You can’t have your Hershey’s Bar and eat it too—or at least you can’t when you have signed a valid waiver of age discrimination claims in return for severance pay and you then attempt to sue your employer for exactly that. Nonetheless, that didn’t stop a group of ex-managers of the Hershey Company from trying.
In 2009 and 2010, Hershey terminated the employment of six managers. In exchange for severance pay, each manager was given the option of waiving his or her claims against the company, including those for age discrimination. Each manager did so. Approximately two years later, realizing that more money may have slipped through their Butterfingers and hoping to Skor S’more money from Hershey, the managers sued the company for age discrimination.
The managers argued that the waivers they had signed were invalid under the Older Workers Benefit Protection Act (“OWBPA”), 29 U.S.C. § 621, et seq. The OWBPA provides that an employee may only waive his or her rights under the Age Discrimination in Employment Act (“ADEA”) if the waiver is “knowing and voluntary.” In order for the waiver to be knowing and voluntary, it must (1) be written in a manner calculated to be understood by the employee, (2) specifically refer to rights or claims arising under the OWBPA, (3) not waive claims that arise after the waiver is executed, (4) be in exchange for consideration, (5) advise the employee to consult an attorney, and (6) be revocable within 7 days. When employees are terminated “in connection with an exit incentive or other employment termination program offered to a group or class of employees,” additional requirements apply. In particular, the waiver must include certain disclosures, including the ages of all individuals selected for termination and the ages of all individuals in the same job classification or organizational unit as the employee who are not selected for termination.
The managers contended that they were terminated as part of a group termination and that because they did not receive the appropriate disclosures, their waivers were not valid. The United States District Court for the Northern District of California disagreed. It held that the managers (with the exception of one) were subject to individual terminations, not group terminations. The court distinguished the two types of terminations as follows: an individual termination is directed at a single employee who understands that the termination is directed at him or her for personalized reasons, and thus might seek to resolve or negotiate the termination; an employee who is subject to a group termination is told that he or she is being terminated for no individual fault, but rather as part of a quick and wholesale reduction of a group or department. Because the Hershey managers were terminated for performance issues, they were clearly subject to individual terminations.
Compliance with the OWBPA is important when seeking a waiver of age discrimination claims from terminated employees. Failure to do so can land employers in Mounds of trouble.