What a Severance Release Can and Cannot Buy in Minnesota

A severance agreement isn’t a gift. It’s a purchase. The employer is buying your legal claims, and the severance check is the price. Look at it that way and the two questions that matter jump out: what’s actually being sold, and what isn’t for sale at any price?

Minnesota law answers both with unusual precision, and it builds return windows right into the deal. A release of Minnesota Human Rights Act claims can be rescinded for 15 calendar days after signing. A release of federal age-discrimination claims by a worker 40 or older requires a 21-day consideration period — 45 days in a group layoff — plus a 7-day revocation right. And a short list of claims can’t be waived in a private severance agreement no matter what the document says: unemployment benefits, workers’ compensation (without agency involvement), and federal minimum-wage and overtime rights. I have reviewed severance agreements that got every one of these wrong. Here’s how to get them right, from either side of the table.

What is the employer actually buying?

Claims that already exist. That’s it.

Under Minn. Stat. § 363A.31, subd. 1, a release of Minnesota Human Rights Act rights is

contrary to public policy and void if the waiver or release purports to waive claims arising out of acts or practices which occur after the execution of the waiver or release.

Federal age-discrimination law says the same thing about ADEA claims: a waiver isn’t “knowing and voluntary” unless, among other requirements, “the individual does not waive rights or claims that may arise after the date the waiver is executed.” 29 U.S.C. § 626(f)(1)(C). So a severance release buys the past — the termination itself, the events leading up to it, anything that’s already happened. It can’t buy the future. A release you sign on Monday doesn’t cover discrimination that happens on Tuesday.

The federal statute adds a pricing rule worth quoting, because it’s the one employers trip over most in installment deals: the employee must waive claims “only in exchange for consideration in addition to anything of value to which the individual already is entitled.” 29 U.S.C. § 626(f)(1)(D). Paying an employee her final wages, her accrued paid time off, or anything else the law or her contract already requires isn’t consideration for a release. Minnesota law independently requires the final paycheck and, for most employees, accrued PTO under the policies I covered in the final-paycheck article and the PTO-payout article. So those sums can’t double as the price of the release. The severance has to be new money.

The 15-day Minnesota rescission right

Any release that covers Minnesota Human Rights Act claims — and every competently drafted general release does — comes with a return window written into the statute. Section 363A.31, subd. 2:

A waiver or release of rights or remedies secured by this chapter which purports to apply to claims arising out of acts or practices prior to, or concurrent with, the execution of the waiver or release may be rescinded within 15 calendar days of its execution …

Then the statute puts a disclosure duty on the drafter: “A waiving or releasing party shall be informed in writing of the right to rescind the waiver or release.” An agreement that says nothing about the 15-day right has a drafting defect at its core, and that defect is the employer’s problem, not the employee’s.

The rescission mechanics are exact, and they’re where employees who change their minds lose. To count, the rescission has to be in writing and delivered within the 15-day period by hand, electronically with the receiving party’s consent, or by mail. If you mail it, it must be postmarked within the 15 days, properly addressed, and — the one everyone forgets — “sent by certified mail return receipt requested.” First-class mail doesn’t satisfy the statute. Neither does an email the employer never agreed to receive. I count three separate ways to blow an otherwise timely rescission, and the statute forgives none of them.

That has two practical consequences. No competent employer pays severance before day 16. If the money moves on day 3 and the employee rescinds on day 12, the employer has paid for a release it no longer owns. And the statute has a drafting lever most people miss: a release “given in settlement of a claim filed with the department or with another administrative agency or judicial body is valid and final upon execution.” Settle after a charge is filed with the Minnesota Department of Human Rights — a process I walked through in the MHRA deadlines article — and there’s no rescission window at all. For an employer that needs finality on signature day, that exception is sometimes worth the charge.

The federal overlay for workers 40 and older

If the departing employee is 40 or older, the Older Workers Benefit Protection Act governs any release of federal age-discrimination claims, and it’s a checklist statute. Under 29 U.S.C. § 626(f)(1), a waiver of ADEA claims is not “knowing and voluntary” unless, at a minimum:

1. the agreement is written in a manner calculated to be understood by the individual, or by the average individual eligible to participate;
2. it specifically refers to rights or claims arising under the ADEA — a release that never says “Age Discrimination in Employment Act” does not release ADEA claims;
3. it does not waive claims arising after execution;
4. the consideration is in addition to anything the employee is already entitled to;
5. the employee is advised in writing to consult an attorney before signing;
6. the employee gets at least 21 days to consider the agreement — or at least 45 days when the waiver is requested in connection with an exit incentive or other termination program offered to a group or class of employees;
7. the agreement provides that “for a period of at least 7 days following the execution of such agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired”; and
8. in a group program, the employer discloses in writing the covered class, eligibility factors, time limits, and “the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program.”

One carve-out mirrors Minnesota’s settlement exception. A waiver given in settlement of a charge already filed with the EEOC, or of an age-discrimination lawsuit, needs only the first five items plus “a reasonable period of time within which to consider the settlement agreement” — the 21-, 45-, and 7-day clocks drop out. 29 U.S.C. § 626(f)(2).

A few things on that list matter more than the rest. The 7-day revocation right, unlike Minnesota’s 15-day rescission right, can’t be waived by signing early. The agreement just isn’t effective until the window closes. The burden of proving a waiver was knowing and voluntary sits on “the party asserting the validity of a waiver,” § 626(f)(3), which in practice means the employer. And no waiver, however well drafted, can stop the employee from filing a charge with the EEOC or taking part in its investigation — § 626(f)(4): “No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the Commission.” The release buys the employee’s monetary claims. It doesn’t buy the government’s interest in the case.

Run the clocks together and a Minnesota employee aged 40 or older in a group layoff holds a 45-day consideration period, a 7-day federal revocation right, and a 15-day state rescission right, the last two running at the same time from signature. The agreement isn’t safely final until the longest window closes.

What no release can buy

Some claims are off the market entirely. An agreement that tries to buy them is void as to those claims. Not voidable. Void.

Unemployment benefits. Minn. Stat. § 268.192, subd. 1, couldn’t be plainer: “Any agreement by an individual to waive, release, or commute rights to unemployment benefits or any other rights under the Minnesota Unemployment Insurance Law is void.” The same subdivision makes it a misdemeanor for an employer to “require or accept any waiver of any right or in any manner obstruct or impede an application or continued request for unemployment benefits.” So the severance agreement can’t make the employee promise not to apply.

Subdivision 1a goes further, and it kills a deal term I still see proposed. An employer may not agree that, in exchange for the employer not contesting unemployment benefits, the employee will quit, take a leave, leave the employment temporarily or permanently, or “withdraw a grievance or appeal of a termination.” The classic handshake — “resign quietly, drop your grievance, and we won’t fight your unemployment” — is an agreement the statute says “has no effect under this chapter.” Whether a resignation set up this way qualifies for benefits at all is a separate fight under the quit-and-misconduct rules I covered in the unemployment article.

Workers’ compensation. A private severance agreement can’t quietly wipe out a work-injury claim. Workers’ compensation settlements have their own statute, Minn. Stat. § 176.521, which requires a written, signed stipulation and — whenever a party is unrepresented, or whenever the settlement closes out future medical or rehabilitation benefits — approval by the commissioner or a compensation judge. A general release signed in an HR conference room isn’t that.

Federal wage claims. Minimum-wage and overtime rights under the Fair Labor Standards Act generally can’t be released in a purely private deal. The settlement path Congress built runs through the Secretary of Labor: 29 U.S.C. § 216(c) authorizes the Secretary to supervise payment of unpaid wages, and it’s that supervised payment which “shall upon payment in full constitute a waiver” of the employee’s claims. Courts have stacked their own approval practice on top. The short version for both sides: treat unpaid-overtime exposure as something a severance release doesn’t reliably extinguish, and price the deal that way.

The gag clauses have their own statute now

What the release buys in silence has shrunk too. Minnesota now restricts what nondisclosure and nondisparagement terms can reach in employment agreements and settlements, and the state has separately made most new covenants not to compete “void and unenforceable” under Minn. Stat. § 181.988 — a subject I covered at length in the non-compete ban guide. The confidentiality limits deserve their own treatment and have one: the NDA-limits article walks through what a Minnesota employer can and can’t ask an employee to keep quiet. Here’s the point for now. A severance template last reviewed before 2023 almost certainly has at least one clause a Minnesota court won’t enforce.

The employer’s checklist

1. New consideration only. Severance money goes on top of final wages and accrued PTO, never in place of them.
2. State the 15-day MHRA rescission right in writing, with the delivery address for a rescission notice.
3. For any employee 40 or older, build in the full OWBPA package: ADEA named expressly, attorney-consultation advice in writing, 21 or 45 days to consider, 7-day revocation, and the group-disclosure exhibit in a program termination.
4. Pay nothing until every rescission and revocation window has closed.
5. Carve out what the law already carves out — unemployment, workers’ compensation, EEOC charge rights — so the agreement isn’t void in part on its face.
6. Check the confidentiality, nondisparagement, and non-compete boilerplate against the 2023-and-later statutes before you reuse it.

The employee’s checklist

1. Read the release as an inventory of what you’re selling. If you don’t know whether you have a discrimination, whistleblower, or wage claim, find out before the consideration period runs out. That’s what the 21 days are for.
2. Don’t let the deadline push you into signing on day 2. The offer’s expiration date has to make room for the statutory clocks. A “sign today or lose it” severance offer to a 50-year-old is itself evidence the employer skipped the OWBPA.
3. If you sign and regret it, move fast and follow the statute to the letter: written rescission, certified mail return receipt requested, postmarked within 15 calendar days.
4. Know what you keep no matter what you sign: unemployment benefits, the right to file an EEOC or MDHR charge, and workers’ compensation rights outside the approval process.
5. Count the money. Severance is taxable wages, and giving up a strong claim for six weeks of pay is a bad trade. The number is negotiable more often than employees think.

How Madgett Law approaches severance agreements

Madgett Law, LLC reviews and negotiates severance agreements for departing employees and drafts them for Minnesota employers. A review engagement is typically flat-fee and fits comfortably inside the 21-day consideration window. If someone just handed you a release — or you’re about to hand one to someone — call 612-470-6529 or send us a message before the clock runs out.

Sources: Minn. Stat. § 363A.31, subd. 1 (prospective waivers of MHRA rights void) and subd. 2 (15-calendar-day rescission right, written-notice duty, hand/electronic/certified-mail delivery mechanics, and the exception for releases given in settlement of a filed claim); 29 U.S.C. § 626(f)(1)(A)–(H) (OWBPA knowing-and-voluntary requirements, including the 21- and 45-day consideration periods and 7-day revocation), § 626(f)(2) (reduced requirements for waivers settling a filed EEOC charge or court action), § 626(f)(3) (burden of proof on the party asserting validity), § 626(f)(4) (EEOC charge-filing rights preserved) (uscode.house.gov); Minn. Stat. § 268.192, subd. 1 (waiver of unemployment-benefit rights void; misdemeanor) and subd. 1a (agreements trading non-contest of benefits for quitting or withdrawing a grievance have no effect); Minn. Stat. § 176.521, subds. 1–2 (workers’ compensation settlement writing and approval requirements); 29 U.S.C. § 216(c) (Secretary-supervised payment as FLSA waiver) (uscode.house.gov); Minn. Stat. § 181.988 (covenants not to compete void and unenforceable). This article is general legal information about Minnesota law, not legal advice; reading it creates no attorney–client relationship, and no outcome is promised or implied.