Issue: Very precise wording is needed when employees waive their rights to sue for age discrimination.
Risk: Employers often treat age-bias waivers like any other waiver, a critical mistake that can cost thousands in court.
Action: Audit your age-discrimination waivers in severance packages. Key in on the following five crucial points.
When you terminate employees, it's smart to ask them to sign agreements that waive their rights to sue for discrimination. Typically, employers wrap such waivers into severance packages.
But that's not enough for departing employees over age 40. If you want to prevent those people from filing age-discrimination lawsuits, the Older Workers Benefit Protection Act (OWBPA) says your waivers must cite age discrimination to be valid. In fact, your age-bias waivers must be crystal clear and hit on these five points:
1. Refer specifically to the Age Discrimination in Employment Act (ADEA) and the employee's age-discrimination rights and claims.
2. Don't ask employees to surrender rights to claims that may arise after signing the agreement.
3. Provide something of value that the employee otherwise wouldn't be entitled to, such as money or other benefits.
4. Urge the employee to consult an attorney before signing.
5. Give the employee at least 21 days to think about the deal and at least seven days after signing to change his or her mind.
If you terminate more than one employee, your waivers must give employees at least 45 days (instead of 21) to consider the agreement, plus you must provide the job titles and ages of all employees being laid off.
Because of these strict rules, don't make age-bias waivers a do-it-yourself project; use an attorney to help you draft it.
Case in point: A laid-off IBM engineer signed a severance deal that waived his right to sue for several reasons.
Before signing, he asked whether he could still sue for age bias or not. IBM personnel told him they weren't comfortable explaining the agreement.
The employee sued and the court let his case go to trial, saying that OWBPA releases must be written in easy-to-understand language. The employee's confusion showed that wasn't the case, and IBM's refusal to answer showed it wasn't willing to help. (Thomforde v. IBM, No. 04-1538, 8th Cir., 2005)