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![](3D"http://www.bizactions.com/content/images//employees%20diversity%20=)
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One Size Doesn't Fit =
All=20
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While =
a bad=20
economy may be one of the biggest reasons =
companies=20
downsize, there are other reasons, including =
mergers and=20
acquisitions, changes in management or strategy, =
and=20
outsourcing.
Problems =
can arise,=20
however, if laid off employees believe =
that they=20
are victims of discrimination. Employees=20
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Follow Each Tenet of the=20
Law
![](3D"http://www.bizactions.com/content/images//supreme%20court2%20med.j=)
One=20
severance case that reached the Supreme =
Court=20
illustrates how having a signed waiver in =
hand=20
doesn't preclude further=20
litigation.
The top court ruled =
that if a=20
release doesn't comply with the knowing =
and=20
voluntary requirement of the Older Workers =
Benefit=20
Protection Act (OWBPA), age =
discrimination=20
suits can be filed.
=
In the=20
case before the court, Dolores Oubre, an =
employee=20
of Entergy Enterprises, received a poor=20
performance rating and was given the =
choice of=20
improving her work or accepting a =
voluntary=20
severance package. She received =
information about=20
the severance package, was given 14 days =
to=20
consider it and eventually accepted =
it.=20
The=20
company violated at least three legal=20
requirements:
1. =
Oubre was=20
not given the minimum 21 days to consider =
the=20
release,
2. =
She was=20
not given seven days to change her mind =
after=20
signing the waiver, =
and
3.=20
The release did not specify the waiver =
of ADEA=20
claims.
After receiving the =
first=20
severance payment, Oubre filed an age=20
discrimination action with the EEOC. The=20
commission dismissed her charge but =
allowed her to=20
file a suit. When she did, she alleged=20
constructive discharge on the basis of her =
age in=20
violation of federal and state laws. She =
did not=20
offer to return the payments she had =
received.=20
Entergy won =
that round=20
in the district court, which held that =
retaining=20
the benefits demonstrated an intention to =
be bound=20
by the waiver and made "a new promise to =
abide by=20
its terms." That ruling was upheld on=20
appeal.
But the =
Supreme=20
Court disagreed, making a distinction =
between the=20
usual application of certain common law =
contract=20
principles and this case, which was =
strictly=20
governed by the OWBPA. Writing for the =
majority,=20
Justice Kennedy stated: "An employee 'may =
not=20
waive' an ADEA claim unless the waiver or =
release=20
satisfies the OWBPA's=20
requirements...
Congress =
imposed=20
specific duties on employers who seek =
releases of=20
certain claims created by statute. =
Congress=20
delineated these duties with precision and =
without=20
qualification: An employee 'may not waive' =
an ADEA=20
claim unless the employer complies with =
the=20
statute. Courts cannot with ease presume=20
ratification of that which Congress=20
forbids."(Oubre v. Entergy Operations, =
=
Inc.) | who have=20
been with the company for a long time may =
believe they=20
are victims under the Age Discrimination in=20
Employment Act (ADEA) and the Older =
Workers=20
Benefit Protection Act (OWBPA). Others may =
believe=20
they have legal claims under Title VII, =
the=20
Americans with Disabilities Act (ADA) or =
the=20
Equal Pay Act=20
(EPA).
To minimize =
the risks=20
of potential litigation, many employers offer =
severance=20
packages that include money, benefits or both in =
exchange for a signed release, or waiver, from =
all=20
future claims. But without careful =
consideration, a=20
severance deal can backfire. (See right-hand=20
box.)
Waivers are =
generally=20
valid only when employees knowingly and=20
voluntarily consent to them, according to =
the Equal=20
Employment Opportunity Commission=20
(EEOC).=20
Whether a waiver is knowing and voluntary is =
often=20
determined by case law, but when it comes to age =
issues,=20
the rules are strictly defined by the OWBPA.=20
To meet =
that=20
requirement, the OWBPA lists seven minimum =
factors. The=20
waivers must:
- Be written clearly and=20
specifically enough for employees to =
understand=20
based on their education and business =
experience. The=20
EEOC's guidance on waivers cites a situation =
where an=20
employee asked his supervisor if certain =
language in=20
the agreement meant that he could still sue =
the=20
company if he made claims only under the ADEA. =
The=20
employer declined to provide legal advice. =
When the=20
employee sued, the court found that even =
though he had=20
accepted the severance pay, the age =
discrimination=20
suit was valid because the waiver wasn't =
written in a=20
manner calculated to be =
understood.
=20
- Refer to rights or =
claims=20
arising under the ADEA. In fact, the EEOC=20
maintains that waivers must spell out the =
Age=20
Discrimination in Employment Act by=20
name.
=20
- Actively advise =
employees in=20
writing to consult an attorney. In one =
instance=20
noted by the EEOC, a waiver was rejected =
because the=20
language did not proactively advise an =
employee to=20
consult with an attorney. It merely asked the =
employee=20
to agree that he had time to do =
so.
=20
- Provide employees at =
least 21 days=20
to consider the waiver. If significant =
changes are=20
made to the final offer, the 21-day clock =
restarts.=20
This applies to employees aged 40 or older. =
That time=20
period extends to 45 days if the employees are =
part of=20
a group termination. For younger employees =
there is no=20
specified time limit, but the number of days =
your=20
business allows may be a factor in determining =
whether=20
an employee knowingly and voluntarily agreed =
to a=20
waiver under other laws. To be on the safe =
side, your=20
company may choose to match the time =
requirements for=20
older workers.
- Give =
employees seven=20
days to revoke their signatures. Employees =
cannot=20
waive this right.
=20
- Not require =
waiving the=20
right to sue for discriminatory acts that =
may=20
occur after a waiver is signed.
- Offer =
employees some=20
form of consideration, such as severance =
pay, to=20
which employees weren't already entitled to by =
law or=20
contract.
Waivers that don't meet these =
requirements cannot=20
be enforced. Moreover, an employer cannot try to =
fix an=20
invalid waiver by issuing a letter with the =
omitted, but=20
required, information after the waiver has been=20
signed.
Bottom Line: If your =
company is=20
contemplating a workforce reduction, huddle with =
your=20
legal advisors to develop a severance package =
that can=20
pass muster under all applicable federal and =
state laws.=20
This ounce of prevention is often worth a pound =
of=20
cure.
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