Hey Handbook! How much time should we give employees to sign a severance agreement?

It depends.

If an employee signs a severance agreement, you want them to provide a general release in exchange for whatever consideration the company is providing. If the employee is at least 40 years old, the Age Discrimination in Employment Act requires that the employee receive at least 21 days to consider the offer.

If, however, the company is laying off at least two employees in a reduction in force (RIF) concurrently, anyone over 40 must get at least 45 days to consider the agreement.

But let’s say you want to terminate a Gen Z employee. How much time should they have to review the agreement?

Well, there is no hard and fast rule. But, a recent Second Circuit decision helps shed some light.

The case involves a user researcher who signed a separation agreement from her employer. After providing a general release in exchange for two months of severance, the employee had some misgivings and decided to sue the employer for FMLA violations. The company moved to dismiss the complaint based on the release provision in the separation agreement.

The lower court sided with the employer and dismissed the complaint. On appeal, the Second Circuit affirmed. In support of its decision, the Second Circuit provided four reasons:

First, the court noted the plaintiff’s work as a user researcher who alleged that she received high praise from coworkers and supervisors. The Second Circuit reasonably assumed she had the education and savvy to understand the release.

Second, the employer provided the employee with fourteen days to consider the agreement and seven additional days to revoke her signature. She signed it after eleven days and did not revoke her signature. Plus, even though the employee did not have an attorney, she agreed to the agreement’s statement that she had “consulted counsel or had the opportunity to consult counsel about this . . . agreement.” The Second Circuit reasoned that the employee had enough time to sign it

Third, the release itself covered “any and all claims . . . including, without limitation, those arising out of or in any way connected with [her] employment or . . . termination” and further specifically released claims under the FMLA.

Fourth, the company paid her two months’ salary in exchange for executing the separation agreement, a benefit exceeding what she was entitled to by law or contract.

Based on these four factors, the Second Circuit agreed with the trial court that the employee’s execution of the separation agreement was knowing and voluntary. Therefore, the release was enforceable, precluding her claims.

So, is 14 days the magic number of days to allow an employee under 40 to consider and sign a separation agreement?

Probably not. It’s a totality of the circumstances test. So, fewer may suffice, especially if the company clarifies to the employee that it is willing to provide additional time upon request.

(I think that, unless applicable law requires otherwise, the extra seven days is overkill for anyone under 40 and creates potential issues if the employee revokes their signature on an otherwise valid release.)

The best non-legal advice I can give you is to have an employment lawyer — not one from the Law Offices of Google and Bing — prepare the separation agreement. And because you’ve paid the employment lawyer for their word, resist any temptation to screw up edit the document before providing it to the employee.