EEOC Issues Technical Guidance on ADEA Waivers

On July 15, the Equal Employment Opportunity Commission (EEOC) issued technical assistance on waivers of discrimination claims, including age discrimination claims, in a Q&A  format(www.eeoc.gov/policy/docs/qanda_severance-agreements.html).

The guidance, directed at employees faced with waiving claims, explains the following criteria for a release to be enforceable:

- The release must be in exchange for consideration over and above that which an employee is already entitled.

- The release must be knowing and voluntary, which means:

  • it was written in a manner that was clear and specific enough for the employee to understand based on his education and business experience;
  • it was not induced by fraud, duress, undue influence, or other improper conduct by the employer;
  • the employee had enough time to read and think about the advantages and disadvantages of the agreement before signing it;
  • the employee consulted with an attorney or was encouraged or discouraged by the employer from doing so;
  • the employee had any input in negotiating the terms of the agreement; and
  • the employer offered the employee consideration (e.g., severance pay, additional benefits) that exceeded what the employee already was entitled to by law or contract and the employee accepted the offered consideration.

In order to ensure that a release is knowing and voluntary, the release should name the claims to be released, including discrimination claims. 

Also, as explained in the new guidance, even if an employee signs a release, s/he can still bring a claim, either challenging the waiver itself or with the EEOC or other agency (which would not be covered by an employee release).  However, arguably a severance agreement can require an employee to return any severance payment attributable to a claim the employee pursues (under a "tender back" provision), or any recovery on the employee's behalf.  A release cannot require an employee to waive his/her right to bring an EEOC charge or cooperate in an EEOC investigation.  A release also cannot waive prospective claims.

The new guidance also explains the additional requirements that must be met for an effective release of an age claim under the Age Discrimination in Employment Act.  Specifically:

  • A waiver must be written in a manner that can be clearly understood. 
  • A waiver must specifically refer to rights or claims arising under the ADEA. 
  • A waiver must advise the employee in writing to consult an attorney before accepting the agreement.
  • A waiver must provide the employee with at least 21 days to consider the offer. 
  • A waiver must give an employee seven days to revoke his or her signature.   
  • A waiver must not include rights and claims that may arise after the date on which the waiver is executed. 
  • A waiver must be supported by consideration in addition to that to which the employee already is entitled.

In the context of an exit incentive, which is a termination of two or more employees, a release of an age claim also must give the employee 45 (instead of 21) days to consider and identify the decisional unit, eligibilty factors, time limits, job titles and ages of all individuals who are eligible for the program, and the job titles and ages of all individuals in the same job classifications or organizational units who are not eligible for the program.

At the July 15 commission meeting at which the guidance was issued, EEOC Acting Chairman Stuart Ishimaru commented that more older workers are staying on the job as a result of current economic conditions; more workers are age 40 and older; and, EEOC age charges are rising (private sector age discrimination charges in fiscal 2008 increased by 29% compared with the prior year and comprised neary 25% of all EEOC charges).  While the burden on employees to prove age discrimination may be high under current judicial interpretation of the ADEA, employers still must avoid age-related stereotypes and "ageist" comments in the workplace. 

 

 

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