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Jan 2001
15
January 15, 2001

EEOC Issues New Regulations on Waivers of Age Discrimination Claims

The EEOC has issued new regulations regarding the validity of waivers of age discrimination claims under the federal Age Discrimination in Employment Act ("ADEA"). These regulations took effect on January 10, 2001.

The Older Workers Benefit Protection Act ("OWBPA"), which amended the ADEA in 1990, contains specific requirements for waivers of ADEA claims. If an ADEA waiver does not follow these requirements, or is otherwise not "knowing and voluntary," then the waiver is invalid and unenforceable. For example, employees age 40 and over must be given 21 days to consider a waiver before signing it (or 45 days under certain circumstances) and 7 days to revoke a waiver after signing it. There are other requirements as well, as explained in detail in EEOC regulations issued in 1998.

The EEOC has added more requirements for ADEA waivers. First, an employer may not require an individual to pay back consideration that was paid to the individual in exchange for a waiver before filing suit under the ADEA. In other words, an individual has the right to challenge the validity of an ADEA waiver, even without paying back the consideration paid for the waiver in the first place. However, if the individual successfully challenges the waiver and prevails on an ADEA claim, the employer may then be entitled to setoff the consideration against any damages awarded to the individual.

The EEOC also states that a covenant (promise) not to sue the employer may be impermissible as to age claims. This is because an individual always has the right to challenge the validity of an ADEA waiver, and an improperly drafted covenant not to sue could imply that an individual is giving up this right, which could invalidate the entire ADEA waiver. Therefore, if an employer wishes to use a covenant not to sue in a separation or release agreement, it must draft the language very carefully to avoid this result.

Furthermore, an employer may not require an individual to pay the employer's attorney's fees and costs, or other damages, if the employee files suit under the ADEA. The EEOC believes that this would have an impermissible chilling effect on employees, discouraging them from challenging the validity of an ADEA waiver.

The new regulations also provide that, even when an individual who has signed an ADEA waiver files suit under the ADEA, the employer may not stop paying consideration given for the waiver. For example, if the employer has agreed to continue the individual's salary and benefits for six months in exchange for an ADEA waiver, and after three months the individual files suit under the ADEA, the employer must continue to pay the individual's salary and benefits for the full six months.

It is no longer safe to use "form" ADEA waivers that have been used in the past, without reviewing them for compliance with these new regulations. If an ADEA waiver does not comply with these new rules, the waiver may be totally invalid.

For more information, contact your WN&J attorney.
 

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