Do You Have 21 or 45 Days to Consider a Severance Agreement

When facing a severance agreement, understanding the consideration period is crucial. The typical timeframe is governed by federal and state laws, with the Older Workers Benefit Protection Act (OWBPA) shaping how waivers of rights under the Age Discrimination in Employment Act (ADEA) are presented to employees aged 40 and older. This article explains when you get 21 days, when 45 days might apply, and how to evaluate a severance package to protect your rights.

What The 21-Day Consideration Period Means

The standard rule for severance agreements offered to employees aged 40 or older under the OWBPA is that the employee must be given at least 21 days to consider the agreement before signing. This period helps ensure that the employee has time to review the waiver of rights, consider the financial and legal implications, and seek legal counsel if desired. During this period, the employee can discuss the agreement with an attorney or tax advisor and decide whether to accept the terms or request changes.

When A 45-Day Period Might Apply

In certain group terminations or complex severance programs, the consideration period can extend beyond 21 days. Specifically, if an employer offers a waiver of ADEA rights in a group separation program, a longer period—sometimes up to 45 days—may be provided to accommodate the needs of multiple recipients. In these situations, employers must still provide clear disclosures about the rights being waived and the ability to revoke the waiver within a specified window after signing.

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Key Protections Under OWBPA And ADEA

For employees 40 and older, the OWBPA imposes safeguards on waivers in severance agreements. A valid waiver must be knowing and voluntary, include a statement that the employee has 21 days to consider the agreement, and provide a 7-day revocation period after signing. The waiver cannot waive rights that cannot be lawfully waived, and it must not require retaliation or coercion to sign. Employers must provide adequate information about benefits, including COBRA, retirement plans, and any applicable non-disparagement terms.

How To Evaluate A Severance Agreement

  • Read the entire document carefully. Look for release language, non-disparagement provisions, non-compete or non-solicit restrictions, and any references to retirement or health benefits.
  • Check the consideration period. Confirm whether you have at least 21 days to review, and whether a 7-day revocation period applies after signing.
  • Seek legal counsel. An experienced employment attorney can assess whether the waiver is valid, identify potential legal pitfalls, and negotiate better terms.
  • Assess monetary and non-monetary components. Consider severance pay, health benefits, continuation of health coverage (COBRA), stock vesting, outplacement services, and references.
  • Identify restrictive covenants. Evaluate non-compete, non-solicit, and non-disparagement terms and how they affect future employment.
  • Consider tax and retirement implications. Analyze how severance payments are taxed and how they interact with retirement benefits or pension plans.

  • Rushing to sign. Don’t sign before using the full consideration period or before consulting counsel, if possible.
  • Missing revocation rights. Failing to preserve the 7-day revocation window can jeopardize the waiver’s validity.
  • Overlooking benefits. Health coverage, COBRA options, and retirement benefits are often overlooked in the rush to accept.
  • Ambiguous language. Vague terms about non-competes or non-disparagement can create future disputes.

  1. Request a written copy of the severance agreement and all related disclosures.
  2. Mark the date you receive the agreement and calculate the 21-day review window.
  3. Consult an employment attorney familiar with OWBPA and ADEA requirements.
  4. Prepare questions about benefits, tax implications, and any restrictive covenants.
  5. Decide whether to accept as-is, negotiate terms, or decline the offer.

Reliable sources include the U.S. Department of Labor, state labor offices, and reputable employment law firms with experience in severance agreements and OWBPA compliance. If there is confusion about eligibility to sign or the validity of a waiver, legal counsel can provide tailored guidance and help negotiate more favorable terms.

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