in it.

From time to time, it is good to review and understand what is in these agreements.  Are you protecting against unknown workplace injury claims?  Are you ensuring that your employee won’t try to use your trade secrets against you?  Have you thought about references and nondisparagement?  Does it contain any language the EEOC might find problematic?

Beyond these issues, however, is one that pops up regularly:  the 21/7 (or, worse, 45/7) provision.  These provisions permit the former employee 21 days to review a separation agreement and, then, up to seven days to revoke it, even after they signed it.

Why on Earth would you want to drag out the process or let the employee back out?

The reason provisions like this have crept into separation agreements is because of overbroad releases.  Lawyers for employers want to make sure their client are protected from every conceivable claim an employee might bring.  So, one of the claims released is potential claims under the Age Discrimination in Employment Act (ADEA).  This act prohibits discrimination on the basis of age.  Unlike any other release, another Federal law, the Older Workers Benefit Protection Act (OWBPA), requires that, for the waiver to be effective, it must give 21 days to consider (45 days if part of a reduction in force) and 7 days to revoke.  But, the ADEA only applies to workers 40 and over.

So, when you want to fire the 23 year old, 35 year old, etc., why do you care if they waive claims under the ADEA?  They aren’t eligible to bring them in the first place.  Even with older workers, you might want to weigh the risks of an age claim (even an unsuccessful one) against the benefit of a quick resolution of the case.  For example, if you really think that a sexual harassment claim might be coming, not age, a quicker settlement helps you close the books, rather than letting the employee get second thoughts once he/she has been a few weeks out of work.  And careless negotiation over material terms may even  restart the 21 day clock with each new offer.

Just because it looks like a standard separation agreement doesn’t mean you should use it.

 

 

 

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