A Minnesota severance agreement that survives challenge does two things at once. It satisfies federal Age Discrimination in Employment Act (“ADEA”) release rules under the Older Workers Benefit Protection Act (“OWBPA”), and it satisfies state-specific procedural rules in Minn. Stat. § 363A.31 that have no federal counterpart. Either gap can void the release. This article walks through the drafting rules a Minnesota employer needs in front of them before sending an offer: the OWBPA validity floor, the Minnesota Human Rights Act (“MHRA”) 15-day rescission rule, the consideration requirement, the final-pay statutes that interact with the severance payment timing, the post-2023 noncompete prohibition, and the scope of claims a release can validly reach. Hall PC drafts and reviews these agreements for Minnesota employers; the employment practice hub collects related material.
What does Minnesota law require to make a severance release enforceable?
A Minnesota severance release that touches discrimination claims must satisfy two parallel rules. Federal OWBPA at 29 U.S.C. § 626(f) governs ADEA waivers for employees age 40 and over: the waiver must be knowing and voluntary, written in plain language, supported by additional consideration, and accompanied by 21 days to consider and 7 days to revoke after signing. State law at Minn. Stat. § 363A.31 adds a separate 15-day rescission window for any release of MHRA claims and bars prospective waiver of MHRA rights entirely. Both rules apply at once when the released employee is 40 or over and the claims include MHRA-covered conduct, which is the typical case. Drafting to OWBPA alone (the most common error in template-pulled agreements) leaves the state release vulnerable to unilateral rescission for 15 days. See also What Makes a Severance Agreement Unenforceable and Waiver of Rights Under the Age Discrimination Laws.
How does the OWBPA validity test work for employees age 40 and over?
OWBPA at 29 U.S.C. § 626(f)(1) sets eight elements that any ADEA waiver must meet. The waiver must be knowing and voluntary; written so the employee or the average eligible employee can understand it; specifically reference rights or claims arising under the ADEA; not waive future-arising claims; provide consideration in addition to anything of value to which the individual already is entitled; advise the employee in writing to consult an attorney before signing; provide at least 21 days to consider (45 days for group exit-incentive programs); and provide at least 7 days to revoke after signing. EEOC guidance and 29 C.F.R. § 1625.22 treat the 7-day revocation as non-waivable by either party for any reason: an early signature does not collapse the revocation window, and severance paid before day 8 risks an unenforceable release. Material changes to the offer restart the 21-day consideration clock. In my practice, the recurring sticking point is the consideration element: severance offers that simply repackage accrued paid time off (“PTO”) or already-promised final wages fail the “in addition to anything of value” test and unwind on review.
How does the MHRA 15-day rescission rule layer on top of OWBPA?
Minn. Stat. § 363A.31, subdivision 2, gives an employee 15 calendar days from execution to rescind a release of MHRA claims. The rescission is the employee’s unilateral right; no breach by the employer is required. The agreement must inform the employee in writing of the right to rescind. Rescission must be written and delivered by hand, by electronic transmission with the recipient’s consent, or by certified mail return receipt requested postmarked within the 15-day window. Releases of claims already filed with the Minnesota Department of Human Rights or another administrative or judicial body become final on execution and cannot be rescinded under this subdivision (a useful carve-out when settling an active charge). The MHRA’s 15-day rescission runs independently of the OWBPA 7-day revocation: an MHRA-and-ADEA release has both clocks running, and the longer one (15 days) controls the practical date severance can be paid. Drafters who mirror only the federal 7-day revocation language create a release the employee can unwind for another eight days under state law.
What additional consideration does Minnesota require beyond what the employee is already owed?
Under § 626(f)(1)(D) and the parallel common-law contract rule, the consideration supporting the release must be “in addition to anything of value to which the individual already is entitled.” Earned wages due under Minn. Stat. § 181.13, accrued PTO that policy already vests, the final paycheck, vested equity, and any payment the employer was already contractually obligated to make are NOT consideration; they are owed regardless of whether the employee signs. Severance must be additional value: a lump sum or schedule of payments, extended benefits the employer was not obligated to extend, outplacement services, or some other thing of value. About half of the severance reviews I do for Minnesota employers find consideration-element soft spots, usually because a template treated PTO payout as part of the severance number. The fix is straightforward: identify what the employee is already owed under Minn. Stat. § 181.13, pay it on the statutory timeline, and structure severance as a separate, identifiable additional payment.
How do Minnesota’s final-pay rules interact with severance timing?
Final pay and severance are two different things on two different clocks. Minn. Stat. § 181.13 makes earned wages and commissions immediately due and payable upon written demand of a discharged employee. The statute requires the demand to be in writing (no specific dollar figure required), and if the employer does not pay within 24 hours after the written demand, the employer is in default and owes a penalty equal to the employee’s average daily earnings for each day in default, up to 15 days. For an employee who quits or resigns, Minn. Stat. § 181.14, subdivision 1, requires payment in full no later than the first regularly scheduled payday after the final day of employment, with limited extensions. Deductions from the final paycheck are prohibited under Minn. Stat. § 181.14, subdivision 4, except as authorized by § 181.79. Earned wages cannot be conditioned on signing the release. Severance pay, by contrast, is governed by the contract and is properly held until after the 7-day OWBPA revocation period and the 15-day MHRA rescission period have run. The cleanest sequence: pay earned wages immediately on the statutory clock; deliver the unsigned severance offer; advise the employee in writing of the right to consult counsel and to rescind; pay severance after the longer of the two windows closes. See MN Statutes on Final Pay & PTO Payout Obligations for the underlying rules.
What claims can a Minnesota severance release validly cover?
A Minnesota release can validly cover past, accrued claims under most federal and state employment statutes: ADEA, Title VII, the Americans with Disabilities Act (“ADA”), the Family and Medical Leave Act (“FMLA”) on past leave use, the MHRA, the Minnesota Whistleblower Act (“MWA”) at Minn. Stat. § 181.932, and common-law tort and contract claims arising from the employment relationship. A release CANNOT cover: future-arising claims (barred by Minn. Stat. § 363A.31, subdivision 1, which voids any agreement that “purports to waive claims arising out of acts or practices which occur after the execution of the waiver or release”); workers’ compensation claims; unemployment insurance rights; vested benefits under the Employee Retirement Income Security Act (“ERISA”); the right to file an EEOC or Minnesota Department of Human Rights charge or to cooperate with an agency investigation; rights to engage in concerted activity protected by Section 7 of the National Labor Relations Act (29 U.S.C. § 157), including the right to file unfair labor practice charges with or cooperate with investigations by the National Labor Relations Board; and the right to whistleblower bounty awards under federal statutes that bar prospective waiver. Wage-and-hour claims under the Fair Labor Standards Act (“FLSA”) generally require court or Department of Labor approval to release, regardless of state law. Draft the release narrowly to past, accrued claims; carve out the categories above by name; and avoid catch-all language that overreaches into prospectively-waived rights. See Minnesota Whistleblower Law for the underlying claim structure.
How should a Minnesota severance agreement handle a pre-2023 noncompete or a new restrictive covenant?
Minn. Stat. § 181.988, subdivision 2(a), provides that “Any covenant not to compete contained in a contract or agreement is void and unenforceable” except in the narrow sale-of-business and dissolution carve-outs in subdivision 2(b). The statute applies to covenants entered into on or after July 1, 2023. A severance agreement signed today cannot create a new noncompete; the restriction is void on its face regardless of the consideration offered. A noncompete in the original employment agreement signed before July 1, 2023, is generally not reached by the statute’s prospective text, but a NEW restraint signed at separation, even one that “extends” or “restates” a prior noncompete, is itself a new agreement and falls within the ban. Confidentiality, nondisclosure, and non-solicitation clauses are not covered by the statute and remain enforceable when narrowly drafted. The drafting move at separation is to (i) leave the pre-2023 noncompete alone (do not restate it), (ii) draft any new restraints as NDAs, trade-secret protections, or customer non-solicits, and (iii) confirm choice-of-law and venue stay in Minnesota under § 181.988 subdivision 3. Last year I reviewed several severance offers that “renewed” pre-existing noncompetes at separation; each of those provisions is now void. See How a Non-Compete Differs from Non-Solicit.
How should the scope of released wage and whistleblower claims be drafted?
Wage claims and whistleblower claims need separate scope analysis. For wage claims, a release can cover past, accrued claims for wages earned through the date of execution under Chapters 177 and 181 (including § 181.13 demand-and-default claims that have already accrued). It cannot cover prospective wage-theft retaliation claims under Minn. Stat. § 181.03, subdivision 6, which prohibits retaliation for “asserting rights or remedies” under the wage statutes; a prospective release of that retaliation right runs into the same public-policy ceiling that § 363A.31 subdivision 1 codifies for the MHRA. For whistleblower claims, a release can cover past retaliation claims under Minn. Stat. § 181.932, with remedies under Minn. Stat. § 181.935, but cannot prospectively waive future claims. The cleanest drafting approach is to recite the wage statutes and the MWA by chapter and section, limit the temporal scope to claims accrued through the execution date, and add an express carve-out for future-arising claims. Almost every severance review I do for a Minnesota employer flags overbroad wage or whistleblower release language that has to be narrowed before sending. See Minnesota Rules on Non-Disparagement in Severance Deals and Legal Implications of Non-Disclosure Agreements in Severance for related clause-level drafting.
How do group exit-incentive programs differ from individual severance?
When severance is offered to a group or class of employees as part of an exit-incentive or termination program, OWBPA’s group rules at 29 U.S.C. § 626(f)(1)(F) and (H) apply. The consideration period extends from 21 days to at least 45 days. The employer must provide written disclosures listing the class, unit, or group of individuals covered by the program; any eligibility factors; any time limits applicable to the program; and the job titles and ages of all individuals eligible or selected, plus those in the same job classification or organizational unit who are not eligible or not selected. The disclosures must be written so the average eligible employee can understand them. A defective or omitted group disclosure invalidates the ADEA release across the entire group, not just for the employee who challenges. Group programs may also trigger Worker Adjustment and Retraining Notification Act (“WARN Act”) notice obligations and Minnesota WARN-equivalent obligations depending on headcount and the closure or reduction-in-force structure. Build the OWBPA group disclosures and any required WARN notices into the program timeline before announcing it.
Can I require an employee to sign a release in exchange for the final paycheck?
No. Earned wages are due on written demand within 24 hours of discharge under Minn. Stat. § 181.13, regardless of whether the employee signs anything. Only severance pay (the additional consideration) can be conditioned on the release. An employer that holds the final paycheck pending signature triggers the daily-earnings penalty under § 181.13.
Does a Minnesota severance agreement need to reference the MHRA by name?
Minn. Stat. § 363A.31 does not mandate a specific recital, but the release must clearly identify the claims it covers. Omitting the Minnesota Human Rights Act (“MHRA”) from the recital can leave state discrimination claims unreleased even when federal claims are validly waived. Name the statute.
Is the OWBPA 7-day revocation period waivable if the employee asks?
No. The Equal Employment Opportunity Commission (“EEOC”) and 29 C.F.R. § 1625.22 treat the 7-day revocation period under 29 U.S.C. § 626(f)(1)(G) as non-waivable by either party for any reason. An employer that pays severance before day 8 risks an unenforceable release on Age Discrimination in Employment Act (“ADEA”) claims.
What if the employee returns the signed release before the 21-day period ends?
Federal regulation permits early signing if the decision is voluntary, but the 7-day revocation clock still must run. Material changes to the offer restart the 21-day clock under 29 C.F.R. § 1625.22. Document the voluntary early signature in the agreement itself.
Can I include a non-compete in a Minnesota severance agreement signed today?
No. Minn. Stat. § 181.988 renders any covenant not to compete in a contract or agreement void and unenforceable, including one introduced for the first time at separation. Nondisclosure agreements (“NDAs”) and non-solicitation clauses remain permitted and are the surviving alternatives.
Do I have to advise the employee in writing to consult an attorney?
Yes for any release that touches an ADEA claim. 29 U.S.C. § 626(f)(1)(E) requires a written advisement to consult counsel before signing. For non-ADEA-only releases, the advisement is not federally mandated, but it strengthens the knowing-and-voluntary record and is standard practice.
What happens if the employee rescinds an MHRA release within 15 days?
The release is void as to the rescinded claims under Minn. Stat. § 363A.31, subdivision 2. The employee’s MHRA claims are restored as if the release had never been signed. The employer’s contract remedies (such as return of severance) depend on the agreement’s own terms — draft them in.
A Minnesota severance release is a two-statute drafting problem layered on top of contract law. OWBPA sets the federal validity floor for ADEA waivers; § 363A.31 adds a 15-day MHRA rescission window with no federal counterpart; § 181.13 keeps earned wages on a separate clock that the release cannot extend; and § 181.988 voids any new noncompete the agreement tries to introduce. Templates that handle one or two of those layers consistently miss the others. If you would like a second set of eyes on a Minnesota severance agreement before it goes out, email [email protected] with a brief description and the draft. The employment practice hub and the related article on structuring enforceable severance terms collect additional drafting guidance.
