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Offering settlement or severance? Don’t forget special ADEA rules

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in Discrimination and Harassment,Human Resources

If you plan to offer an employee age 40 or older a severance payment in exchange for promising not to sue, don’t forget to include Age Dis­­crimi­­na­­tion in Employment Act (ADEA) review-and-consult language in the agreement. The ADEA has very specific requirements for allowing the employee to show severance agreements to an attorney before signing.

If you leave out that language, the employee may take the offer but change her mind later and still sue. Other claims may not hold up, but age discrimination allegations will likely get a court hearing.

Recent case: Paula worked for Blue Ridge Electric for 24 years until her job was eliminated because her position was unnecessary. The company discovered this when she took lengthy FMLA leave and the work still got done. She was offered a substantial payment not to sue and she signed on the dotted line.

Then she changed her mind and sued for FMLA violations and age discrimination, alleging that the settlement didn’t comply with the ADEA’s legal review requirements for waivers.

The court agreed the contract barred her FMLA claims, but said her age discrimination claims could proceed. So while Blue Ridge Electric thought it had settled all claims, its payment covered everything except age discrimination. (Pope v. Blue Ridge Electric, No. 5:10-CV-185, WD NC, 2013)

Final note: Always have your attorney prepare and negotiate severance agreements, to make sure the contract is airtight and won’t open you up to additional litigation despite your payment.

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