Receiving a severance agreement can be a stressful and overwhelming experience, especially if it’s unexpected. Whether you’re facing a layoff, termination, or a voluntary departure, understanding the details of your agreement is crucial. One of the most common concerns is how much time you have to review and sign the agreement. It’s important to know that this timeline can vary depending on your age, the circumstances of the severance, and even your employer’s policies.
This blog will guide you through the timeframes for signing a severance agreement, factors to consider, and how to approach this decision with care.
Legal Timeframes
If You’re 40 or Older: The OWBPA Safeguards
For employees aged 40 or older, federal law provides protection under the Older Workers Benefit Protection Act (OWBPA), which is part of the Age Discrimination in Employment Act (ADEA). These protections ensure that older workers are not rushed into making decisions that could affect their rights.
If you’re being asked to waive age discrimination claims for severance, the OWBPA requires that you must be given at least 21 days to review the agreement. This allows time to seek legal advice, evaluate the offer, and decide if it’s in your best interest.
For group layoffs or terminations, where multiple employees are let go under the same conditions, the review period extends to 45 days. Group layoffs often involve more complex agreements and carry a higher risk of age discrimination claims.
Regardless of whether you have 21 or 45 days to review, you still have 7 days after signing to revoke your decision. This ensures you don’t feel pressured and have a final chance to change your mind. If you do, notify your employer, and the agreement will be voided.
If You’re Under 40: Employer-Set Timeframes
For employees under 40, OWBPA protections don’t apply. There’s no federal mandate on how much time you have to review. However, most companies still offer a reasonable timeframe — usually a few days to a week. This will be outlined in the severance agreement, so read it carefully.
It’s important to note that if the time feels insufficient, you can ask for more. Employers aren’t required to grant an extension, but some may agree if you request it.
Important Factors to Consider When Reviewing a Severance Agreement
Once you know how long you have to sign, it’s crucial to use that time wisely. Here are key factors to consider before deciding.
Severance Pay: Severance pay is often offered as compensation for job loss. Confirm how much you’re being offered, whether it’s a lump sum or paid over time, and how it compares to your expectations. Pay is usually based on years of service, but it’s worth negotiating if the offer feels low.
Waiver of Legal Claims: Severance agreements often include a waiver of legal claims, meaning you give up the right to sue your employer for issues like discrimination or wrongful termination. If you believe you have a valid claim, consult an attorney before signing.
Non-Compete and Non-Disclosure Clauses: Non-compete clauses may limit your ability to work in the same industry for a set period, while NDAs restrict what you can say about your employment or termination. These can impact your career, so review them carefully.
Continuation of Benefits: Many severance agreements include health insurance continuation for a period. Check how long your benefits last and if you’ll need to pay out of pocket through COBRA. This is especially important if you have dependents or medical needs.
Outplacement Services: Some packages offer outplacement services like career coaching or resume help. While less tangible than severance pay, they can be valuable for your job search. Ask if these services are included and what support you’ll receive.
Should You Negotiate for More Time?
If the severance agreement is complex, or you need more time to review it, you can always ask for an extension. It’s perfectly reasonable to request extra time, especially if you’re seeking legal counsel or if the terms are unfamiliar. While employers aren’t required by law to grant an extension, many will as a goodwill gesture.
It’s important not to feel rushed. The decisions you make regarding your severance can significantly impact your financial future and legal right
Conclusion: Take Your Time and Get Advice
Signing a severance agreement is a significant decision with lasting consequences. While the timeframes for signing can vary depending on your age and the situation, it’s important to make the most of the time you have. Whether you’re offered 21 days, 45 days, or just a week, use that time to consult with legal counsel, carefully review the terms, and ensure that the agreement is in your best interest.
If you’re feeling uncertain, remember that you have the right to negotiate and to revoke the agreement within 7 days after signing. Making an informed decision will help protect your future and ensure that you’re receiving fair treatment.
The severance process can feel overwhelming, but with careful consideration and professional advice, you can navigate it with confidence.