What is ADEA and why does it matter for my severance?

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Short answer: ADEA is the Age Discrimination in Employment Act, a federal law that protects workers 40 and older. When you sign a severance agreement that releases age-discrimination claims, federal law (the OWBPA amendments to ADEA) requires the company to give you a 21-day review window for individual layoffs, 45 days for group layoffs, plus a 7-day revocation period after you sign. Releases that don't comply are unenforceable as to ADEA claims.

The short version of ADEA

The Age Discrimination in Employment Act is the federal statute that prohibits employment discrimination against workers 40 and older. It applies to hiring, firing, promotions, compensation, and severance.

For severance agreements specifically, ADEA matters because:

If you're 40 or older when you sign, the agreement almost certainly includes a release of age-discrimination claims
To make that release valid, the company must follow specific procedural rules set out in the Older Workers Benefit Protection Act (OWBPA), which amended ADEA in 1990
Companies sometimes draft severance agreements that don't fully comply, leaving the ADEA release unenforceable

The rules cover the review period, the revocation period, what the agreement must explicitly say, and what disclosures the company must provide in group layoffs.

Why the OWBPA matters

The OWBPA was passed because workers 40+ were being pressured to sign releases of age-discrimination claims without time to consult counsel or understand what they were giving up. Congress responded with specific procedural protections:

Review period requirements:

21 days minimum for an individual layoff
45 days minimum for a group layoff (defined as 2+ employees terminated as part of the same program)

Revocation period:

7 days after signing, during which you can rescind

Notice requirements:

The agreement must specifically reference ADEA and the rights being waived
The agreement must advise you to consult with an attorney
The 21 or 45-day review period must be stated in the agreement itself
The 7-day revocation period must be stated

Group layoff disclosures:

For group layoffs, the company must provide a list of all job titles and ages included in the "decisional unit" (the group the layoff applies to) and all who were not included
This lets you assess whether the layoff disproportionately affected older workers

These aren't suggestions. They're statutory requirements. A release that fails any of them is unenforceable as to ADEA claims.

What a compliant release looks like

A typical OWBPA-compliant severance agreement for an employee 40+ includes:

A clear statement that Employee waives all claims, including specifically claims under the Age Discrimination in Employment Act
A statement of the 21-day (or 45-day) review period, with the start and end dates filled in
A statement of the 7-day revocation period and instructions on how to revoke
A statement advising the employee to consult with an attorney of their choice
For group layoffs, an attached exhibit listing job titles and ages within the decisional unit and those outside it
Signature blocks for both parties

If your severance agreement is missing any of these and you're 40 or older, the agreement is partially defective. The ADEA release portion is unenforceable.

What happens if the release isn't compliant

The Supreme Court addressed this directly in Oubre v. Entergy Operations, 522 U.S. 422 (1998). The Court held that a release that fails to satisfy OWBPA requirements is voidable by the employee even if the employee already cashed the severance check. The employee does not have to return the severance money to sue for age discrimination.

Practical implications:

If you signed a non-compliant release and discover age-discrimination evidence later, you can still sue
The non-compliant release is voidable as to ADEA claims, but typically not as to other claims (state discrimination claims, contract claims) unless those are also defective for other reasons
Companies are generally aware of this exposure and tend to overcomply, but smaller employers sometimes get this wrong

This is one of the reasons employment attorneys carefully review every ADEA-affected severance agreement. The procedural compliance is the first checklist item.

Beyond age: other protected claims

While ADEA is the most common issue for employees 40+, there are several other categories of claims that cannot be waived in a release regardless of age:

Whistleblower protections under SEC Rule 21F-17 and Dodd-Frank
Sarbanes-Oxley whistleblower claims (18 USC § 1514A)
NLRA Section 7 rights (concerted activity, discussing wages/conditions)
EEOC charge filing rights (you can still file a charge, though you can waive personal monetary recovery)
Unemployment insurance eligibility
Workers' compensation claims (in most states, require state agency approval)
Defend Trade Secrets Act immunity disclosures (18 USC § 1833(b))

A well-drafted release explicitly carves these out. A less carefully drafted release leaves them in the broad waiver language, which makes the release partially unenforceable as to those carve-outs but doesn't void the rest.

A common counter when reviewing a severance agreement: request explicit carve-out language for all of the above categories. The company's lawyers will almost always agree, since they know the carve-outs apply by law anyway.

What to do next

If you're 40 or older and your severance agreement is missing OWBPA-compliant language, that's a significant flag for your negotiating position. The company should be especially motivated to make the agreement clean, which gives you room to negotiate other terms.

If you want a delivered review of your severance agreement, including a full check on OWBPA compliance and release carve-outs, we deliver one in 24 hours for $199. See Severance Review.

Sources

ADEA: 29 USC § 621 et seq.
OWBPA: 29 USC § 626(f)
Oubre v. Entergy Operations, 522 U.S. 422 (1998)
EEOC guidance on Understanding Waivers of Discrimination Claims in Employee Severance Agreements (2009)
McLaren Macomb, 372 NLRB No. 58 (2023) on NLRA implications for severance non-disparagement

Get your contract reviewed

If you want a delivered review of your specific document with cited authority and counter language, see https://trycounteroffer.com/severance.

Last updated: Sun May 31 2026 00:00:00 GMT+0000 (Coordinated Universal Time)

Counteroffer is a contract analysis service, not a law firm. This page is informational, not legal advice.