
Older Workers Benefit Protection Act: What It Is and Why It Matters
August 08, 2025 Written by Rafael Spuldar
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With more Americans working well into their 60s and beyond, protecting the rights of older employees goes beyond ethics: it’s a legal requirement. The Older Workers Benefit Protection Act (OWBPA) plays a central role in ensuring that employees over 40 are treated fairly, particularly during layoffs, retirements, or voluntary separation agreements.
Understanding how the OWBPA works, as an amendment to the ADEA (Age Discrimination in Employment Act), is critical for HR professionals and business leaders. If you don’t comply, you risk legal challenges and reputational damage. This guide walks you through everything you need to know, from legal requirements to practical steps for compliance.
What Is the Older Workers Benefit Protection Act?
The Older Workers Benefit Protection Act (OWBPA) was enacted in 1990 to enhance protections for employees over 40, especially during career transitions. As an amendment to the ADEA, the OWBPA prevents older workers from being coerced into giving up their rights or accepting reduced benefits because of their age.
At its core, the OWBPA ensures:
- Equal access to benefits for older and younger workers.
- Clear and informed consent when waiving age discrimination claims.
- Additional time and legal resources for older workers during layoffs or early retirement.
The OWBPA also outlines specific requirements for how employers handle severance offers and waivers for older employees, helping protect against age discrimination in individual and group employment decisions.
What Are the Rules for Laying Off Employees Over 40?
When downsizing or restructuring, employers must take extra care when terminating workers aged 40 or older. The OWBPA sets legal safeguards to prevent discrimination, whether the termination is voluntary or involuntary.
Here’s what employers must not do:
- Use age as a deciding factor in termination.
- Target older workers disproportionately in reduction-in-force (RIF) plans.
- Pressure or mislead employees into signing waivers of age discrimination claims.
- Provide insufficient or misleading information in severance offers.
The Older Workers Benefit Protection Act also applies to:
- Early retirement plans
- Exit incentive programs
- Voluntary resignations connected to severance packages
To remain compliant, employers must offer something of value—often called “consideration”—in exchange for a signed release of claims. Importantly, this must go above and beyond what the employee is already legally entitled to, such as unused paid vacation time or final paycheck.
Typical forms of “consideration” include:
- Severance pay
- Health benefits extension
- Outplacement services
- Bonus or incentive payouts
- Relocation assistance
EXPERT TIP:
Final pay, unused paid time off, or other legally required benefits don’t qualify as valid consideration. To comply with the OWBPA, employers must offer additional value, like extended health coverage (e.g., COBRA), bonuses, or outplacement services.
If you need help addressing layoffs with your employees, click below to download our free Careerminds layoff script. It will guide you through the five steps to navigate this challenging process with empathy and professionalism.
How to Draft a Valid OWBPA Release of Claims
A release of claims under the Older Workers Benefit Protection Act must meet very specific criteria. If even one element is missing, the waiver could be deemed invalid.
To comply, your OWBPA waiver must:
- Be in writing: The waiver must be formally documented in print or digital form to create a clear and enforceable agreement.
- Use plain, clear language: Avoid legal jargon. The language should be easy to understand for the average employee without legal training.
- Cite the ADEA Act: The waiver must clearly reference the ADEA, indicating that age discrimination rights are being knowingly and voluntarily waived.
- Be voluntary: The employee must sign without pressure, threats, or misleading information; any coercion could invalidate the entire agreement.
- Encourage legal review: Employers must advise the individual, in writing, to consult with an attorney before signing the waiver to ensure full understanding.
- Provide adequate time: For individual terminations, you must give employees a minimum of 21 days to consider the offer. After signing, they should be given 7 days to revoke. In group terminations, the consideration period extends to 45 days.
OWBPA Compliance in Group Terminations
When terminating two or more employees over 40, additional rules apply. These group exits fall under stricter OWBPA protections and require expanded disclosures to ensure transparency and fairness.
In this case, you must provide the following details to each affected employee:
- The job titles and ages of all employees affected by the layoff
- The ages of employees not selected for termination
- Any criteria used to determine who was selected for layoff
- Any applicable timeframes or deadlines
This information must be presented clearly in writing and shared at the same time as the waiver of claims.
The extra disclosure empowers employees to make better-informed decisions when deciding whether to waive their rights under the ADEA. This additional layer of transparency also acts as a stronger safeguard against systemic age discrimination.
The Cost of OWBPA Noncompliance
Ignoring the Older Workers Benefit Protection Act will expose your organization to legal risks. If an employee successfully argues that they were misled, rushed, or not given the proper information, courts may invalidate the waiver and age discrimination lawsuits could follow.
EXPERT TIP:
Each waiver should be reviewed by legal counsel and customized to reflect the employee’s unique role, compensation, and separation terms. One-size-fits-all templates won’t cut it under the OWBPA.
Older Workers Benefit Protection Act: FAQs
The OWBPA and ADEA often raise important questions for employers, especially when handling layoffs or severance. Below are some of the most common frequently asked questions about these laws.
What Does the Older Workers Benefit Protection Act Do?
The OWBPA is a federal law designed to protect workers aged 40 and above from age-based discrimination during job transitions, including layoffs, retirements, and severance negotiations. It ensures fair treatment in layoffs, early retirement offers, and severance agreements, and sets strict rules for waiving age discrimination claims under the ADEA.
What Triggers the OWBPA Notice?
Any time an employer offers a waiver of age discrimination rights in connection with a layoff, retirement, or severance agreement involving an employee over 40, the OWBPA rules are triggered. For group terminations, the law requires detailed disclosure of selection criteria and workforce demographics.
What Is the 21-Day Requirement for OWBPA?
In individual terminations, the OWBPA mandates that employees must be given at least 21 days to consider a severance offer that includes a waiver of rights under the ADEA. After signing, they have an additional 7 days to revoke their agreement.
Can Employers Restrict Job Postings to Younger Candidates?
No. Limiting hiring based on age violates both the ADEA and OWBPA. Employers should ensure that job descriptions are non-age-biased and focused on qualifications only.
Is It Legal to Ask an Applicant’s Age?
While not strictly illegal, it’s highly discouraged. Asking for age during the application or interview process could raise red flags and lead to age bias claims.
What Makes a Waiver of Age Discrimination Invalid?
Waivers are unenforceable if employees are misinformed, coerced, or denied proper consideration and time to decide. Missing OWBPA elements—like the 21-day review window or the written recommendation to consult a lawyer—can invalidate the entire release.
Do Older Employees Get Bigger Severance Packages?
Not automatically. Severance amounts are typically based on role, tenure, and negotiated terms, not age. However, older employees may be offered additional benefits as consideration under the OWBPA.
Older Workers Benefit Protection Act: Final Thoughts
HR and business leaders must regard the Older Workers Benefit Protection Act as a matter of ethical and inclusive HR practice instead of another legal checkbox. With the aging US workforce and increasing risk of age discrimination lawsuits, understanding the ins and outs of the OWBPA, ADEA, and related laws like the USC Average Act is more important than ever.
For HR leaders and managers, the best path forward is to:
- Build age-inclusive termination policies.
- Train teams on OWBPA compliance.
- Partner with legal counsel on severance documentation.
Doing so ensures that employees of all ages will have a fair, respectful exit process.
If you need help navigating termination policies, handling reductions in force, or supporting staff of all ages and levels of experience, reach out to Careerminds. With our resources, templates, guides, and industry-leading outplacement services, you’ll be set to tackle those challenges efficiently. Click below to reach out to our experts and learn more about our modern approach to outplacement.
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