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What to Do When You Are Asked to Sign a Severance Agreement

Attorney Dan Lenz discusses the fact that businesses are still downsizing and often offer employees severance agreements. He informs how these agreements often include a requirement to waive your right to pursue a discrimination complaint. It is important to discuss your rights with an attorney before signing a severance agreement.

Unfortunately, discharge is still a big part of the economic climate.  Three years after the beginning of the economic crisis, many employers are still firing valuable employees to preserve their bottom line.  Often, these firings are accompanied by a document with a title like Severance Agreement or Termination Agreement. These documents are often presented to employees at the worst possible moment.  They have been told that a job that they depended on is ending, often after a long period of faithful service and often without a satisfactory explanation.  Many employees may feel as though they cannot leave or should not leave without signing the Agreement that is put in front of them, even when they think they're being treated unfairly.  These Agreements almost always contain a promise of severance payment, like a certain amount of severance pay or continued insurance coverage. It is important to realize that these agreements may also waive your rights to pursue a discrimination complaint against your employer. In 1990, Congress passed the Older Workers Benefit Protection Act, an amendment to the Age Discrimination in Employment Act of 1967 (ADEA).  The newer law set certain minimum requirements for waivers of rights under the ADEA, which are: Waiver is part of an agreement between the individual (you) and the employer that is written in a manner calculated to be understood by such individual… The waiver specifically refers to rights or claims arising under the ADEA. The individual does not waive rights or claims that may arise after the date the waiver is executed. The employer provides consideration in exchange for the agreement, which must be additional to any pay or anything of value to which you were already entitled. The individual is advised in writing to consult with an attorney prior to executing the agreement. The individual is given a period of at least 21 days within which to consider the agreement. The agreement provides that for a period of at least 7 days following the execution of such agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired. These requirements apply specifically to the ADEA.  29 U.S.C. § 626 (f)(1).  Other rights, such as rights under the Wisconsin Fair Employment Act or Title VII may be waived without all of these formalities in place.  Employers, however, may use these requirements as a basis when drafting their agreements.  If you would like to consult an attorney, it is important you do so either prior to signing the agreement, or as soon as possible within the reconsideration period. Contact me at dlenz@lawtoncates if you have been terminated or lost your job and want to know if you have a claim.

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