The Big Uneasy (Part 3): When is a Release not a Release?
Much to the surprise of many business managers, a terminated employee who has been paid a severance may still sue for age discrimination after signing a release if the release was not carefully drafted. The complexities of such a release are compounded in the context of a reduction in force (RIF). Under the Older Workers’ Benefit Protection Act of 1990 (OWBPA), an employer wishing to obtain an enforceable release that releases all claims of age discrimination needs to consider carefully the following requirements:
|1.||Does the release properly identify the decisional unit at issue?|
|2.||Has appropriate time for consideration and revocation been provided?|
|3.||Has the release been written in a manner calculated to be understood by the average individual being requested to sign it?|
|4.||Does the release properly identify the pertinent eligibility factors for inclusion in the layoff?|
|5.||Does the information provided with the release identify the job titles and ages of the individuals eligible or selected for the program?|
Those are a lot of points to consider. Unfortunately, OWBPA and the courts that have interpreted the Act are not clear on these points. In fact, the courts disagree on whether these requirements should be strictly enforced or whether the ambiguous nature of the Act itself argues for less strict application of the law.
While there are legal and mathematical elements of a release, there is also a need for careful drafting — what I call the art of the release. When applying the law and considering the math, you must be careful that the art of the release drafting does not appear to be, as one court put it, an employer “fiddling with definitions” to mask evidence of age discrimination.
In the context of a RIF, there is probably no release-related issue more fraught with the danger of future litigation than the definition of the decisional units in which the employer must identify the classifications and ages of employees that were selected or were considered but not selected. The description of the decisional unit is intended to reflect the employer’s selection process. For example, to say that the decisional unit is the entire company when only employees in one department were actually terminated may seem like an attempt to “mask” the impact that the layoff had on employees over the age of 40.
Managers who know so much about a RIF may understand the release, but they may supply their own context from their knowledge to do so. It may be wise to ask someone not directly involved in the process to read the portions of the release intended to comply with OWBPA. Once they have done so, have them tell you what they understand the employer’s process to have been in determining who will be laid off. If their answer is confused, you may need to go back to the drawing board on that release.
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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.