Severance Agreement (over 40) Template

In plain language: Identifies the employer and employee by legal name, states the official last day of employment, and summarizes the circumstances of separation.

Common mistake: Using a trade name instead of the registered legal entity name. If the employer entity on the agreement doesn't match payroll records and the actual employing entity, the release may be challenged as signed with the wrong party.

In plain language: States the total severance amount, how it will be paid (lump sum or installments), and any continuation of health or other benefits beyond the separation date.

Common mistake: Describing severance as a gift rather than consideration for the release. Courts have found that framing severance as 'ex gratia' rather than exchange consideration weakens the enforceability of the release.

In plain language: The specific clause waiving age discrimination claims under the ADEA and OWBPA, written in plain language, with explicit reference to the statute being waived.

Common mistake: Using boilerplate 'all claims' language without expressly naming the ADEA and OWBPA. The OWBPA requires the waiver to specifically reference the ADEA by name — a general release of 'all statutory claims' is insufficient to waive ADEA rights.

In plain language: Broader release covering all other employment-related claims beyond ADEA — including Title VII, ADA, state law claims, breach of contract, and wage and hour disputes — with any carved-out claims explicitly listed.

Common mistake: Failing to carve out EEOC charge-filing rights. The EEOC has confirmed that employees cannot waive the right to file a charge; attempting to do so voids that portion of the release and signals a non-compliant agreement to regulators.

In plain language: Informs the employee in plain language that they have 21 calendar days to consider the agreement before signing, and that signing earlier is voluntary.

Common mistake: Pressuring the employee to sign before 21 days have passed or conditioning benefits on early signing. Conditioning receipt of consideration on a shorter review period invalidates the ADEA waiver entirely.

In plain language: Notifies the employee that they may revoke their acceptance within 7 calendar days after signing, and that the agreement does not take effect until that period expires.

Common mistake: Scheduling severance payment before the 7-day revocation period expires. If the employer pays before the Effective Date and the employee revokes, recovering the payment is costly and may constitute a waiver of the revocation right.

In plain language: Restricts the employee from disclosing the terms of the agreement and from making negative statements about the company, and may include a mutual provision binding the employer.

Common mistake: Making the confidentiality clause one-sided without checking state law. Several states — including California and Illinois — have enacted restrictions on employer-imposed confidentiality provisions in settlement agreements involving harassment or discrimination claims.

In plain language: Requires the employee to return all company property — equipment, credentials, documents, and confidential materials — by or on the separation date.

Common mistake: No specific deadline or inventory list for property return. Without a defined deadline, enforcing the clause requires a separate legal action, and disputes over what was returned become credibility contests.

In plain language: References or incorporates any surviving non-compete, non-solicit, or confidentiality obligations from the original employment agreement that continue after separation.

Common mistake: Attempting to impose new post-employment restrictions in the severance agreement that were not in the original employment contract. Courts scrutinize new restrictions added at separation — they require independent consideration and may be unenforceable if the only consideration is severance the employee was already entitled to.

In plain language: States the governing jurisdiction, confirms the agreement supersedes all prior representations, and includes an explicit acknowledgment that the employee was advised to consult an attorney.

Common mistake: Omitting the written advisement to consult an attorney. OWBPA specifically requires that the employer advise the employee in writing to consult with an attorney — failure to include this language renders the ADEA waiver void.

A severance agreement over 40 is a separation contract between an employer and an employee aged 40 or older that includes specific provisions required by the Older Workers Benefit Protection Act (OWBPA) to validly waive age discrimination claims under the ADEA. It covers severance pay, benefits continuation, a release of claims, and mandates a 21-day review period and a 7-day revocation right that standard severance agreements for younger employees do not require.

The Age Discrimination in Employment Act (ADEA) protects employees aged 40 and older from employment discrimination. The Older Workers Benefit Protection Act amended the ADEA to set strict requirements for any waiver of ADEA claims — if the employee is under 40, these requirements do not apply. Using a standard severance agreement for an employee over 40 without OWBPA-compliant language leaves the age discrimination waiver void, meaning the employee could still sue for age discrimination after accepting severance.

To be valid under the OWBPA, a waiver of ADEA claims must: (1) be written in plain language the individual employee can understand; (2) specifically reference the ADEA by name; (3) not waive future claims or the right to file an EEOC charge; (4) be supported by consideration beyond what the employee is already entitled to; (5) advise the employee in writing to consult an attorney; (6) provide a 21-day consideration period; and (7) allow a 7-day revocation period after signing.

Yes. For employees aged 40 or older, the OWBPA grants an unconditional 7-day revocation right after signing. The agreement does not become effective until this period expires without revocation. Employers cannot waive or shorten the revocation period by contract. If the employee revokes, the agreement is void and any severance paid before the Effective Date must be returned, which is why employers should not process payment until Day 8.

A standard severance agreement for employees under 40 releases general employment claims and sets severance terms, but is not subject to OWBPA's mandatory requirements. A severance agreement over 40 must additionally include a specific ADEA waiver naming the statute, a written attorney advisement, a 21-day review period, and a 7-day revocation right — none of which are legally required for employees under 40. Using the wrong version leaves the age claim waiver unenforceable.

Yes. When two or more employees over 40 are terminated in the same reduction in force or as part of the same program, OWBPA extends the review period to 45 days and requires the employer to provide a written disclosure listing the job titles and ages of all employees in the affected decision unit — both those selected and not selected for termination. Failing to provide this disclosure gives each affected employee the right to revoke indefinitely.

No. Signing is always voluntary. An employee who declines to sign receives their final pay and any vested benefits they are legally entitled to, but forfeits the severance consideration offered in the agreement. The employer cannot retaliate against an employee for declining to sign or for filing an EEOC charge regardless of whether a severance agreement has been presented.

Employees can waive the right to monetary recovery for past ADEA claims, Title VII claims, ADA claims, state law discrimination claims, wrongful termination, and breach of contract, among others. They cannot waive the right to file a charge with the EEOC or participate in an agency investigation, claims that arise after the agreement's effective date, vested retirement benefits, workers' compensation rights, or NLRA protected activity rights. Including prohibited waivers risks voiding the entire release.

For most routine separations of a salaried employee, a carefully prepared template reviewed by an employment attorney is sufficient. Legal review is strongly recommended — OWBPA's technical requirements are specific and a single missing element voids the age claim waiver. Engage employment counsel for any executive separation, group RIF involving multiple employees over 40, situations where a discrimination complaint is already pending, or when state law adds requirements beyond federal OWBPA minimums.