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.