As the economy continues to struggle, many employers are still laying off workers. These workers often include older employees who are eligible for retirement or approaching eligibility.
To minimize the risk of potential litigation, many employers offer departing employees a severance package in exchange for a release (or “waiver”) of liability for all claims connected with the employment relationship, including those under the Age Discrimination in Employment Act.
When drafting severance agreements, employers must be cognizant that, in addition to meeting the requirements for a valid contract, waivers of age discrimination claims must comply with provisions of the Older Workers Benefit Protection Act (OWBPA).
The OWBPA sets out specific minimum standards that must be met in order for a waiver to be considered knowing and voluntary and, therefore, valid. They include the following:
- 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, or failing to inform participants and must present any advantages or disadvantages without either exaggerating the benefits or minimizing the limitations.
- 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.
- 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.
- 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.
The Law Office of Beth Lincow Cole is committed to helping employers comply with federal and state employment law and avoid potential business-wrecking lawsuits. If your company needs assistance in drafting, reviewing, or revising its severance agreements, contact employment law attorney Beth Lincow Cole.
