Call "US" on the carpet
Haines on Carpet Cleaning

Serving Red Wing, Hager City, Lake City, Ellsworth and Hastings

Severance Agreement Older Workers

Severance Agreement for Older Workers: What You Need to Know

As companies are restructuring and adapting to changing business environments, they often offer severance packages to employees. For older workers, these packages may include special provisions that protect their rights and financial stability. Understanding the basics of severance agreements for older workers is essential for anyone in this position.

Age Discrimination and the Law

The Age Discrimination in Employment Act (ADEA) protects workers who are 40 and older from discrimination in the workplace. This law applies to companies with more than 20 employees and covers all aspects of employment, including hiring, promotions, and layoffs. Severance agreements are also subject to the ADEA, which means that employers cannot use age as a factor in determining who is offered a severance package.

Severance Package Elements

A severance package typically includes a lump sum payment, continuation of health benefits, and potential unemployment benefits. For older workers, there may be additional provisions that are specific to their needs. For instance, an employer may agree to extend health insurance coverage for a longer period than for younger employees. Employers may also offer job search assistance to older workers who have a harder time finding new employment.

Release of Claims

One significant aspect of a severance agreement is the release of claims. This clause essentially waives any rights the employee has to make a legal claim against the employer after the agreement is signed. For older workers, this can be a delicate issue as they may have a higher risk of age discrimination in the workplace. It is crucial to seek legal advice before signing a severance agreement to ensure that you are not waiving your rights to seek legal recourse if necessary.

Tax Implications

Severance packages are generally taxable income, meaning that the recipient must pay federal and state income tax on the money received. This is true for older workers as well. Depending on the amount of the severance payment, it may be beneficial to spread the income over several years to minimize the tax impact.


If you are an older worker who has been offered a severance package, it is essential to carefully evaluate the terms of the agreement and seek legal advice before signing. Understanding your rights under the ADEA, the elements of a typical severance package, release of claims, and the tax implications will help you make informed decisions that protect your financial interests and legal rights.