With businesses facing revenue losses due to the Coronavirus-induced economic decline, many employers are reducing their costs by eliminating jobs. Some are telling employees their job terminations are due to the employees’ individual job performance and are making modest severance pay offers in exchange for the employees’ release of claims.
Job terminations could be masking age discrimination
But the employer might be violating its disclosure obligations and masking age discrimination. The Older Workers Benefit Protection Act (OWBPA) amended the Age Discrimination in Employment Act (ADEA) to add requirements for a valid waiver of age discrimination claims. If a release in a separation agreement fails to satisfy those requirements, the waiver is unenforceable and the employee may pursue claims under the ADEA.
For a termination that is part of an “exit incentive program” or “other employment termination program,” the employer must provide 45 days to consider the release (vs. 21 days for an individual termination) and must disclose information about the ages and job titles of employees who are selected and not selected for the program. The purpose of these informational requirements is to help employees to make an informed choice about whether to give up age discrimination claims.
An “other employment termination program” usually refers to two or more employees who were involuntarily terminated and offered a standardized formula or package of severance benefits. The program is generally not subject to negotiation between the employer and employee.
Watch out for Older Workers Benefit Protection Act (OWBPA) violations
During the current crisis, some employers have told a group of employees that they are being terminated due to the employees’ individual job performance and offered them severance in the same amount or based on the same formula. But the employers did not provide the employees the ages and job titles of other employees being discharged and retained. That potentially violates the OWBPA.
An example is illustrative. An employer notifies 10 sales representatives in a division that because of their unsatisfactory sales, it is terminating their employment. These sales representatives are terminated in the same week and all are offered one week of severance for every full year of employment. The severance agreement gives the employees only 21 days to consider the offer and provides them no information as to the other sales representatives terminated and retained (which would have shown 8 of the 10 terminated are in the protected age group, and only 2 of the 10 retained are in the protected age group). These employees have a claim that their terminations were part of an “employment termination program” because they were offered a standardized severance package available to two or more employees and the terms were not subject to negotiation. That claim will be even stronger if but-for the virus-induced sales downturn, the employees would not have lost their jobs, making the terminations look more like part of a cost-cutting program.
In this example, even if the employees signed the severance agreement with a release of ADEA claims, they can pursue age discrimination claims. And they are not required to tender back the severance pay provided as consideration for the release before filing an EEOC charge or lawsuit.
Age discrimination is on the rise and has been accelerated by the current economic downturn. If you are over 40, you should make sure that you receive the information to which you are entitled before signing a waiver of age discrimination claims. And if you signed an invalid waiver and discovered that you have a legitimate age discrimination claim, you should consider challenging the waiver and pursuing your claim.
Written by: Laura Lindner
For more than 27 years, Laura has represented employers in employment litigation cases. She is a tenacious and successful litigator who has tried many cases throughout the country and has resolved many disputes through tough, skilled negotiation. She is known for providing clients excellent advice, unmatched service, and steadfast emotional support throughout difficult employment situations.