You’re about to have a reduction in force and you’re going to offer a severance package to those effected: one week of salary for every year of service in exchange of a full release of all claims. If one or more employees affected by the reduction in force is 40 years of age or older, you’d better make sure that your release language complies with the the Age Discrimination in Employment Act (“ADEA”), as amended by the Older Workers Benefit Protection Act (“OWBPA”). Unlike other general releases, by statute, an ADEA/OWBPA release must have certain required elements for it to be effective.
One employer, in this recent case, learned the hard way. The employer RIFed the plaintiffs, but failed to inform them “about the group of employees who were being terminated as a result of the reorganization or about employees who were not selected for termination,” as the law requires. Consequently, the age discrimination release that the plaintiff signed wasn’t worth the paper it was printed on.
Kinda like this blog.
If you are going to lay off anyone over the age of 40, to obtain a release of potential age discrimination claims, you must obtain a knowing and voluntary waiver. This means, at a minimum, your release must include the following six elements:
- it must be easy to understand;
- it must refer to claims under the ADEA/OWBPA
- the employee cannot waive rights or claims that may arise after the date the waiver is executed;
- the employee waives rights or claims only in exchange for consideration in addition to anything of value to which the individual already is entitled (i.e., you have to incent the employee to agree to the release);
- the employee is advised in writing to consult with an attorney prior to executing the agreement; and
- the employee has at least 21 days (45 days for a RIF) within which to consider the agreement, and 7 days after signing the agreement in which to revoke it.
Plus, in a RIF situation, the employer is required to provide the following information to the
affected employees: (a) any class, unit, or group of individuals covered by such RIF, any eligibility factors for such RIF, and any time limits applicable to such RIF; and (b) the job titles and ages of all individuals eligible or selected for the RIF, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the RIF.
Unless, you’ve done this several times before, consider engaging an employment lawyer to walk you through the process. Otherwise, that severance you pay may be used to subsidize a subsequent age discrimination claim against your company.
For more on age discrimination releases, read the statute and review the EEOC guidance.