The Older Workers Benefit Protection Act (OWBPA) in South Dakota Severance Deals

Unlike neighboring states that include age in their state civil rights statutes, the South Dakota Human Relations Act codified at S.D. Codified Laws § 20-13-10 prohibits private-sector workplace discrimination based on race, color, creed, religion, sex, ancestry, disability, and national origin-leaving out age entirely for private employers. Because of this unique legislative gap in South Dakota, private-sector workers aged 40 and older in Sioux Falls, Rapid City, Aberdeen, and Brookings rely exclusively on federal law to protect them from age-based terminations and coercive severance deals.

When a South Dakota employer with 20 or more employees asks a worker aged 40 or older to sign a separation agreement waiving legal claims, the contract is strictly governed by the federal 29 U.S.C. § 626(f), which amended the Age Discrimination in Employment Act (ADEA). If your employer cuts corners on the mandatory review windows or omits required statutory disclosures, the age-claim release is legally defective. Consulting a South Dakota employment lawyer from our directory before your review window closes can help you leverage these federal protections into a substantially stronger severance package.

Why Your Age Matters in Severance

Under South Dakota's general at-will employment statute, S.D. Codified Laws § 60-4-4, an employer can terminate an employee at any time without notice or severance pay, provided the termination does not violate public policy or federal anti-discrimination statutes. For an employee aged 39 or younger, an employer can offer a small severance check and demand a signature within 48 hours. Once an employee turns 40 years old, however, federal law steps in and transforms the rules of contract formation.

Understanding why your age matters in a South Dakota severance negotiation requires recognizing two critical jurisdictional realities:

• Federal Law Is Your Sole Private-Sector Shield: While South Dakota state government career service employees enjoy state-level age protections under S.D. Codified Laws § 3-6D-14, private-sector workers in South Dakota have no state-law age discrimination claim under S.D. Codified Laws § 20-13-10. Consequently, your federal ADEA claim under 29 U.S.C. § 623 is the primary legal risk your employer is paying to eliminate.
• Strict 180-Day EEOC Filing Deadline in South Dakota: In states where a state agency has statutory authority to grant relief for age discrimination, workers get 300 days to file a federal charge. Because the South Dakota Division of Human Rights, Pierre lacks state statutory authority over private-sector age claims, 29 U.S.C. § 626(d)(1)(A) imposes a strict 180-day deadline from the date of termination notice for South Dakota workers to file an ADEA charge with the Equal Employment Opportunity Commission, Minneapolis Area Office, Minneapolis.

The 21-Day Review Rule Explained

Under 29 U.S.C. § 626(f)(1)(F)(i), an individual employee aged 40 or older must be given a period of at least 21 full calendar days within which to consider a severance agreement that waives ADEA claims. If the termination is part of an exit incentive or group layoff affecting two or more employees, that review period automatically increases to 45 calendar days under 29 U.S.C. § 626(f)(1)(F)(ii).

Federal regulations issued by the EEOC at 29 C.F.R. § 1625.22(e) establish strict ground rules for how the 21-day clock operates in practice:

1. When the Clock Starts: The 21-day period runs from the date of the employer's final severance offer. Under 29 C.F.R. § 1625.22(e)(4), if you or your attorney negotiate material changes to the final offer (such as increasing the severance payout or narrowing a South Dakota non-compete clause), the 21-day clock restarts from day one unless the parties agree in writing that material changes will not restart the period.
2. Early Signing Rules: Under 29 C.F.R. § 1625.22(e)(6), an employee may choose to sign the agreement before the 21 days expire, provided the decision is completely voluntary and not induced by the employer through fraud, misrepresentation, or a threat to withdraw or alter the offer prior to the expiration of the 21-day window.
3. No Penalty for Taking the Full 21 Days: An employer cannot offer a 'signing bonus' that expires in 72 hours if doing so penalizes a worker aged 40 or older for exercising their statutory 21-day review right.

The Unwaivable 7-Day Revocation Period

Even after you sign and return a severance agreement in South Dakota, the contract does not become immediately binding. Under 29 U.S.C. § 626(f)(1)(G), the agreement must provide that for a period of at least 7 calendar days following the execution of the agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired.

Unlike the 21-day review period-which an employee can voluntarily shorten by signing early-federal regulation 29 C.F.R. § 1625.22(e)(5) explicitly states that the 7-day revocation period cannot be shortened or waived by the parties for any reason. Even if you write a clause into the contract waiving the 7-day period in exchange for same-day cash, that waiver is legally void. Consequently, South Dakota employers always hold the severance check until at least the eighth day after receiving your signature.

Waiving Age Discrimination Claims Legally

Under 29 U.S.C. § 626(f)(1), an older worker may not waive any right or claim under the ADEA unless the waiver is 'knowing and voluntary.' To satisfy this standard in the Eighth Circuit-which governs federal courts across South Dakota, as illustrated in Thomforde v. International Business Machines Corp., 406 F.3d 500 (8th Cir. 2005)-every severance agreement presented to a worker aged 40+ must satisfy seven absolute statutory elements:

• Plain Language Mandate: The agreement must be written in a manner calculated to be understood by the individual (29 U.S.C. § 626(f)(1)(A)), avoiding technical legal jargon and contradictory cross-references.
• Express ADEA Reference: The waiver must specifically refer to rights or claims arising under the Age Discrimination in Employment Act by name (29 U.S.C. § 626(f)(1)(B)). A generic release of 'all federal and state claims' is insufficient to waive age discrimination.
• No Waiver of Future Claims: The employee cannot waive rights or claims that may arise after the date the waiver is executed (29 U.S.C. § 626(f)(1)(C)).
• New Consideration: The waiver must be exchanged for consideration in addition to anything of value to which the individual is already entitled (29 U.S.C. § 626(f)(1)(D)), such as earned wages required under S.D. Codified Laws § 60-11-10.
• Written Advisement to Consult an Attorney: The contract must expressly advise the employee in writing to consult with an attorney prior to executing the agreement (29 U.S.C. § 626(f)(1)(E)).
• Statutory Review and Revocation Windows: The agreement must grant the 21-day (or 45-day) consideration window and the 7-day revocation period, plus group demographic schedules if applicable.

What happens if a South Dakota employer violates even one of these OWBPA rules? In the landmark decision Oubre v. Entergy Operations, Inc., 522 U.S. 422 (US Supreme Court 1998), an employer gave an older worker only 14 days to consider a severance agreement, omitted the 7-day revocation clause, and made no specific reference to the ADEA. After receiving the severance money, the employee sued for age discrimination. The U.S. Supreme Court held that a defective OWBPA release cannot bar an ADEA lawsuit, and the employee is not required to return ('tender back') the severance money as a precondition to filing suit. Furthermore, under 29 U.S.C. § 626(f)(4), no waiver agreement can affect the EEOC's enforcement authority or prevent an employee from filing a charge or participating in an EEOC investigation.

Step-by-Step Process in South Dakota

If you are 40 or older and receive a severance package in Sioux Falls, Rapid City, Pierre, or Yankton, follow these steps to protect your rights.

Step 1: Log the Delivery Date and Mark Your Statutory Deadlines

Save the email or envelope showing the exact date you received the agreement. Count forward 21 calendar days (or 45 calendar days if at least one other employee was laid off in the same program) to establish your statutory consideration deadline. Do not let human resources pressure you into signing before you have completed a thorough legal review.

Step 2: Audit the Agreement for OWBPA Defects

Check whether the document explicitly names the Age Discrimination in Employment Act, advises you in writing to consult an attorney, and includes the 7-day revocation instructions. If the termination was part of a group layoff, verify whether the employer attached the required 29 U.S.C. § 626(f)(1)(H) age-and-title table. Missing or inaccurate OWBPA disclosures give your attorney major leverage to demand additional severance pay in exchange for executing a corrected, valid release.

Step 3: Assess Non-Compete Clauses and Final Wage Compliance

Verify that your final earned paycheck and any vested benefits are paid separately on the next regular payday under S.D. Codified Laws § 60-11-10 without being conditioned on your signature. Also review whether the severance contract attempts to insert a new two-year non-compete or customer non-solicitation clause under S.D. Codified Laws § 53-9-11.

Step 4: Submit a Strategic Counteroffer

Have a South Dakota employment lawyer present a written counteroffer requesting enhanced severance pay, COBRA health insurance contributions, or the removal of restrictive covenants. If you have evidence that younger, less-qualified employees were retained or hired to replace you, your attorney can present an ADEA demand to negotiate a significantly higher settlement.

Step 5: Execute the Agreement or File an Administrative Charge

If you reach fair terms, sign the agreement and wait out the 7-day revocation period before collecting your payout. If you choose to reject the offer and pursue an age discrimination claim, you must file Form 5, FED, Equal Employment Opportunity Commission, Charge of Discrimination with the Equal Employment Opportunity Commission, Minneapolis Area Office, Minneapolis (Towle Building, 330 S. Second Ave., Suite 720, Minneapolis, MN 55401; phone: 1-800-669-4000) within 180 calendar days. If your case also involves disability, sex, or race discrimination under S.D. Codified Laws § 20-13-10, you can file Form Intake, South Dakota, Division of Human Rights, Charging Party Intake Form (Employment) with the South Dakota Division of Human Rights, Pierre within 180 days under S.D. Codified Laws § 20-13-31. Subsequent lawsuits proceed in the U.S. District Court for the District of South Dakota, Sioux Falls, the U.S. District Court for the District of South Dakota, Rapid City, the Minnehaha County Circuit Court, Sioux Falls, or the Pennington County Circuit Court, Rapid City.

How Much Does It Cost in South Dakota?

Because the OWBPA requires employers to advise you in writing to consult an attorney, having a lawyer evaluate your severance package is standard practice across South Dakota:

• Flat-Fee OWBPA Review and Consultation: Most South Dakota employment attorneys charge a flat fee between $350 and $850 to audit your severance agreement, verify OWBPA compliance, and advise you on negotiation strategy.
• Hourly Negotiation Rates: If you retain counsel on an hourly basis to draft demand letters or negotiate directly with the employer's legal team, rates in Sioux Falls and Rapid City typically range from $225 to $425 per hour.
• Contingency Fees on Enhanced Severance: Many employment lawyers offer a hybrid or contingency structure, charging 25 percent to 33 percent of the additional dollar value they negotiate above your employer's initial severance offer-meaning you never pay out of your original baseline offer.
• Agency and Court Filing Fees: Filing an ADEA discrimination charge with the EEOC or a state charge with the South Dakota Division of Human Rights, Pierre is completely free ($0). Filing a civil lawsuit in a South Dakota Circuit Court costs $72.00 under S.D. Codified Laws § 16-2-29, while filing a federal ADEA lawsuit in the U.S. District Court for the District of South Dakota costs $405.

How Long Does the Process Take?

Every stage of an OWBPA severance transaction or age discrimination claim in South Dakota operates on strict statutory clocks:

• Individual Consideration Period: Up to 21 calendar days to review and negotiate an individual separation agreement (29 U.S.C. § 626(f)(1)(F)(i)).
• Group Layoff Consideration Period: Up to 45 calendar days if two or more workers are terminated in the same program (29 U.S.C. § 626(f)(1)(F)(ii)).
• Mandatory Revocation Window: Exactly 7 calendar days after signing, during which the agreement cannot take effect and no severance funds are released (29 U.S.C. § 626(f)(1)(G)).
• EEOC Filing and Suit Deadlines: If you reject the severance offer, you have 180 calendar days to file an EEOC charge in South Dakota, and under 29 U.S.C. § 626(d)(1), you may file a federal civil lawsuit 60 days after filing your EEOC charge (and must file within 90 days of receiving a Notice of Right to Sue).

Frequently Asked Questions (FAQ)