The Equal Employment Opportunity Commission (EEOC) has published guidance regarding the release of employment discrimination claims in severance agreements—specifically, claims related to age, race, sex, national origin, religion and disability. The guidance is written in a question and answer format directed at employees, but also contains useful information for employers.
The EEOC’s guidance presents an overview of the law regarding releases of employment discrimination claims and the “knowing and voluntary” standard applied to such releases. Understanding the “knowing and voluntary” standard is particularly important with respect to the Age Discrimination in Employment Act (ADEA). An amendment to the ADEA, the Older Workers Benefit Protection Act (OWBPA), sets forth minimum requirements for when a release of claims under the ADEA will be deemed “knowing and voluntary.” OWBPA’s requirements often come as a surprise to employers, particularly the disclosure requirements for securing valid releases in connection with a reduction-in-force. These disclosures must contain detailed information concerning the factors used in making termination decisions and the job titles and ages of all individuals who were considered for terminations. Generally, all employees over the age of 40 who are terminated as part of a reduction-in-force and offered severance benefits must receive these disclosures for their waiver of claims under the ADEA to be “knowing and voluntary.”
Although the EEOC’s guidance fails to account for some recent developments in the law, the guidance is useful in providing employers with a basic overview of the OWBPA and when its disclosure requirements can be triggered. Employers should carefully review this section of the guidance and consult with counsel when appropriate. In the context of a reduction-in-force, complying with OWBPA’s disclosure requirement is essential. If an employer runs afoul of the OWBPA, every release of age discrimination claims signed in connection with the reduction-in-force can be deemed invalid notwithstanding the employees’ acceptance of severance benefits. The terminated employees could then pursue claims of age discrimination which, in the context of reductions-in-force, are often brought as class actions.
The guidance is available here.