One of the most common requests that I receive as an employment attorney is to review severance offers. I’ve had these kinds of requests from friends, relatives, acquaintances and (on rare occasions) clients and I seldom turn them down. I have probably handled hundreds of reductions in force for various corporate clients so I like to see how others handle them. In the past month, I have reviewed two severances packages and both failed to follow the requirements of the Older Workers’ Benefit Protection Act (“OWBPA”). I was not at all surprised. If I had to guess, I would say that over 50% of the severance offers I’ve reviewed over the years are not in compliance with the OWBPA.
Under the OWBPA, for a release of age discrimination claims to be valid, the following must be present:
- the waiver must be in writing and be understandable;
- the waiver must specifically refer to ADEA rights or claims;
- the employee may not waive rights or claims that may arise in the future;
- the waiver must be in exchange for valuable consideration, i.e. more than the employee is otherwise entitled to receive;
- the waiver must advise the individual in writing to consult an attorney before signing the waiver; and
- the waiver must provide the individual at least 21 days to consider the agreement and at least seven (7) days to revoke the agreement after signing it.
The foregoing is required of any severance agreement offered to an employee who is over 40 years old. Waivers in the context of a reduction in force have additional requirements.
Initially, the requirements for waiver in the individual context apply with one modification. When an exit incentive or other employment termination program (e.g. a severance program) is offered to a group or class of employees, the individual must be given a period of at least 45 days (as opposed to 21 days in the individual context) within which to consider the agreement. Also, the employer must provide to all eligible participants the job titles and ages of those individuals eligible for the program and the ages of those individuals in the same job classification or organizational unit who are not eligible or were not selected for the program.
Thus, in the context of a reduction in force, the employer must provide all employees who are over 40 years of age with a list of the employees in the same organizational unit who are being offered the severance incentive to waive their claims, i.e. losing their employment, and those who are not, i.e. remaining employed. Moreover, the employer must disclose the eligibility criteria for the severance program. This informational requirement exposes the employer’s process for selecting employees for termination or determining which employees will be eligible for voluntary exit incentive programs. If an employer does not comply with these requirements, waivers of age discrimination claims will not be valid.
Both of the severance offers I recently reviewed failed to include the list of employees who were losing their employment and those who were not. One of the offers only provided 21 days to consider the offer despite being offered in a reduction in force in which multiple employees were being terminated. In both cases, the employers were large corporations with tens of thousands of employees nationwide.
The OWBPA rules and requirements are very detailed. Employers should work carefully with legal counsel to develop and properly document the eligibility and selection process and to prepare the appropriate releases and notices.
Topics/Tags
Select- Labor & Employment Law
- Department of Labor
- Employment Law
- Discrimination
- Coronavirus
- FLSA
- Overtime Pay
- Labor Law
- Non-Compete Agreements
- National Labor Relations Board
- Wage & Hour
- Federal Trade Commission
- Privacy
- Reasonable Accommodation
- NLRB
- Workplace Accommodations
- Employee Benefits and Executive Compensation
- Pregnancy Discrimination
- FMLA
- Arbitration
- Employment Litigation
- Workplace Violence
- Religion Discrimination
- Medical Marijuana
- IRS
- Litigation
- Social Media
- Employer Policies
- Americans with Disabilities Act
- Disability Discrimination
- Retirement
- Medical Cannabis Dispensaries
- National Labor Relations Act
- Race Discrimination
- Sexual Orientation Discrimination
- Accommodation
- OSHA
- Employer Handbook
- ERISA
- Whistleblower
- EEOC
- ADAAA
- United States Supreme Court
- ACA
- Affordable Car Act
- Unions
- Title VII
- Employer Rules
- Sexual Harassment
- Technology
- Federal Arbitration Act
- NLRA
- Transgender Issues
- Disability
- 401(k)
- Employment Settlement Agreements
- Sixth Circuit
- Equal Employment Opportunity Commission
- Fair Labor Standards Act
- Paycheck Protection Program
- Benefits
- Class Action Litigation
- Disability Law
- Gender Identity Discrimination
- Posting Requirements
- Securities Law
- E-Discovery
- Evidence
- Preventive Care Benefits
- Health Savings Account
- SECURE Act
- Environmental Law
- Family and Medical Leave Act
- US Department of Labor Employee Benefits Security Administration
- Privacy Laws
- Representative Election Regulations
- Department of Justice
- Healthcare Reform
- Older Workers' Benefit Protection Act (OWBPA)
- Affirmative Action
- Electronically Stored Information
- Equal Opportunity Clause
- Telecommuting
- Compensable Time
- Occupational Safety and Health Administration
- Security Screening
- Supreme Court
- E-Discovery Case Law
- Electronic Data Discovery
- ESI
- Unemployment Insurance Integrity Act
- American Medical Association
- Attendance Policy
- Return to Work
- Seniority Rights
- Classification
- Confidentiality
- Disability Leave
- Equal Pay
- Fair Minimum Wage
- Federal Minimum Wage
- Genetic Information Discrimination
- Media Policy
- Misclassification
- National Origin Discrimination
- Retaliation
- Social Media Content
- State Minimum Wage
- Wage Increase
- Employment Incentives
- HIRE Act
- Social Security Tax
- Taxation
- Antitrust
Recent Posts
- Federal Court Overturns Expansion of Overtime Requirements
- U.S. Supreme Court to Review Title VII Reverse Discrimination Case
- NLRB General Counsel Expands Focus on Non-Compete Agreements and Stay-Or-Pay Agreements
- FTC's Non-Compete Rule Struck Down
- District Court Finds in Favor of FTC, Declines to Issue Injunction
- DOL Increases Compensation Threshold for Exemption Eligibility
- Federal Trade Commission Announces New Rule Invalidating Non-Compete Agreements
- EEOC Announces Final Rule Providing Guidelines under the PWFA
- The Practical Employment Law Podcast: Immediate Termination
- The Practical Employment Law Podcast: Labor & Employment Law Update February 2024