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. 

 

 

Effective Releases of Age Claims

The Age Discrimination in Employment Act  ("ADEA") prohibits employment discrimination against employees age 40 or older.  In order for a release of a claim for age discrimination under the ADEA to be effective, it must meet the requirements of the Older Workers’ Benefit Protection Act (“OWBPA”).  While simply meeting the minimum statutory requirements does not satisfy the burden of proving that the release is knowing and voluntary, failure to do so can be fatal to the enforceability of the release.            

The OWBPA requires, at a minimum, that the waiver agreement between the individual and the employer:

  • be written in language easily understood by the average employee;
  • specifically refer to rights or claims arising under the ADEA;
  • not waive rights or claims that may arise after the date of the waiver is executed;
  • provide for consideration which is in addition to anything of value to which the individual already is entitled;
  • advise the individual in writing to consult with an attorney prior to executing the agreement;
  • give the individual at least 21 days within which to consider the agreement;
  • provide for a seven-day revocation period.

The OWBPA imposes additional requirements in the context of a group or class termination. The employer must provide the departing employees with at least 45 days (not 21 days) to consider the release and provide the employees with detailed information concerning those eligible and ineligible for the separation program. The latter information must include any class, unit or group of individuals covered by the program, any eligibility factors for the program, and any applicable time limits, as well as 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.  

 

The purpose of the information is to provide older workers with enough information to decide whether a termination may be discriminatory before signing a release. If this information is inaccurate or if the employer does not define the job classification or unit properly, the age release may not be enforceable.  One court recently invalidated age releases because the company represented that it laid-off 152 employees at one facility, when the correct number was 154, and because the company used confusing codes to identify the job classifications at issue.

 

Note that the above requirements do not need to be met where an employee is not releasing a claim under the ADEA, even if the employee is part of a group lay-off or reduction. Thus, where the employee is under age 40, the employer does not need to give the employee 21 (or 45) days in which to consider the agreement (although the employee should have a reasonable period of time in which to do so) and the employer does not have to permit the employee any revocation period. In such agreements, it is advisable for the employee to confirm his or her birth date.