Severance Agreements in Massachusetts: Top Ten Tips for Older Workers

Attend any event for employees in transition in Massachusetts and you will find a great number of older workers.  According to a recent article in the New York Times entitled: “Older Workers Without Jobs Face Longest Time Out of Work,” the typical length of time out of work for a worker between the ages of 55 and 64 is 44.6 weeks, which is just a few week short of a year.  Given the anticipated time out of work, older workers who are laid off or fired from their jobs in Massachusetts should take the time to understand any severance agreement presented to them.  Severance agreements can affect such employee rights as the continuation of health insurance, whether or not the employer will contest unemployment benefits and the vesting of certain stock and pension benefits. Given the importance of severance agreements for older workers in the current state of the economy, the following are the top ten tips for older workers in understanding severance agreements in Massachusetts: 

  1. Employees who are forty years of age or older are in an age protected category.  This means that an employer may not take an adverse employment action against a worker because of his or her age, including terminating, discharging or laying an employee off.
  2. If an employee is terminated from his or her job and replaced with an employee who is younger by at least five years, or if the employee is part of a lay-off of older workers, the worker should consider whether he or she has a claim for age discrimination.
  3. Often severance agreements in Massachusetts contain waivers of rights, including releasing employers from any liability for age discrimination.  In order to waive these rights, the severance agreement must be clear and understandable.
  4. In order to waive a claim for age discrimination, a severance agreement must offer the employee something in return, such as severance pay.
  5. If only one employee being laid off or terminated, the severance agreement must give the employee at least 21 days to consider it, and 7 days to revoke the agreement after signing in order to be an effective waiver of a right to bring an age discrimination claim.
  6. For employees who are being laid off as part of a group, the employer may have to give 45 days to consider signing the severance agreement as well as a list of the ages of the employees being laid off and the ages of the employees the company is keeping.
  7.  As a practical matter, because the employee can revoke the agreement up to 7 days after signing it, the employer will hold onto any severance pay until that time has expired.
  8. Typically severance pay in Massachusetts is subject to the usual withholdings, similar to an employee’s paycheck.  Accordingly, an employee who has received $5,000 in severance pay will not typically receive a check for $5,000, but will receive a lesser amount that reflects the withholdings and deductions.  Severance pay is often negotiable.
  9. Given the difficult job market, older workers should consider negotiating a reference.  Even in a situation where the employer is claiming performance issues, a worker may be able to negotiate a neutral reference.
  10. Severance agreements are complex legal documents that can have long-lasting implications for an employee.   Often the documents presented to employees are one-sided and drafted for the benefit of the company.  It is wise to seek advice of an attorney before signing a severance agreement.

While we can’t answer questions about specific employee situations through this blog and this is a general overview and not legal advice, please call Attorney Maura Greene, Law Office of Maura Greene, LLC, Six Beacon St., Suite 205, Boston, MA 02108, at 617-936-1580 if you have specific questions about the law concerning severance agreements in Massachusetts.  Call us, we’re friendly!