How to Write a Severance Agreement That Complies with ADEA and OWBPA (2026)

A severance agreement that releases Age Discrimination in Employment Act (ADEA) claims must meet the Older Workers Benefit Protection Act (OWBPA) standards or the waiver is void as a matter of law. For any employee aged 40 or older, the agreement needs a 21-day consideration period, a 7-day revocation window after signing, and a specific list of statutory disclosures — none of which can be waived by the employee, regardless of what the contract says.

What ADEA and OWBPA actually require

The ADEA, 29 U.S.C. § 621 et seq., prohibits age-based employment discrimination against workers 40 and older. The OWBPA, enacted in 1990 and codified at 29 U.S.C. § 626(f), added the rule that any waiver of ADEA claims must be "knowing and voluntary." The EEOC has consistently interpreted this to mean a waiver that falls short of § 626(f) is unenforceable on the ADEA claims — even if the employee received and kept the severance pay.

The statute sets out seven conditions. The agreement must: (1) be written in plain language understandable to the employee; (2) specifically refer to ADEA rights or claims; (3) not waive claims arising after the date of signing; (4) provide consideration beyond what the employee would otherwise receive; (5) advise the employee in writing to consult an attorney; (6) give at least 21 days to consider the agreement; and (7) allow 7 days to revoke after signing.

The 21-day consideration window

The 21-day clock runs from when the employee receives the final version of the agreement — not from when HR first mentions severance. If the employer makes any material changes to the document after delivering it, the 21-day period restarts from the date of the change. Non-material changes, such as correcting a typo in an address, do not restart the clock under EEOC guidance.

Employees can sign before the 21 days expire. OWBPA permits this as long as the employer has not pressured the employee to sign early. Document any early execution with a brief acknowledgment that the employee reviewed and signed voluntarily before the period elapsed.

The 7-day revocation right

After the employee signs, they have 7 calendar days to revoke. The agreement does not become effective until this window closes. Employers who release final pay or transfer severance funds before the 8th day are taking a risk — EEOC positions and most district courts hold that accepting revocation during this period requires unwinding the payment, not just invalidating the release.

Put the revocation mechanics in the agreement itself. Specify the address (or email address) where revocation must be sent, and state whether delivery by the end of day 7 suffices or whether actual receipt by the employer is required. Ambiguity here tends to cut against the drafter.

Group terminations: the 45-day rule and decisional unit disclosure

Individual separations use the 21-day period. Exit programs, group layoffs, or any reduction in force where two or more employees in the same decisional unit are offered severance in exchange for a release trigger a different rule: the consideration period extends to 45 days under § 626(f)(1)(F)(ii).

Beyond the extended window, a group exit requires the employer to provide a written disclosure of: (1) the job titles and ages of all employees eligible for the program and those not selected, in the same organizational unit; and (2) the time limits applicable to the program. This decisional unit disclosure is not optional. Courts have voided waivers in group RIFs where employers omitted it or provided a list covering the wrong population. The Supreme Court's ruling in Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998), confirmed that accepting severance money does not ratify a defective ADEA waiver — the employee could keep the payment and still sue.

What "consideration beyond what you would otherwise receive" means

The additional consideration requirement is frequently misunderstood. It does not mean the severance must be generous; it means the employee must receive something they are not already legally entitled to. An offer of accrued but unpaid vacation pay, which many states require to be paid out regardless of any release, cannot be the sole consideration for the ADEA waiver. Common valid consideration includes: lump-sum severance beyond any contractual obligation, extended health benefits, outplacement services, or accelerated equity vesting.

When the base employment contract already guarantees a certain severance amount, some courts have found that paying only that amount fails the additional-consideration test. Add something — even a modest extension of COBRA subsidy — to put this beyond dispute.

Language the agreement must include

Every OWBPA-compliant severance agreement should contain at minimum:

Reference to the ADEA. A general release of "all claims" is not enough. The agreement must say, or clearly incorporate, that ADEA claims are covered. Standard practice names the ADEA and the OWBPA by title in the release clause.

Advice to consult counsel. The statute requires the employer to "advise the individual in writing to consult with an attorney prior to executing the agreement." A general statement that "you may wish to seek legal advice" has been found sufficient, but a signed acknowledgment from the employee that they received this advice is better practice.

Non-waiver of post-execution claims. Language releasing "any and all claims, known or unknown, from the beginning of time through the date of this agreement" is the standard formulation. Avoid any phrasing that could be read as releasing future claims — courts have held such language void on its face for ADEA purposes.

Broader release provisions: state law matters too

Most severance agreements bundle the ADEA waiver with a release of state discrimination claims, contract claims, and anything else the employer can think of. A few states impose additional conditions. California employees must receive an express Civil Code § 1542 waiver to release unknown claims. Illinois courts have interpreted the Workplace Transparency Act to restrict confidentiality clauses in harassment settlements. New York's Human Rights Law requires specific language and certain waiting periods for sexual harassment releases.

None of these state requirements override OWBPA — they layer on top of it. Draft the release with the most restrictive state requirements as the baseline, then confirm OWBPA compliance independently.

Common drafting failures

Rushing the signature. HR departments under pressure to wrap up a RIF often push employees to sign before the consideration period ends. Even if the employee agrees, an employer-induced early execution can later be characterized as coercion. If an employee wants to sign on day 3, have them initial an acknowledgment that they understood the full 21 days were available.

Omitting the revocation address. Courts in the Sixth and Ninth Circuits have scrutinized severance agreements that describe the revocation right in abstract terms without telling the employee where to send the revocation. Include name, address, and whether electronic delivery is accepted.

Using the same template for individual and group terminations. The decisional unit disclosure requirement only applies to group programs, but employers who run multiple layoffs with the same 21-day template across the board risk voiding every release whenever two people exit under the same program.

Tying effective date to revocation period ambiguously. Write: "This agreement becomes effective on the eighth calendar day after the Employee signs, provided no revocation notice has been received." A clause that says "effective immediately upon execution" contradicts the statutory revocation right.

How to structure the document

A workable structure for an OWBPA-compliant agreement covers these sections in order: recitals (employment dates, termination date, reason); severance consideration (exact amount, schedule, and what it is over-and-above any existing obligation); general release of claims, naming ADEA and OWBPA specifically; covenant not to sue; confidentiality and non-disparagement if applicable; cooperation clause; OWBPA statutory disclosures (consideration period, revocation right, attorney advice); effective date; and signature block with date.

For most single-employee separations, a free US severance agreement template provides the statutory framework. For group RIFs, supplement the template with the decisional unit chart required by § 626(f)(1)(H) before distributing to employees.

After the revocation period closes

Once 7 days pass without revocation, the agreement becomes effective. Keep a dated copy showing the execution date and the date the revocation window closed. ADEA claims have a 300-day administrative filing deadline in deferral states and 180 days in non-deferral states. The signed agreement is your evidence that the employee waived those claims knowingly and voluntarily. Store it with the personnel file.

The EEOC audits ADEA waivers during larger RIF reviews. Companies that used defective templates or lost decisional unit disclosures have faced reinstatement orders and back-pay liability years after the original separation. Getting the agreement right the first time costs nothing beyond a careful read of § 626(f).