The District of Minnesota recently invalidated a release of claims used by Guidant Corporation in connection with a 2004 RIF on the grounds the release did not comply with the Older Worker Benefits Protection Act ("OWBPA"). Pagliolo, et al. v. Guidant Corp., available at 2007 WL 1040869. The court held the release violated OWBPA by, among other things, failing to identify, as "eligibility factors" for the group termination program, the criteria by which employees were selected for termination.
Guidant witnesses testified that "job performance and criticality" were the criteria used to select employees for the RIF, and the Pagliolo court concluded those criteria should have been disclosed as "eligibility factors." The court clarified that employers need not disclose the particular reason each individual was selected for termination but must disclose the general criteria used to make selection decisions.
Pagliolo will likely have persuasive effect, even outside of the Eighth Circuit. As we monitor the developing case law, we recommend that companies take certain steps:
- For group terminations, consider including in OWBPA disclosures a statement identifying the general criteria used to select employees for termination.
- Review release documents and disclosures to ensure they strictly comply with the requirements of OWBPA.
- Carefully examine decision-making processes with respect to group terminations to ensure disclosures identify proper decisional unit (the "class, unit, or group of individuals" from which termination decisions were made).
Dorsey will monitor the case law in this area as it develops. In the meantime, please contact us directly if you have any questions.