Do Severance Agreements Expire?
Hello, everybody. I’m Alan Crone, CEO of The Crone law Firm. And here with another legal bulletin on questions that we received through our Ask Alan format. And today’s is interesting, it’s: do severance agreements expire?
And one way that severance agreements can expire is by their very terms. They can require execution or acceptance by a date certain. Sometimes that’s the date that the drafter just decides on. They want to know in ten days, or they want to know in two weeks.
So, they want to know right then, the moment that they present it to the person leaving. The Older Workers Benefit Act requires that anyone over 40 who want is going to release an age discrimination claim must be given 21 days to review the agreement.
So, in other words, you can’t hot box the person in an exit interview or in a termination meeting and say, “here is severance, you got to sign this before you hit the door, and if you don’t, it’s off the table.”
You got to give them 21 days to review it. The agreement has to advise the person to go see a lawyer and consult with a lawyer about their rights. And then once they do sign it, they have seven days from that date to revoke it. Again, that’s all under the Older Workers Benefit Act, and it really only covers agreements for age discrimination. But in my experience, an employer is going to include that in any separation agreement where there’s a release for any liability. If it’s well drafted, they’re going to go ahead and do that.
Now what I’m about to say, I don’t encourage people to rely on this factor, but I think it’s certainly true. The company wants the employee to sign this agreement. And so even if there are deadlines, many times, if you miss those deadlines, you can go back and say, “look, I’d like to go ahead and sign this. If you don’t mind.”
The company wants the document to be signed, and they’ll generally be pretty flexible with you about that.
So, do severance agreements expire? Yes, it can by its terms. And once you let that time go, then the company’s rights are to say, no, we’re not going to honor that agreement anymore. So, take those deadlines very seriously.
But if a deadline has passed, can’t hurt to go back and say, hey, “I’m sorry I missed the deadline, but I’d like to go ahead and submit this.”
Nine times out of ten, the company will go ahead and honor it because again, they want the signature on the document. They want the release; they want the closure of a document.
And you can also continue to negotiate beyond that deadline again, 99 times out of 100. The fact that you’re negotiating isn’t going to void the validity of the contract. It requires mutual consent to do that. But most of the time companies will engage in that negotiation, even if the end of the negotiation is no, we’re not putting any more money on the table take it or leave it. Hopefully that answers your question; do severance agreements expire.
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