In 1990, Congress amended the ADEA by adding the Older Workers Benefit Protection Act (OWBPA) to clarify the prohibitions against discrimination on the basis of age. OWBPA establishes specific requirements for a “knowing and voluntary” release of ADEA claims to guarantee that an employee has every opportunity to make an informed choice whether or not to sign the waiver. There are additional disclosure requirements under the statute when waivers are requested from a group or class of employees.
What makes a waiver of age claims knowing and voluntary?
OWBPA lists seven factors that must be satisfied for a waiver of age discrimination claims to be considered “knowing and voluntary.”[i] At a minimum:
- A waiver must be written in a manner that can be clearly understood. EEOC regulations emphasize that waivers must be drafted in plain language geared to the level of comprehension and education of the average individual(s) eligible to participate. Usually this requires the elimination oftechnical jargon and long, complex sentences. In addition, the waiver must not have the effect of misleading, misinforming, or failing to inform participants and must present any advantages or disadvantages without either exaggerating the benefits or minimizing the limitations. A court held that the severance agreement was not enforceable because it was not written in a manner calculated to be understood.[ii]
- A waiver must specifically refer to rights or claims arising under the ADEA. EEOC regulations specifically state that an OWBPA waiver must expressly spell out the Age Discrimination in Employment Act (ADEA) by name.
- A waiver must advise the employee in writing to consult an attorney before accepting the agreement. A release stating: “I have had reasonable and sufficient time and opportunity to consult with an independent legal representative of my own choosing before signing this Complete Release of All Claims,” does not comply with OWBPA’s requirement that an individual be advised to consult with an attorney. Although the voluntary early retirement agreement advised employees to consult financial and tax advisors, to seek advice from local personnel representatives, and to attend retirement seminars, it said nothing about seeking independent legal advice prior to making the election to retire and accepting the agreement.[iii]
- A waiver must provide the employee with at least 21 days to consider the offer. The regulations clarify that the 21-day consideration period runs from the date of the employer’s final offer. If material changes to the final offer are made, the 21-day period starts over.[iv]
- A waiver must give an employee seven days to revoke his or her signature. The seven-day revocation period cannot be changed or waived by either party for any reason.
- A waiver must not include rights and claims that may arise after the date on which the waiver is executed. This provision bars waiving rights regarding new acts of discrimination that occur after the date of signing, such as a claim that an employer retaliated against a former employee who filed a charge with the EEOC by giving an unfavorable reference to a prospective employer.
- A waiver must be supported by consideration in addition to that to which the employee already is entitled.
If a waiver of age claims fails to meet any of these seven requirements, it is invalid and unenforceable. In addition, an employer cannot attempt to “cure” a defective waiver by issuing a subsequent letter containing OWBPA-required information that was omitted from the original agreement.
Are there other factors that may make a waiver invalid?
Yes. Even when a waiver complies with OWBPA’s requirements, a waiver of age claims will be invalid and unenforceable if an employer used fraud, undue influence, or other improper conduct to coerce the employee to sign it, or if it contains a material mistake, omission, or misstatement.