To make a severance agreement involving older workers stick, employers have to follow the Older Workers Benefit Protection Act (OWBPA). The law prohibits releases of Age Discrimination in Employment Act (ADEA) claims unless the agreement meets very specific requirements. (See “Valid OWBPA releases” in box below.)
One of those requirements is that employees must have the right to consider the agreement for at least 21 days, or 45 days if the offer is part of a reduction in force.
But beware: It’s how you actually ask employees to accept the agreement terms that counts—not what may be written in the agreement. Anything you do that makes it seem like they must sign the agreement right away may invalidate the whole thing.
Recent case: James Peterson and David Olson worked for Seagate Technology until they were terminated. They suspected that the company was pursuing a pattern and practice of terminating older employees such as themselves. They filed a class action lawsuit.
On the day they were terminated, they and everyone else who was being fired received a packet of materials that included a “Special Separation Agreement and General Release.” It purported to release all claims against the company—including ADEA claims—in exchange for a lump-sum payment.
Employees from the HR office handed out the packets and then stood at the exits.
Nineteen of the 21 terminated employees signed the agreements and handed them back to the HR sentries at the door. Peterson and Olson refused to sign.
In their lawsuit, they claimed that the employees who did sign did so under duress and did not have time to consider what they were doing. The company argued that there was no pressure other than the inherent stress of deciding between a possible lawsuit and money in hand.
But the court said there was ample evidence of duress. Having HR employees collect the forms was evidence that the signatures were not voluntary, no matter what the actual papers said. (Peterson, et al., v. Seagate, No. 07-2502, DC MN, 2007)
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