Employment & Labor Law

Age Discrimination Releases – The Courts Are Finding Devils in the Details

Employers terminating employees, particularly in layoffs, often condition the receipt of severance pay or other benefits on the employees signing a release agreement. In return for the money or benefits it provides, the employer might as well get peace of mind that it won’t face any claims from the terminated employees. In order to achieve this goal, employers should pay attention to the details in the severance agreements as there is a growing trend of courts rejecting releases, particularly in group severance situations.

The more stringent requirements for a valid release of employment-related claims come from the Older Workers Benefit Protection Act’s conditions on age discrimination releases. Most employers know the general requirements and that these requirements increase when a group (rather than individual employee) separation is involved. Added items called for in a group separation program are employer disclosure of employee demographics (ages and job titles), criteria for selecting employees, and the employer’s decisional unit(s) across which the selections were made. While these specific requirements only apply to age discrimination releases, group layoffs or early retirement incentive programs usually involve employees protected by age discrimination laws (i.e., those age forty and older).

Courts are taking note that employers are often not paying attention to the details of the notice requirements in group separations. As a result, courts are voiding some releases, which in a group separation typically means all the employees separated are no longer barred from suing for age discrimination. The defects being found by the courts most often concern whether the employer gave the employees an accurate list of all the persons let go or eligible for the incentive program, whether the employer reasonably accurately described the criteria for determining which employees are eligible for the program (e.g., how employees were selected for layoff), and whether the employer properly described and included peers in other jobs, departments or locations of the employer not selected.

The message to employers is to not only pay attention to the provisions of the age discrimination release agreement itself – such as providing employees adequate time to consider the agreement (21 days minimum in an individual separation, 45 days minimum in a group separation), providing seven days minimum after signing to revoke the release agreement, informing the employee that he/she may review it with an attorney, specifically stating that the release agreement covers age discrimination claims – but to also pay attention to the details of what must go in the group separation release agreement attachment that contains the required notice items. Don’t assume the details don’t matter. In light of this court trend, plaintiffs’ attorneys will be looking to use these decisions to break release agreements and bring suits against employers.

If you have questions on this or another employment law topic please contact Craig M. Brooks.