Filing an Age Discrimination Claim

Age discrimination is illegal. Employers sometimes try to avoid age discrimination claims by making severance pay conditional on signing a waiver. The Equal Employment Opportunity Commission (EEOC) has issued regulations for severance agreements involving potential age discrimination claims. These rules now allow employees to accept severance pay while still challenging the validity of age discrimination waivers.

The Age Discrimination in Employment Act of 1967 (ADEA) applies to employers with 20 or more employees and prohibits age discrimination against workers 40 and older.

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

ADEA waivers

When an employer offers severance, the agreement sometimes includes a waiver of your right to file an age discrimination claim. In exchange for this waiver, you receive something of value—early retirement benefits, a severance package, or both.

Congress worried that employees might be tricked or pressured into signing these waivers, so it passed the Older Workers Benefit Protection Act (OWBPA) as an amendment to the ADEA.

Provisions of OWBPA

The OWBPA set minimum standards for an ADEA waiver to be legally valid. Waivers must be written in plain English and give you 21 days to review the agreement. The employer must encourage you to consult an attorney and allow you seven days to revoke the waiver after signing.

During the 1990s, courts debated whether an employee could challenge an ADEA waiver without first returning the severance money.

In Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998), the Supreme Court ruled that older workers do not have to return severance money before filing ADEA lawsuits.

The Court reasoned that older workers often rely on severance to cover living expenses. Requiring them to repay it before filing a claim would function as financial pressure to drop valid claims.

In December 2000, the EEOC issued regulations called "Waivers of Rights and Claims: Tender Back of Consideration," effective January 10, 2001. These rules clarify:

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

• An employer cannot force you to pay damages, costs, or attorney's fees for filing a lawsuit as a condition of the severance agreement.
• An employer can recover severance money only if you successfully challenge the waiver's validity and win your age discrimination claim. Even then, the court may limit recovery to whichever is smaller: the amount paid for the waiver or the amount of your age discrimination award. This protects you from losing both the severance and any judgment in your favor.
• Your lawsuit does not stop the employer from paying severance. Payments must continue as promised. The employer must prove the waiver was valid under OWBPA to use it as a defense to dismiss your case.

What this means for you

Carefully review any documents you sign when leaving a job. You have the right to have an attorney review them before or after you sign.

You have rights regarding these waivers. You must understand what you're signing. No one can demand you sign immediately or lose your severance. After signing, you have seven days to change your mind and cancel the agreement.

Even if you've signed a waiver, you may still be able to pursue an age discrimination claim. If you do, you cannot be forced to return severance payments, and the employer cannot stop making them.

However, if the employer has followed all ADEA and OWBPA requirements, you cannot sign the agreement, take the severance, and then successfully sue for age discrimination.

You have a limited time to act. Eventually you must decide whether to accept the severance agreement or pursue legal action.

Seek legal counsel early

Talk to an attorney who handles employment law. They can review your situation and assess whether age discrimination likely occurred and whether you can prove it.

If you believe you were terminated because of your age, meet with an attorney soon. These decisions often involve significant money, and the evidence is usually circumstantial. It takes time to gather documents and establish whether you have a reasonable case.

Give yourself enough time to collect the facts and weigh your options.