ADEA Waivers and OWBPA Laws on Age Discrimination

• Filing an age discrimination claim

• ADEA waivers
• Provisions of OWBPA
• Seek legal counsel early

Filing an age discrimination claim

By: Roger Braddock

Age discrimination is illegal, but employers have tried to sidestep it by conditioning severance pay on signing a waiver that bars age discrimination claims. The Equal Employment Opportunity Commission (EEOC) has established rules about these waivers, and the courts have made it clear: you can take the severance money and still challenge the waiver in court.

The Age Discrimination in Employment Act of 1967 (ADEA) covers employers with 20 or more employees and protects workers 40 and older from age discrimination.

ADEA waivers

When you leave a job, an employer may offer severance in exchange for signing away your right to sue for age discrimination. This is called an ADEA waiver. In return for the waiver, you get severance pay or early retirement benefits.

Congress worried that employers were pressuring workers into these agreements. In response, Congress passed the Older Workers Benefit Protection Act (OWBPA) to set rules that protect older workers.

Provisions of OWBPA

For an ADEA waiver to be enforceable, the OWBPA requires it to be written in plain English. You must get at least 21 days to review it. The waiver must tell you to consult a lawyer, and you have seven days after signing to revoke the agreement.

In the 1990s, a legal question arose: did you have to give back the severance money before you could sue to challenge the waiver?

The Supreme Court answered no in Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998). You do not have to return severance money to file an age discrimination lawsuit.

The Court reasoned that severance money helps you pay bills while you're out of work. Making you return it just to file a claim would be financial coercion.

In December 2000, the EEOC issued regulations that reinforced and expanded this ruling. Effective January 10, 2001, these regulations state:

You do not have to return severance pay or other benefits before suing to challenge an ADEA waiver.

• An employer cannot get around this rule by requiring you to pay damages, costs, or attorney fees for filing suit.
• An employer can only recover severance money if you win your age discrimination case. Even then, the employer gets back the lesser of: (a) what they paid for the waiver, or (b) what the court awarded you. This means you'd keep whichever is larger—the severance or the award—but not both.
• The employer must continue paying severance even while you're suing. The waiver is an affirmative defense, so the employer must prove it was valid under OWBPA rules or the case won't be dismissed.

What does this mean for you?

Read any documents carefully before you sign them. You can have a lawyer review them before or after signing.

You have rights. You don't have to sign immediately, and even after signing, you have seven days to change your mind and cancel the agreement.

Signing a waiver doesn't lock you out of filing an age discrimination claim. If you do file, you can't be forced to return severance payments, and the employer can't stop making them to you either.

But understand: if the employer followed all the ADEA and OWBPA rules correctly, you can't have it both ways. You can't take severance and win a separate age discrimination award.

Time matters. You have limited options, so you need to decide quickly whether to accept the severance or pursue a legal claim. You may not be able to do both.

Seek legal counsel early

Get a lawyer to help you decide. An attorney can review what happened and tell you whether you likely have an age discrimination case that can be proven.

If you think you've been discriminated against because of your age, see an attorney soon. These cases involve significant money but often turn on circumstantial evidence. Building a strong case takes time.

Give yourself enough time to gather facts and weigh your options.