May 19, 2009
In today's business environment, mass layoffs are commonplace, but layoffs do not immunize employers from employment discrimination challenges. As a result, employers typically offer severance packages with additional compensation in exchange for agreements from employees waiving claims arising out of the employment. An employer, however, must be aware of, and satisfy, additional requirements to waive claims for age discrimination.
To deter age discrimination, the federal Older Workers Benefit Protection Act ("OWBPA") establishes detailed requirements for a valid waiver concerning all employees 40 years of age or older. The OWBPA requires the language of the waiver to be understood by the recipient. The waiver must specifically refer to rights under the Age Discrimination in Employment Act. The employee only waives claims up to the date that he or she signs the waiver, and the employee must be advised that he or she may consult an attorney before signing the waiver.
The employee must be given 45 days to consider the waiver and 7 days to revoke the waiver after signing it. The 45-day review period is longer than the 21 required for an employee to consider a waiver in an individual separation situation. Finally, group layoffs require supplemental informational disclosures. In that case, the employer must follow a strict procedure for disclosing the job titles and ages of all individuals in the area within the company that has been targeted for the layoff.
Failure to include the supplemental disclosures and additional waiver requirements in a severance agreement could expose an employer to age discrimination claims, even if employers are paying departing employees additional compensation to waive such claims.
The Employment Law Practice Group at Berg Hill is highly experienced at analyzing and negotiating severance agreements and releases for employers and employees arising out of individual or group separations. If you have questions about severance plans, group separations, or waivers of discrimination rights, we are available to advise you throughout the process.
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