If I want to sue after signing a release, do I have to give back my severance?

Question: I was laid off about six months ago, along with about two dozen of my coworkers. I received a severance package, for which I signed a contract called a "Release and Waiver of Claims." I was presented with the contract on my last day of work and told that I had to sign it that day or give up the severance. The contract included a bunch of confusing legal words, but it did clearly say that I was agreeing to give up the right to sue the company for anything arising out of my employment. One of my coworkers wants to sue for age discrimination: Every person who was laid off is over the age of 60, and most of us were replaced by much younger new hires, even though our employer told us our jobs were being eliminated. Can I sue even though I signed the release? Do I have to give my severance money back?

Answer: If you want to file a lawsuit after signing a release, you will have two hurdles to jump. To win an age discrimination lawsuit, you will ultimately have to prove that your employer used age as a basis for its layoff decisions. Before you get there, though, you'll have to prove that the release you signed is not valid, and therefore should not prevent you from filing your lawsuit in the first place.

It sounds like you've got a pretty good argument that the release you signed is not valid under the Age Discrimination in Employment Act (ADEA). The ADEA requires a waiver and release to meet several requirements. Among other things, the waiver must specifically refer to your rights under the ADEA and must be written in language you can understand. Employers must also give employees at least 21 days to consider the agreement. In your case, however, this time period is extended to 45 days because the release was presented to you as part of a group layoff, where multiple employees were to lose their jobs. Also, once you sign, you must be given at least seven days to revoke the agreement. And, you must receive certain information about the job action, including the job titles and ages of the employees who are losing their jobs and the ages of everyone in the same job classification or organization unit who were not selected for layoff.

It doesn't sound like your employer even came close to legal compliance. Presenting an employee with a "take it or leave it, now!" waiver is a far cry from the weeks of deliberation contemplated by the ADEA.

If you decide to join your coworker in challenging the layoff, you'll be pleased to learn that you don't have to give your severance money back. Traditional contract law requires someone who wants to invalidate a contract to first give back what he or she received under the contract. However, this principle (called the "tender-back" rule) doesn't apply in age discrimination cases. So, you can keep your severance even though you are claiming that the severance agreement is not valid.

Keep in mind that, before filing or joining a lawsuit for age discrimination, you must file a charge of discrimination with the Equal Employment Opportunity Commission or your state's fair employment practices agency.

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