Separation agreements are typically used by employers in “one-off” terminations as well as large-scale restructurings. The purpose of such agreements is to provide employees with a cushion to aid in the transition from employment while providing employers with a guarantee that they will not face future litigation from the employee.

The critical component of such agreements is the release, under which employees waive their claims against the employer and, in return, receive payments and/or benefits to which they would not otherwise be entitled. For the release to be valid, the employee is afforded ample time to review the agreement and consult with an attorney before having to sign the separation agreement. Additional requirements must also be met to ensure a valid release of age discrimination claims pursuant to the Older Workers Benefit Protection Act. However, over the past several months, courts have issued decisions eroding the scope of releases. The law in this area is rapidly evolving.

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