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Some employers try to avoid claims for illegally discharging employees by offering a severance agreement.  In most cases, even if the employer offers a nominal amount, say $100, and the employee accepts it and signs a release waiving claims, those claims are gone forever. Therefore, before you sign any documents after your termination, contact an employment attorney so that you know your options before it is too late.

Even if you have already signed an agreement, you should always consult with an attorney anyway because there are exceptions.  One of those exceptions  can be found in the Older Workers Benefits Protection Act of 1990 (“OWBPA”), which is part of the Age Discrimination in Employment Act (“ADEA”).  The OWBPA contains specific requirements regarding any severance agreements for employees over 40 years old, including firings, reductions-in-force, early retirement plans, exit incentive plans and even when the employee resigns. The OWBPA puts the burden on the employer and, as a result, releases that do not fulfill the OWBPA’s requirements cannot be enforced by the employer.

These are the OWBPA’s requirements found in § 201:

  1. Requirement to be in writing. Oral agreements to waive or release age discrimination claims cannot be enforced.
  2. Requirement to understandable by the particular employee:  The OWBPA provides that the agreement must be “written in a manner calculated to be understood by such individual, or by the average individual eligible to participate.” That means that if the employee has sub-average intelligence, it must be written in a manner that that particular employee can understand, and pulling a form agreement off the computer will not suffice.  Moreover, if the severance agreements rely on legal, complex or technical terms it may be unenforceable.  Thus, if it looks like an employment lawyer wrote it, there may be a problem enforcing it.  If the release appears misleading or exaggerates certain components then the whole thing would likely be found unenforceable.
  3. Requirement to advise consultation with an attorney: The OWBPA provides: to be effective, in the agreement, “the individual is advised in writing to consult with an attorney prior to executing the agreement.” Thus, even thought the agreement has to written to be understood without the need for consulting the attorney, the employee still must be advised to do so – not just of the right to do so. This should emphasize the goal of making sure that the employee understands what age discrimination claims are being waived and/or released.
  4. Requirement to specifically reference to the “rights and claims arising under” ADEA:  If the release does not mention the ADEA, the employer cannot enforce it.  If it mentions the ADEA is passing, but does not discuss the specific rights and claims, there will likely be a problem with the employee understanding it, which may cause the release to be unenforceable.
  5. Requirement for additional consideration/payment: The OWBPA provides: “the individual waives rights or claims only in exchange for consideration in addition to anything of value to which the individual already is entitled.”  This means that the employer cannot offer the final paycheck or previously bonus or commissions in exchange for the release of ADEA claims.
  6. Requirement for time to review: If only one person over 40 is being separated from employment, that employee must be given 21 days to consider the agreement, but “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 is given a period of at least 45 days within which to consider the agreement.”
  7. Requirement for revocation period: The OWBPA provides: to be effective, “the agreement [must provide] that for a period of at least 7 days following the execution of such agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired.”
  8. Prohibition against waiving future claims: The OWBPA provides: “the individual does not waive rights or claims that may arise after the date the waiver is executed.”  This makes sense except that most employers have the agreement signed in advance of the termination date.  In my view, the termination date is the basis for any wrongful termination claim.  Thus, if the employer has the agreement waiving any employment discrimination claims signed before the date (and time of termination), the wrongful termination claim remains may not be waived and a valid claim.  I expect that employment defense attorneys will focus on the seven day revocation period and argue that as long as the agreement was entered within a week of the termination, the wrongful termination claims are released. As a caveat, I have yet to see this argued one way or the other.
  9. Prohibition against requiring the employee to give up the right to file with the EEOC: The OWBPA provides: “No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the Commission.” An employer may require the employee to forgo receiving any portion of damages assessed against the employer resulting from the filing a claim with the EEOC, but cannot block the actual filing.
  10. Additional requirement for multiple employee separations:  When multiple employment separations are taking place of employees over 40, whether at the same time or staggered (terminations that are part of the same decision-making process regardless of date of termination), the employer must provide the following information: “any class, unit, or group of individuals covered by such program, any eligibility factors for such program, and any time limits applicable to such program,” 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.”

As a last note, the OWBPA does not require the employee to refund any amounts paid under an allegedly invalid agreement before filing an age discrimination lawsuit.

If you even think that your employment rights have been violated or that you might need an employment lawyer, then call the right attorney to schedule a free and confidential consultation at 866-797-6040. The Spitz Law Firm is dedicated to protecting employees’ rights and solving employment disputes.

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