Filing an age discrimination
By: Roger Braddock
Age discrimination is against
the law and employers have often tried to get around age
discrimination claims by holding severance pay as a hostage to
signing an age discrimination waiver. The Equal Employment Opportunity
Commission ("EEOC") has issued regulations regarding
severance agreements that are signed by people who could file an age
discrimination claim. The employee now has an easier time
collecting offered severance pay from the employer while at the same
time challenging age discrimination releases and waivers in the severance agreement.
The Age Discrimination in
Employment Act of 1967 ("ADEA") applies to employers with
20 or more employees and prohibits age discrimination against
employees 40 years of age or older.
In some cases, an employer might
offer a severance agreement that includes a waiver of a right to
file an age discrimination claim. Such a waiver under ADEA is
a legal agreement in which the employee gives up the right to file
an age discrimination claim against the employer in exchange for
something of value like early retirement benefits or a severance
Congress was concerned that an
exiting employee might be duped or coerced into signing this
agreement, and passed the Older Workers Benefit Protection Act
("OWBPA") as an amendment to the ADEA.
Provisions of OWBPA
The OWBPA established certain
minimum requirements that must be met in order for an ADEA waiver to
be valid. Those minimum requirements, among other things, require
waivers be written in plain English and give employees a twenty-one
day consideration period. It must also encourage employees to
consult legal counsel and provide a seven-day period which they can
back out of the agreement.
During the 1990''s, legal disputes
arose concerning whether an employee could challenge an ADEA waiver
in court without first having to return the severance money the
employee received from the employer for the waiver.
In Oubre v. Entergy Operations,
Inc., 522 U.S. 422 (1998), the United States Supreme Court resolved
this matter, holding that older workers are not required to give
back severance money to their employers before filing ADEA
The reason for the Court's decision
was the an older worker often needs the severance money to make
bills and that forcing the worker to give back the money in order to
make a claim would be tantamount to financial blackmail to avoid a
legitimate claim being filed.
In December 2000, the EEOC issued
new regulations reaffirming and expanding the U.S. Supreme Court''s
decision. The regulations, entitled "Waivers of Rights and
Claims: Tender Back of Consideration", became effective
January 10, 2001 and in summary, provide:
An older worker does not have to
"tender back" (give back) severance pay or other benefits
before filing a lawsuit to challenge an ADEA waiver;
- An employer cannot avoid the
"no tender back" rule by contractually requiring an
employee to pay damages, costs or attorneys'' fees for having
- An employer may only recover
severance monies paid if the employee successfully challenges
the validity of his waiver and wins on his age discrimination
claim. But.the employer is, at the court's discretion,
limited to recovering the lesser of: (a) the amount the company
paid for the ADEA waiver; or (b) the amount of the employee's
ADEA award; In other words, the employee would probably
not be able to keep both the settlement amount or award AND the
severance pay, but would be allowed to keep the larger of the
- An employee's lawsuit does not
stop the employer's commitments under the severance agreement
(i.e. the employer must continue making severance payments it
agreed to provide to the employee); and Waiver is an affirmative
defense to an ADEA lawsuit so a case will only be dismissed if
the employer can prove the employee's waiver was valid under the
What does all this mean to
seniors who are being terminated or laid off?
Essentially, you must give due
consideration to any documents that you sign when you leave.
And of course, you are entitled to have an attorney review these
documents before you sign them and even after you sign them.
You also have rights regarding the
waivers including that you must understand what it is that you are
signing. Nobody can say that you must sign them now or forget
it, and even if you do sign them, you have a solid week to
reconsider and undo your agreement.
It also means that if you have
signed such a waiver, it does not necessarily mean that you cannot
pursue an age discrimination claim against the employer and that if
you make that claim, you cannot be compelled to give back the
severance payments or the employer cannot suddenly stop making them
What it does not mean: If the
employer has fulfilled all of their duties under ADEA and OWBPA, you
cannot just sign the agreement and sometime later hope that you are
going to get both your severance pay and successfully file an age
You are given a window of
opportunity here, but at some time, that window does close and you
don't have unlimited recourse against your old employer. At
some time (and you don't have for ever), you must make a decision as
to whether you will accept the terms of the severance agreement and
the associated terms, or if you will pursue legal recourse.
Seek legal counsel early
It is recommended that you seek
professional legal counsel in making this determination. There
is the opportunity to have someone who has experience in these
matters take a look at your situation and help you determine first,
whether age discrimination has likely occurred, and if so, if it is
reasonable that it can be proven.
If you think that you have been discriminated
against because of your age, you should make an appointment with an
attorney early. This kind of decision potentially can involve
a great deal of money and there are often very few hard facts.
It can take time to pull together all of the circumstantial evidence
to determine if there is a reasonable case for age
You owe it to yourself to have the
most time possible to determine as many facts as you can and have
the most time to consider all of your options.
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