Over the age of 40? Think before you sign anything!

The Age Discrimination in Employment Act (ADEA) was enacted in 1967 to stop an employer from discriminating against an employee on the basis of their age.  The ADEA forbids an employer from harassing employees over the age of 40 or otherwise subjecting them to adverse treatment. In 1990, Congress amended the ADEA to include the Older Workers Benefit Protection Act (OWBPA).
OWBPA is a federal law that compels employers to offer their older workers, who are at least 40 years of age, benefits that are equal to that of younger employees.  When a severance package is proposed, the OWBPA protects those older employees’ rights.  Typically, a  severance package includes a waiver, which means the employee must relinquish their rights to assert claims of age discrimination against their employer if they accept the payment of severance.  “The OWBPA is designed to protect the rights and benefits of older workers.  The OWBPA implements Congress’ policy via a strict, unqualified statutory stricture on waivers.” Oubre v. Entergy Operations Inc., 522 U.S. 422, 477 (1998).  The Act also seeks to ensure that older workers know of their legal rights and are not coerced or manipulated into signing a severance agreement in which they are unfamiliar with the terms.

For a severance agreement to be valid under the ADEA, the signing employee must sign the waiver “knowingly and voluntarily.”  A waiver which is signed by an employee who does not fully understand the terms of the agreement is not legally binding under the ADEA.  In 1998, the Court sought to clarify many of the terms under the OWBPA since it was causing great confusion for both employers and employees.
A signed waiver provision under the OWBPA is voluntary and knowing if all of the following are met.  Aside from the employee signing the waiver voluntary and knowing, there must be consideration for value included in the waiver for the employee.  If any of the following requirements are found lacking, the waiver is ineffective and the employee can seek legal remedies against their employer for discriminatory actions regarding their age.  The requirements under the 1998 revisions of OWBPA are:

1. The waiver must be part of a written agreement between the employee and employer, which is drafted in language calculated to be understood by the employee. If the company (employer) uses a form agreement for all departing employees, it should be written for the comprehension of the average individual eligible to participate.
2. The waiver must specifically refer to rights or claims arising under the ADEA.
3. The employee cannot waive future rights or claims that arise after the execution of the waiver.
4. The waiver must be supported by additional consideration over and above anything of value to which the employee is already entitled (examples being vacation benefits, contractual severance, etc).
5. The employer must advise the employee in writing to consult an attorney before signing the agreement.
6. The employee must be allowed up to 45 days to consider agreements proposed as part of an early retirement of incentive program offered to a group or class of employees.  Agreements proposed in connection with other kind of separations must allow for a 21-day consideration period (unless litigation is already pending and the waiver is part of a settlement agreement).
7. The employee can revoke a signed agreement for up to seven days after executing it.
8. The employer who offers an incentive program to a group of employees must disclose, in writing and in comprehensible language:
   1. The class of group of employees covered by the program, the eligibility requirements for the program, and any time limits set for participation, and
   2. The job titles and ages of all employees eligible for the program, as well as the ages of all individuals in the same job classification or unit who are not eligible for the plan.

29 U.S.C. § 626(f)(1)
The waiver must be written so that an average employee will understand what they are signing.  A waiver that is comprised of legal jargon and terminology will not be valid under the OWBPA.  Additionally, the waiver must include the advantages and disadvantages to signing the waiver.  Lastly, the waiver must inform the employee to seek legal advice prior to signing.
When the employer approaches an employee with the severance package and seeks to have a waiver of all ADEA claims signed, the employee has a 21-day period to think about their options.  If the waiver is accompanied with an early exit incentive or termination program, the employee has 45-days to consider their options.  Furthermore, the employee can revoke their waiver up to 7-days after signing.  These time period are in place so the employee has ample time to weigh their options prior to leaving their employment.
The 1998 Amendments to OWBPA also require that the employee be given consideration in addition to what they are already entitled to had they not signed the waiver.  The consideration must be something in addition, it cannot be something taken away and given back to the employee as an incentive to signing.  An employee over the age of 40 is not required to receive over and above what an employee under the age of 40 deserves, but it cannot be less.
When an employee is planning to terminate a group of employees and have those employees sign waivers, that group of employees is referred to as a decisional unit.  The employer must inform the decisional unit of the ages and job titles of the employees being terminated.  The purpose of this information is for the employee to fully understand the make-up of the potentially terminated employees and to consider if they really want to waive their opportunity to allege ADEA violations.  In 2006, the 11^th Circuit clarified why this information is required and why it is important for the decisional unit to know.  “In the discrimination context, the data must permit employees and their attorneys to make meaningful comparisons to determine whether an employer engaged in age discrimination.  The data must allow the employees to consider whether anything suggests that older employees in their unit were unjustifiably terminated in favor of young ones.” Burlison v. McDonalds Corp., 455 F.3d 1242.
If a waiver does not comply with all of the OWBPA requirements, the waiver is invalid. An employee who signs an invalid waiver retains the right to file a claim against their employer for ADEA violations.  Furthermore, if an employee received consideration under the waiver and it turned out to be invalid, the employee is not required to return the items of consideration to bring an ADEA claim. Oubre v. Entergy Operations, Inc., 118 S.Ct. 838 (1998).

Although employees who sign these waivers give up their rights to sue under the ADEA, they do not give up their rights to file a claim with the Equal Employment Opportunity Commission (EEOC).  In E.E.O.C. v. Lockheed Martin Corp., 444 F.Supp.2d 414 (D.Md.2006), the Court held that an employee cannot waive their right to file a charge of discrimination with the EEOC.  An employee always has the right to file a charge of discrimination to the EEOC and this right cannot be signed away.
It is extremely important that any severance package or waiver you have signed, or plan to sign, meets all of the requirements set forth in the Older Workers Benefit Protection Plan.  If you are over 40 years old and have been presented with a severance package and waiver, you should consult with an employment attorney immediately.  You may contact Valli Kane & Vagnini for a free consultation to hear about your legal options and remedies.