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General Requirements for Employees Age 40 and Over

In 1990, Congress amended the ADEA by adding the Older Workers Benefit Protection Act (OWBPA) to clarify the prohibitions against discrimination on the basis of age. OWBPA establishes specific requirements for a “knowing and voluntary” release of ADEA claims to guarantee that an employee has every opportunity to make an informed choice whether or not to sign the waiver. There are additional disclosure requirements under the statute when waivers are requested from a group or class of employees. See “Additional Requirements for Group Layoffs of Employees Age 40 and Over” at IV. B.

What makes a waiver of age claims knowing and voluntary?

OWBPA lists seven factors that must be satisfied for a waiver of age discrimination claims to be considered “knowing and voluntary.”  At a minimum:

• A waiver must be written in a manner that can be clearly understood.  EEOC regulations emphasize that waivers must be drafted in plain language geared to the level of comprehension and education of the average individual(s) eligible to participate. Usually this requires the elimination of technical jargon and long, complex sentences.  In addition, the waiver must not have the effect of misleading, misinforming, orfailing to inform participants and must present any advantages or disadvantages without either exaggerating the benefits or minimizing the limitations.
  

  Example 5:  An employee, who had worked for his company for  28 years, was selected for an involuntary RIF and asked to sign a "General Release and Covenant Not to Sue” (severance agreement) in exchange for money. The severance agreement provided, among other things, that the employee “released” his employer “from all claims . . . of whatever kind,” including claims under the ADEA and any other federal, state, or local law dealing with discrimination in employment.  The severance agreement also referenced “covenants not to sue” and stated that “[t]his covenant not to sue does not apply to actions based solely under the [ADEA].”  After reading the severance agreement, the employee asked his supervisor if the exception for ADEA claims contained in the covenant not to sue meant he could sue the employer if his suit was limited to claims under the ADEA.  His supervisor contacted the employer’s legal department and then sent the employee an e-mail stating, "Regarding your question on the General Release and Covenant Not to Sue, the wording is as intended. . . . . The site attorney was not comfortable providing an interpretation for you and suggested you consult with your own attorney."

  The employee signed the agreement, collected severance benefits, and then sued his employer for age discrimination under the ADEA.  A court held that the severance agreement was not enforceable because it was not written in a manner calculated to be understood.

• A waiver must specifically refer to rights or claims arising under the ADEA.  EEOC regulations specifically state that an OWBPA waiver must expressly spell out the Age Discrimination in Employment Act (ADEA) by name.
• A waiver must advise the employee in writing to consult an attorney before accepting the agreement.
  

  Example 6:  A release stating: “I have had reasonable and sufficient time and opportunity to consult with an independent legal representative of my own choosing before signing this Complete Release of All Claims,” did not comply with OWBPA’s requirement that an individual be advised to consult with an attorney.  Although the voluntary early retirement agreement advised employees to consult financial and tax advisors, to seek advice from local personnel representatives, and to attend retirement seminars, it said nothing about seeking independent legal advice prior to making the election to retire and accepting the agreement.

• A waiver must provide the employee with at least 21 days to consider the offer.  The regulations clarify that the 21-day consideration period runs from the date of the employer’s final offer.  If material changes to the final offer are made, the 21-day period starts over.
• A waiver must give an employee seven days to revoke his or her signature.  The seven-day revocation period cannot be changed or waived by either party for any reason.
• A waiver must not include rights and claims that may arise after the date on which the waiver is executed.  This provision bars waiving rights regarding new acts of discrimination that occur after the date of signing, such as a claim that an employer retaliated against a former employee who filed a charge with the EEOC by giving an unfavorable reference to a prospective employer.
  

  Example 7:  An employee who received enhanced severance benefits in exchange for waiving her right to challenge her layoff later filed suit.  In finding the waiver valid, the court noted that because the waiver clearly stated that she was releasing any claims that she “may now have or have had,” it did not require her to waive future claims hat may arise after the waiver was signed.

• A waiver must be supported by consideration in addition to that to which the employee already is entitled.

If a waiver of age claims fails to meet any of these seven requirements, it is invalid and unenforceable.  In addition, an employer cannot attempt to “cure” a defective waiver by issuing a subsequent letter containing OWBPA-required information that was omitted from the original agreement.

Are there other factors that may make a waiver of age claims invalid?

Yes.  Even when a waiver complies with OWBPA’s requirements (see Question and Answer 6 above), a waiver of age claims, like waivers of Title VII and other discrimination claims, will be invalid and unenforceable if an employer used fraud, undue influence, or other improper conduct to coerce the employee to sign it, or if it contains a material mistake, omission, or misstatement.

Example 8:  An employee who was told that his termination resulted from “reorganization” signed a waiver in exchange for severance pay.  After a younger person was hired to do his former job, he filed a lawsuit alleging age discrimination.  The company then changed its position and claimed that the real reason for the employee’s discharge was his poor performance.  The employee argued that his waiver was invalid due to fraud and that if he had known that he was being terminated because of alleged poor performance, he would have suspected age discrimination and would not have signed the waiver.  The court held that fraud was a sufficient reason for finding the waiver invalid.

Example 9:  An employee was terminated and given ten weeks of severance pay in exchange for signing an agreement waiving all of her potential discrimination claims. She later filed a lawsuit alleging that she was continuously passed over for promotion based on her age and sex throughout her employment.  In response to the employer’s attempt to dismiss her suit, she alleged that the waiver was an ultimatum which effectively gave her no choice since she was her grandchildren’s guardian and her family’s source of income.  The court held that the employee’s financial problems and prospective loss of her job did not constitute “duress” for the purpose of invalidating a waiver.

If you feel you have been mistreated by your employer or in your place of employment and would like to explore your employment law options, contact the experienced employment law attorneys today at 203-221-3100, or by email at JMaya@mayalaw.com. We have the experience and knowledge you need at this critical juncture. We serve clients in both New York and Connecticut including New Canaan, Bridgeport, White Plains, and Darien.

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Source- https://www.eeoc.gov/policy/docs/qanda_severance-agreements.html