Severance Agreements and Employment Discrimination

With the rising number of layoffs, it is not surprising to learn that the number of employment discrimination claims that have been filed with the U.S. Equal Employment Opportunity Commission (EEOC) has increased. The EEOC is the lead U.S. government agency charged with enforcing the various federal laws that prohibit discrimination in the workplace. For fiscal year 2008, the EEOC received 95,402 charges of discrimination compared to 82,792 charges filed in 2007.

While a company is not legally obligated to offer a laid-off employee a severance package, it is not uncommon for most larger companies to offer them. In most cases, in order for the employee to receive the severance, the company will require the employee to sign an agreement where the employee waives their right to file a employment discrimination charge in exchange for the severance. Other conditions can include a non-compete agreement and/or non-disclosure agreement. Under the Older Workers Benefit Protection Act (which is incorporated into the Age Discrimination in Employment Act), an employee aged 40 or over has 3 weeks to consider whether or not to sign any type of post-employment document.

As these severance agreements are legally binding documents, it is a good idea to have an employment attorney review it before you sign. In addition to advising you of your rights, the attorney might be able to negotiate a better severance package for you.