Fact or Fiction: A “general release” settles all discrimination claims

Welcome back to “Fact or Fiction” a/k/a “Quick Answers to Quick Questions” a/k/a QATQQ f/k/a “I don’t feel like writing a long blog post”. But before I dispense with the brevity, allow me to pat myself on the back as, yesterday, both the ABA Law Journal and the Wall Street Journal recognized one of my recent blog posts.

***A-thank you. Thank you very much. You’re all too kind.***

On the heels of this case from the Second Circuit that I read about yesterday, I figured that today we should discuss releases. Cue the music…

http://www.youtube.com/watch?v=0zUKPpEYsAI

Let’s begin with a hypothetical. Robert Rank-And-File has sued his former employer, Pennsylvania-New Jersey-Delaware, Inc., asserting various discrimination claims against the company (race, age, retaliation). After months of scorched-earth litigation, the two sides agree to settle. Pennsylvania-New Jersey-Delaware, Inc. prepares a settlement agreement which provides that in exchange for a settlement sum, Robert agrees to release all claims against the company. The agreement even includes the language, “THIS IS A GENERAL RELEASE.”

Guess what, folks? If that is the extent of the release language, then Pennsylvania-New Jersey-Delaware, Inc. likely just funded the balance of Robert’s age discrimination action against the company because Robert has not released his age-bias claim.

How could that be? Well, in 1990, Congress amended the Age Discrimination in Employment Act (ADEA) to impose specific requirements for releases covering ADEA claims, so that a person waiving rights under the ADEA would do so in a manner that is both “knowing and voluntary.” In order for an ADEA waiver to be both “knowing and voluntary,” it must contain seven elements:

    1. 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 person eligible to participate. So dump the legalese and technical jargon. 
    2. A waiver must specifically refer to rights or claims arising under the ADEA. EEOC regulations specifically state that the waiver must expressly spell out the Age Discrimination in Employment Act by name.
    3. A waiver must advise the employee in writing to consult an attorney before accepting the agreement. This is an easy one to take for granted if you know that the employee has already retained counsel. But, you still need it in the agreement.
    4. A waiver must provide the employee with at least 21 days to consider the offer. If the employee wants to sign the agreement before Day 21, that’s fine. But, if material changes to the final offer are made, the 21-day period starts over. (Note: if a waiver is requested in connection with an exit incentive or other employment-termination program offered to a group or class of employees, the individual gets 45 days in which to consider the agreement).
    5. A waiver must give an employee seven days to revoke his or her signature. Whereas, the employee may waive the 21-day requirement above by returning a signed a agreement before Day 21, the 7-day revocation period cannot be changed or waived by either party for any reason. 
    6. 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.
    7. A waiver must be supported by consideration in addition to that to which the employee already is entitled. For example, withholding an employee’s last paycheck on the condition that he/she agrees to release any potential age discrimination claim will not work.

    Although not technically a requirement, a best practice when settling the claims of a current or former employee is to call a capable employment-law attorney.

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