The Equal Employment Opportunity Commission (EEOC) has recently issued regulations which set forth and clarify procedures for complying with the Age Discrimination in Employment Act and Older Workers Benefit Protection Act ("OWBPA").
The regulations take effect July 6, 1998. The regulations confirm that a release that does not comply with the OWBPA will not bar an employee’s claim of age discrimination. The regulations also address the United States Supreme Court’s ruling in Oubre v. Entergy Operations, Inc. (January 26, 1998) that an employee challenging the validity of an age waiver need not give back the money he received before bringing legal action.
The following is a summary of the topics covered by the EEOC regulations:
1. Form of Agreement – The entire waiver must be in writing and written in plain language geared to the level of understanding of the individual party or parties to the agreement. The waiver must refer to the ADEA by name in connection with the waiver and the individual must be advised in writing to consult with an attorney before executing the agreement.
2. Waiver of Future Rights – An individual may not be required to waive rights or claims that may arise after the date the waiver is executed. However, the employer may enforce an employee’s agreement to perform future actions such as an agreement to retire or terminate employment at a future date.
3. Consideration – An age waiver is only valid if the individual waives rights or claims in exchange for consideration which is in addition to anything of value to which the individual is already entitled. As such, offering pension benefits the individual is otherwise entitled to will not be considered adequate consideration. However, offering enhanced pension benefits or early entitlement to retirement benefits will meet the adequate consideration threshold.
4. Time periods –
A. Review period. Individuals must be given at least twenty-one (21) days to consider an agreement before signing an age waiver. If the waiver is requested in connection with an exit incentive program or other employment termination program offered to a group or class of employees (defined as two or more employees), individuals must be given at least 45 days to consider the agreement. The 21 or 45 day period, as applicable, runs from the date of the employer’s final offer. Material changes to the final offer restart the running of the 21 or 45 day period. The parties may agree that changes do not restart the running of the review period. In addition, employees may sign the agreement within the 21 or 45 day review period as long as the shortened review period is the employee’s choice and is not compelled by the employer.
B. Revocation period. Once an employee signs an age related claim waiver (at the conclusion of the 21 or 45 day period or earlier if the employee so desires) a mandatory seven-day revocation period is triggered. This revocation period cannot be shortened by the parties by agreement or otherwise. Therefore, employers should ensure that any payments or benefits to be given to an employee pursuant to a release are made after the conclusion of the 7-day revocation period. Payments made before the conclusion of this period may be lost where an employee decides to revoke the agreement, challenge its validity, and then refuses to return payments made by the employer.
5. Informational requirements – Where waivers are requested in connection with an exit incentive program or other employment termination plan offered to a group or class of employees, the individual must be provided with certain information about the program.
A. What must be provided. The regulations require the following information to be provided:
- The class, unit, or group of individuals covered by the program;
- Eligibility criteria;
- Time limits for participating in the program;
- 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 unit not selected or eligible for the program.
Information regarding ages should be broken down individually according to the age of each person selected/eligible for the program and each person not selected/not eligible for the program. The use of age bands (such as age "25-30") does not satisfy the requirement. In addition, where the program involves several grade levels or subcategories within a job classification, the information should be broken down that way.
Example: Here is a list of ages and job titles of individuals in a warehouse division of a manufacturing corporation which satisfies this requirement:
|
Job Title |
Age |
# Selected |
# Not Selected |
|
I. Laborers |
24 |
32 |
53 |
|
28 |
8 |
41 | |
|
58 |
4 |
14 | |
|
62 |
2 |
9 | |
|
II. Sorters |
29 |
15 |
14 |
|
31 |
19 |
28 | |
|
48 |
6 |
3 | |
|
52 |
4 |
1 |
etc...for other job classifications and ages.
B. To whom must the information be given. The information, as described above, must be given to each person who is asked to sign a waiver agreement in what the EEOC calls the "decisional unit". The "decisional unit" is simply the group in the organization eligible for the program. The decisional unit may encompass, a particular department, location, division, or the entire corporation. Likewise, if the employer’s program is based upon a particular job category(ies), the decisional unit is that particular classification (e.g. all laborers).