Unfortunately, the current economy has caused many employers to consider the option of implementing a reduction-in-force ("RIF"). Employers that wish to obtain full releases from employees age 40 and over during a RIF must be careful to comply with the strict requirements of the Older Workers' Benefit Protection Act ("OWBPA"), which requires releases to contain certain written disclosures in order to properly waive federal age discrimination claims.
A failure to comply with the hypertechnical requirements of the OWBPA will result in the release being invalid as to age discrimination claims. For example, one court recently held that an employer's written notification to employees that 154 employees were affected by the RIF (when the actual number was 152) was sufficient grounds to invalidate the age releases.
Particularly controversial is the inclusion of RIF "selection criteria" (i.e., the criteria used by the employer to select individuals for layoff). [See http://www.fenwick.com/docstore/Publications/Employment/EB_10-27-05.pdf] Some employers have taken the position that selection criteria need not be included in the releases, as the statute and regulations do not explicitly refer to the inclusion of "selection criteria." However, several federal district courts have recently held that an employer must identify – at least in general terms – the criteria used by the employer in selecting individuals for layoff. These courts have held that employers can satisfy their obligations by identifying broad factors (such as job criticality and job performance) in the releases, but are not required to disclose which factors led to each individual's selection for layoff.
Accordingly, it is prudent for employers to include selection criteria in all OWBPA releases used in connection with a RIF. Employers should also consult with counsel early in the RIF planning stages to ensure that not only are the releases OWBPA-compliant, but that all other legal requirements related to the RIF (such as any applicable mass layoff or plant closing notice requirements) are met.