Obtaining an effective waiver of claims in the context of a reduction in force, an exit incentive, or other termination program is tricky. The Older Workers Benefit Protection Act (OWBPA) has numerous requirements that must be followed “just right” in true Goldilocks fashion. Compliance with the OWBPA is crucial because an employee, over the age of forty, who signs a noncompliant waiver may pursue an age discrimination claim against her former employer without giving back the consideration received for signing the invalid release.

Any waiver of age discrimination claims in this context must follow these requirements:

  • be written in plain language;
  • refer to the Age Discrimination in Employment Act by name when describing the claims to be released;
  • not waive prospective rights;
  • identify consideration in addition to what the employee is already entitled to;
  • advise the employee in writing to consult with an attorney;
  • provide selected employees with 45 days to accept;
  • allow at least a 7 day revocation period;
  • identify the decisional unit: the “class, unit, or group of individuals” covered by the termination program; and
  • disclose the job titles and ages of all individuals in that decisional unit designating which were and were not selected.

The case law illustrates the pitfalls.

Foster v. Mountain Coal Co., LLC, 2014 WL 2024877 (D. Colo. 2014) invalidated a release because it did not explicitly advise the employee to consult with an attorney before signing it. Past tense, passive language that the employee had the “opportunity for consideration and consultation with attorney” was insufficient. Too hot.

Loksen v. Columbia University, 2013 WL 5549780 (S.D.N.Y. 2013) invalidated a waiver because the employer failed to include one employee’s job title and age in its decisional unit disclosure. The job titles and ages of sixteen of the seventeen employees in the decisional unit were disclosed. While this omission was admittedly immaterial, it alone was sufficient to invalidate the release. Too cold.

O’Connor-Goun v. Weill Cornell Medical College of Cornell University, 956 F.Supp.2d 549 (S.D.N.Y. 2013) invalidated a waiver that failed to include the 7 day revocation provision required by the OWBPA. Cornell University argued – in vain – that such clauses are implied in the agreement as a matter of law. The court held that the OWBPA does no such thing. Too hard.

Pagliolo v. Guidant Corp., 483 F. Supp. 2d 847 (D. Minn. 2007) invalidated a waiver that improperly aggregated employees of six separate corporate subsidiaries into one decisional unit for RIF purposes. Listing nearly all United States-based employees in a single mega-disclosure obscured the information that OWBPA requires be provided. Furthermore, the disclosure should have noted those employees that were eligible for the severance plan but opted to accept redeployment within the company; failing to provide that distinction constituted a material misrepresentation because it created the illusion that there were about 10% fewer terminations. Too soft.

But just right is achievable. Adams v. Moore Business Forms, Inc., 224 F.3d 324 (4th Cir. 2000) involved terminations in connection with the closing of the employer’s manufacturing plant in West Virginia. Here, employees argued that they were entitled to information concerning the ages and job classifications of workers at any facility to which work from their plant was transferred, not just information for their closing plant. The Fourth Circuit sent those Goldilocks scampering home empty-handed.

It can be difficult to draft these waivers just right. Defining the decisional unit is especially difficult because business executives have often brainstormed broadly before deciding narrowly. Thus, after considering the entire plant, decisions are often limited to a single department or shift. It is not the final selections, however, but the universe considered that is the true decisional unit under the regs. 29 C.F.R. § 1625.22(f)(3)(i)(B). That is, however, merely the first step; the second step – defining that unit with specificity – is, as illustrated in Guidant Corp., equally critical.

It can also be dangerous to follow the template releases from the last RIF without looking at the current case law which is what appeared to have happened in Mountain Coal and Cornell University. In contrast, the mistake in Columbia University looks like a proofreading error only to those who have never had the task of assembling such OWBPA disclosures; it requires far more than proofing to back check that each job in the decisional unit is captured, that job titles are correct, that ages of incumbents are correct, etc.

The OWBPA creates a “just right” standard. Coming close isn’t enough so be careful.