Age is but a number — except when it comes to employee separation agreements. Written agreements can protect employers from future claims, including those related to age discrimination. If you’re parting with employees 40 years and older, it’s important to understand the provisions required by the Older Workers Benefit Protection Act (OWBPA), a part of the Age Discrimination in Employment Act (ADEA).
What is the Age Discrimination in Employment Act (ADEA)?
The ADEA offers protection to workers at least 40 years old by eliminating age discrimination and providing equal employment opportunity. In particular, the present-day ADEA prohibits discrimination in the following key areas:
Hiring
Promotions
Layoffs and Terminations
Wages and Compensation
Benefits
The ADEA was signed into law in 1967.
What is the Older Workers Benefit Protection Act (OWBPA)?
In 1990, Congress amended the ADEA by adding the OWBPA, which serves as an extra layer of protection for workers 40 and older. The OWBPA safeguards older workers in a number of ways, including mandatory requirements when asking parting employees to “knowingly and voluntarily” waive their rights under the ADEA.
What must the separation and release agreement include to comply with the OWBPA?
The OWBPA waiver of rights is most often part of the employee separation agreement. The pinpointed seven criteria that must be met to ensure a waiver of rights is knowing and voluntary under the OWBPA.
To be knowingly and voluntarily entered into, the waiver agreement must:
Be written in a manner that can be clearly understood.
Specifically refer to rights or claims arising under the ADEA.
Advise the employee in writing to consult an attorney before accepting the agreement.
Provide the employee with at least 21 days (45 days in group layoffs) to consider the offer.
Give an employee seven days to revoke his or her signature.
Not include rights and claims that may arise after the date on which the waiver is executed.
Be supported by consideration in addition to that to which the employee already is entitled.
What is included in an OWBPA disclosure?
Employers must meet the minimum qualifications that make the waiver of age discrimination claims “knowing and voluntary,” as detailed in the previous section.
If the group includes two or more workers aged 40+, additional requirements must be met.
Employers must give employees written notice of the layoff and a 45-day period to consider signing the waiver. Employers must also provide, in writing:
The decisional unit, which is the group of employees from which the employer chose the employees who were and who were not chosen for layoffs.
For example, if an employer needs to reduce overall headcount by ten employees, the decisional unit is likely “all employees.” If, on the other hand, the employer needs to eliminate five accountants, the decisional unit might be the “accounting team.”
The eligibility factors for layoffs
Eligibility factors often correlate with the decisional unit; for example “All employees on the accounting team.” However, there has been about this.
The time limit, which should be 45 days in the case of group layoffs. In addition to the 45-day period to consider and accept the terms of the agreement, employees must be given 7 days to revoke the agreement.
The job titles and ages of all individuals in the decisional unit, including those whose positions are eliminated and those who are being kept on board.
If I don’t meet all of the OWBPA requirements the first time, can I send a second waiver?
No. Employers must get it right the first time. If the waiver doesn’t meet all of these requirements, it’s as though the OWBPA waiver of rights wasn’t provided at all. Plus, you can’t make a defective waiver valid by issuing a subsequent letter with information that wasn’t included in the original agreement.
In Summary
It’s critical to make sure that your separation agreements are executed with precision that properly enforces the requirements under the OWBPA. Even if affected employees waive their rights, the EEOC has the right and responsibility to ensure that your decisions are free from all types of discrimination that could result in adverse impact. It’s important to get it right from the start.
Onwards HR is an all-in-one separation platform that automates separation agreements, release waivers, and OWBPA disclosures in compliance with corporate policy and employment laws.
Age discrimination involves treating an applicant or employee less favorably because of his or her age.
The Age Discrimination in Employment Act (ADEA) forbids age discrimination against people who are age 40 or older. It does not protect workers under the age of 40, although some states have laws that protect younger workers from age discrimination. It is not illegal for an employer or other covered entity to favor an older worker over a younger one, even if both workers are age 40 or older.
Discrimination can occur when the victim and the person who inflicted the discrimination are both over 40.
Age Discrimination & Work Situations
The law prohibits discrimination in any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, benefits, and any other term or condition of employment.
Age Discrimination & Harassment
It is unlawful to harass a person because of his or her age.
Harassment can include, for example, offensive or derogatory remarks about a person's age. Although the law doesn't prohibit simple teasing, offhand comments, or isolated incidents that aren't very serious, harassment is illegal when it is so frequent or severe that it creates a hostile or offensive work environment or when it results in an adverse employment decision (such as the victim being fired or demoted).
The harasser can be the victim's supervisor, a supervisor in another area, a co-worker, or someone who is not an employee of the employer, such as a client or customer.
Age Discrimination & Employment Policies/Practices
An employment policy or practice that applies to everyone, regardless of age, can be illegal if it has a negative impact on applicants or employees age 40 or older and is not based on a reasonable factor other than age (RFOA).