If you offer severance pay to discharged workers, take note. If you’re terminating an older employee—and you ask the employee to waive the right to sue for alleged age discrimination in exchange for your severance package—be sure to offer something more than what you offer others who lose their jobs.
Courts may not honor or enforce such age discrimination waivers unless you can prove you offered the employee more than a standard severance agreement.
The “extra” doesn’t have to be big. Courts have held that keeping a laptop computer was enough extra payment to support an age bias waiver.
Advice: Always consult your attorney before modifying a severance plan. He or she can help draft an agreement that sticks.
Recent case: Thaddeus Kabat, who is over age 40, accepted a job as a district manager for Bayer CropScience. About eight months later, he learned he was being terminated because of a restructuring.
Bayer offered him a severance payment under the company severance policy, with additional benefits such as relocation assistance and discounted purchase of a company car. In exchange, he agreed to waive any age discrimination claims he might have.
Kabat found out later that his job had been filled by someone younger than 40. He then sued, alleging that the real reason he was terminated was his age. He also claimed his waiver was invalid because he received the standard severance payment.
But Bayer proved that he had received extras, so the court said the waiver was valid. (Kabat v. Bayer CropScience, No. 1:08-CV-341, MD NC, 2010)
Final note: The court also said that it didn’t matter that Kabat had signed the waiver before he had any idea that age discrimination might be an issue. That’s another reason to include age bias waivers in severance agreements.
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