What Are the OWBPA Severance Agreement Requirements?

A severance agreement that asks a worker aged 40 or older to give up age discrimination claims is only enforceable if it meets seven OWBPA severance agreement requirements set out in the Older Workers Benefit Protection Act. Miss one, and the waiver of claims under the Age Discrimination in Employment Act falls apart, even if the rest of the agreement is well drafted. The rules live in 29 U.S.C. § 626(f)(1) and the EEOC’s implementing regulations, and courts apply them strictly.¹

The Seven Requirements

For a waiver of ADEA claims to be “knowing and voluntary,” the severance agreement must:

Be written in plain language the average eligible employee can understand. Dense legal jargon or tangled sentences can invalidate the waiver on their own.¹
Specifically refer to rights or claims under the Age Discrimination in Employment Act. A generic release covering “all claims” does not cover ADEA rights.¹
Cover only claims that already exist when you sign. You cannot waive claims for anything that hasn’t happened yet.¹
Provide new consideration. The employer must offer something beyond what you are already entitled to receive under a contract or existing company policy.¹
Advise you in writing to consult an attorney before signing.²
Give you at least 21 days to consider it (or 45 days in a group termination).
Give you at least 7 days after signing to revoke.

Two of these deserve a closer look, because the timing rules and the new-consideration rule are where employers most often slip.

The Consideration and Revocation Periods

21 Days for an Individual Termination

If you are being let go on your own, the employer must give you at least 21 days to review the agreement.³ You can sign earlier if you want to, but any pressure or coercion to do so invalidates the waiver.

If the employer changes the offer during those 21 days, the clock may restart. Under 29 C.F.R. § 1625.22, material changes reset the period; immaterial ones do not. The parties can agree that changes won’t reset the clock, but that agreement itself must be voluntary.⁴

45 Days for a Group Layoff

When two or more employees are part of the same exit incentive or termination program, the consideration period stretches to at least 45 days.¹ The 45-day clock starts when you receive the final offer along with the demographic data described below. The same material-change reset rule applies.⁴

Seven Days to Change Your Mind

After you sign, you get seven days to revoke the agreement for any reason. Neither side can waive, shorten, or negotiate away this right.¹ The agreement doesn’t become effective or enforceable until the seven days run out, which is why most employers hold severance payments until the eighth day.³ If you decide to revoke, follow the specific procedure the agreement spells out. Most require written notice to a designated person or address within the seven days.

Extra Disclosures in a Group Layoff

When a severance offer is part of a group program, the employer must hand over information that lets you check for patterns of age bias. The disclosures must be in writing, in language the average affected employee can understand, and they must cover:

The decisional unit — the department, facility, division, or other group the employer selected people from.
The eligibility factors the employer used to pick who was offered severance.
Any time limits that apply to the program.
The job titles and ages of every person in the decisional unit who was selected.
The ages of every person in the same job classification or organizational unit who was not selected.

That last piece — the age and job-title data — is the point of the whole disclosure.¹ It lets you compare who was cut against who was kept, broken down by age. If the numbers show a disproportionate hit to older workers, that’s evidence worth reviewing with a lawyer before you sign.

Courts hold employers to a strict standard here. If the data is missing, incomplete, or misleading, the waiver of age discrimination claims is generally invalid.³ Getting the decisional unit wrong can unravel every waiver in the group.

Rights the Agreement Cannot Take Away

Some rights survive even a fully compliant OWBPA waiver, and any clause that says otherwise is unenforceable.

You keep the right to file a charge of discrimination with the EEOC, testify in an investigation, or cooperate with an EEOC proceeding. No severance agreement can legally prohibit this, and the EEOC treats any such prohibition as a violation of federal anti-retaliation protections regardless of where the language sits in the document.⁵

The agreement also cannot penalize you for challenging the waiver itself. Clauses requiring you to repay severance before filing suit, or allowing the employer to recover attorney fees if you bring an ADEA claim, are prohibited.⁶ The employer cannot use the agreement to build financial barriers around the courthouse door.

You Don’t Have to Return the Money to Challenge a Bad Waiver

In Oubre v. Entergy Operations, Inc. (1998), the Supreme Court held that if a waiver fails to meet OWBPA requirements, the employee does not have to return the severance money before filing an age discrimination lawsuit.⁷ The reasoning was practical: most terminated employees spend severance on rent, health insurance, and daily bills. Requiring them to return it first would keep most people from ever challenging a defective waiver, and would encourage employers to cut corners on compliance.

If you successfully challenge a defective waiver and win your age discrimination case, the court has discretion to offset the severance you already received against any damages award. That reduction can never exceed either the amount you recover in the lawsuit or the severance you received, whichever is less.⁶

Employers also cannot retaliate by stopping severance payments if you challenge the waiver. EEOC regulations are clear that a company cannot cut off promised payments or withhold agreed benefits just because you have asked a court to evaluate the waiver’s validity.³

What Happens When an Employer Misses a Requirement

If a waiver fails to meet any of the seven OWBPA requirements, it is invalid and unenforceable as to your ADEA claims.³ There is no “substantial compliance” exception. A court will not overlook a missing element because the employer got most of it right.

For you, the practical result is that you keep the severance you have already received and you keep the right to file an age discrimination lawsuit. The employer ends up paying without the release it was buying.

The mistakes that most often invalidate waivers are familiar ones: failing to name the ADEA specifically, shortening the 21 or 45 days, leaving out the written advice to consult a lawyer, and in group layoffs, providing incomplete or inaccurate demographic data.

What to Check Before You Sign

Start with the consideration period. If you are 40 or older and you have been given fewer than 21 days on an individual termination (or fewer than 45 in a group layoff), say so to your employer in writing. A company that rushes you is either unfamiliar with the law or hoping you won’t push back.

Confirm the offer includes something beyond what you are already owed. If a standard company severance policy or your employment contract already guarantees a payout, the OWBPA waiver only works if the employer adds value on top of that baseline. This is where many agreements quietly fail the legal test.³

Read the release language. It has to mention the ADEA by name, cover only claims that already exist, and be written clearly enough for the average eligible employee to follow.

Watch for clauses that try to restrict your right to file EEOC charges or cooperate with government investigations. Those provisions are unenforceable, and their presence often signals broader compliance problems in the document.

If you are in a group layoff, study the age and job-title data. If the numbers skew heavily toward older workers, take that to a lawyer before signing. The OWBPA requires the employer to advise you in writing to consult one, and an experienced employment attorney can usually spot compliance issues in a single consultation.

1
Office of the Law Revision Counsel. 29 U.S. Code 626 – Recordkeeping, Investigation, and Enforcement
2
eCFR. 29 CFR 1625.22 – Waivers of Rights and Claims Under the ADEA
3
U.S. Equal Employment Opportunity Commission. Q&A – Understanding Waivers of Discrimination Claims in Employee Severance Agreements
4
U.S. Equal Employment Opportunity Commission. Waivers and Claims Under the ADEA 29 CFR 1625.22
5
U.S. Equal Employment Opportunity Commission. Enforcement Guidance on Non-Waivable Employee Rights Under EEOC Enforced Statutes
6
eCFR. 29 CFR 1625.23 – Waivers of Rights and Claims: Tender Back of Consideration
7
Legal Information Institute. Oubre v. Entergy Operations, Inc.