Navigating Timeframes in Severance Agreements: Understanding Consideration Periods
Severance Agreement Consideration Periods
When you are considering a severance agreement, the significant exchange of money for a comprehensive release of legal claims against an employer demands thoughtful consideration. Common questions revolve around the timing of severance agreement consideration—specifically, how much time employers are required to provide and the consequences if the stipulated deadline is missed without reaching a decision.
How Much Time Should You Have to Consider a Severance Agreement?
Timeframes for contemplating and accepting severance agreements vary. In some cases, specific regulations apply, for example for those aged 40 and above under the Age Discrimination in Employment Act (ADEA). The ADEA mandates a 21-day consideration period, with an additional seven days post-signing to revoke acceptance. Beyond ADEA-related claims, employers' requirements differ, ranging from a common minimum of one week to extended periods of up to 45 days.
Beyond specific statutory requirements like the ADEA, the general rule is that the time for consideration must be "reasonable." Rushed decision-making may render the release involuntary or made under duress, potentially allowing employees to bring back released legal claims.
How Firm is the Severance Acceptance Deadline?
Importantly, the deadline's rigidity is a misconception; it merely reflects the period during which the employer commits to keeping the offer open. Employers can retract or extend the deadline, especially if negotiations or legal advice discussions are ongoing.
Understanding that response deadlines are not absolute opens the door to negotiation and legal consultation. Seeking legal advice to enhance the terms or negotiate a different severance amount can prompt deadline extensions, fostering a more informed and comprehensive discussion.
What Happens if You Miss the Severance Acceptance Deadline?
This happens, usually because it can take a little time to find the right attorney to advise you on this situation, and they in turn may need some time to thoroughly review and give you their best advice.
As noted above, the best practice in that case is to have your attorney ask for an extension, or ask for one yourself. If the date has already passed, what that means is you have given up the guaranteed right to the offered severance, but you retain all of the rights you had to bring legal claims against your employer.
This is important to remember when the severance amount is small. Often people feel pressured by the deadline, when the truth is they had no intention of accepting the offer. In that case, you have as much time as afforded by the applicable statutes of limitations (300 days for discrimination, 2-3 years for almost everything else) to articulate a legal claim to your employer and seek to negotiate a settlement.
Finally, if you are over 40 and the severance contains a release of claims under the ADEA, it should also contain a seven day revocation period, which can be used to negotiate if you end up signing by the deadline but have doubts.
Navigating the timeframes in severance agreements requires a nuanced understanding of legal requirements, especially concerning ADEA-related releases. Whether the consideration period is a standard week or an extended 45 days, recognizing the flexibility in response deadlines empowers employees to engage in meaningful negotiations and make well-informed decisions about their severance packages.
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