Employment Law Severance Packages and ADEA Waivers

Over time people in California will continue to get older, but that does not mean that once they hit a specific age that they automatically lose the ability to do their jobs. Also, many older employees need to keep working in order to pay their bills and provide for their families. However, many companies feel that it is either cheaper or better for the company to keep their workforce younger. Therefore, they will offer severance packages and other incentives to get their older employees to quit.

Under the Age Discrimination in Employment Act of 1967 (ADEA), older employees are protected from being discriminated against or fired based on their age, and by themselves, these severance packages would violate that law for wrongful termination. However, the law also allows the employee to waive their ADEA claims in exchange for the severance package or other form of compensation. In order for it to be a valid waiver of their ADEA claims, though, it must meet certain criteria.

The first requirement is that the waiver must be in writing and written in a way that is understandable to the employee. It has to specifically refer to ADEA claims and not just a general statement about claims against the company. The waiver must also be in exchange for compensation, which is in addition to what the employee would already be entitled to such as a pension or payment for unused vacation time. Finally, the employee must be given time to consult with an attorney of their choosing and be given time to consider the offer before signing.

Many older employees in California are offered incentive packages to get them to leave their employment. For the most part, the company cannot just fire these employees, because it would be a violation of the ADEA. However, they are allowed to offer severance and other incentives in exchange for the employees’ waiver of ADEA claims. It is important for employees to understand their rights though before signing these agreements, so they can make decisions that are in their best interests.