Your company is about to conduct some layoffs. That’s common enough. You don’t want to be sued. So you offer the employee severance benefits along with a release. Since your employee is over 40 years old, you really don’t want to deal with age discrimination claims. So you include in your waiver any claims under the Age Discrimination in Employment Act (ADEA). The employee signs the release, and you breathe a sigh of relief. Then your company is served a summons and complaint. Yep. The employee who waived the ADEA claim is now suing your company for age discrimination. You’re not worried, because, after all, your employee signed a release. Boy are you shocked, when the court invalidates your release and allows the employee’s suit to go forward! Wait. Can that happen? It can and it just did. Read on to learn more about the case and how you can make sure that doesn’t happen to your company….
You’ll probably recognize the defendant in this case. It’s AT&T. You may not even be surprised. It’s not the first time AT&T has been sued over allegations of age discrimination in its layoff policies. The case is Allison Ray v AT&T Inc., et al Case 2:18-cv-03303 (E.D. PA Jan. 11, 2019). In a nutshell, Ms. Ray worked as a Sales Manager for AT&T from September 2011 through January 15, 2018. She oversaw various southeastern Pennsylvania retail locations within the Ohio/Pennsylvania Market, and part of the East Region of AT&T Mobility Retail Sales and Services . On November 16, 2017, Ms. Ray received a “Surplus Notification Letter”, essentially starting the process by which her position was eliminated, and she was ultimately let go. Ms. Ray received an offer of severance benefits, in exchange for signing a release, waiving pretty much any claim that could legally be waived, including claims under the Age Discrimination in Employment Act (ADEA). She signed the release, and later filed an ADEA claim.
What’s wrong with this picture? How can an employee waive claims via a signed release, get severance benefits in exchange for the waiver and then bring the very type of claim s/he waived? Most of the time an employee can’t do that– or rather they will see their claim dismissed if they do. This case was different though. This case involved an ADEA claim waiver, and they are governed by the Older Workers’ Benefits Protection Act (OWBPA). I previous wrote about the OWBPA and all its requirements here. For those deatils you can read that post. I’m going to focus on the specific parts of the OWBPA that apply to this case.
What did AT&T do wrong in connection wtih its release. Let’s start with some basics. Any waiver in any release must be knowing and voluntary. In this case it means that the employee must be signing the release of their own free will, without threats or coercion, either express or implied, and, they must know what exactly they are waiving. To ensure that the waiver is knowing and voluntary, the OWBPA requires that when discharging one or more employees over the age of 40, an employer must provide the employee the following information:
- The class, unit or group of individuals covered by the exit program.
- The eligibility factors for the exit program.
- The job titles and ages of all individuals eligible for or selected for the program.
- The ages of all employees in the same class who were not eligible or selected for the program.
Here is where AT&T fell short. I won’t get into all the details here. The bottom line is that the court found that AT&T’s information was vague and did not provide a clear indication of how it arrived at its decision. The purpose of requiring the above information is precisely so that an employee can evaluate whether s/he might have an ADEA claim and if so, how substantial it might be. In other words, meeting those requirements is supposed to ensure that the waiver is in fact knowing and voluntary.
Is that really enough of a reason to let an employee get severance pay and also sue for more damages? According to Congress, and the US Supreme Court, yes. The OWBPA requirements are very strict, and they are interpreted very strictly. Employers wishing to extract an ADEA waiver from their former employees must comply with ALL requirements, even those that seem to be techinical, meaningless details. Failure to comply with even one requirement, even if that failure doesn’t result in actual harm to the employee, will invalidate any waiver of ADEA claims.
You have a right to discharge employees. You have a right to get a waiver of claims, including ADEA claims in exchange for severance pay and a release. Just make sure that if you are discharging and employee over 40 years old and if you want him or her to waive an ADEA claim that your waiver complies with every single OWBPA requirement. In other words, dont’ be like AT&T.
Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
Before choosing an attorney, you should give this matter careful thought. The selection of an attorney is an important decision. If you find this communication to be inaccurate or misleading, you may report it to the Committee on Attorney Advertising Hughes Justice Complex, CN 037, Trenton, NJ