Employers Should Review Existing Practices Regarding Releases of Age Discrimination Claims

Employers, beware! Your releases of age discrimination claims may be fatally flawed following a recent decision from the U.S. Court of Appeals for the Tenth Circuit. This Court has ruled that employers seeking waivers of claims under the Age Discrimination in Employment Act (ADEA) in accordance with the Older Workers’ Benefit Protection Act (OWBPA) must now clearly explain not only who has been selected for layoff, but also why each employee was selected for layoff.

The Court in Kruchowski v. Weyerhaeuser, No. 04-7118 (September 13, 2005), concluded that the company failed to provide sufficient notice to each employee of its reasons for choosing that employee in its reduction-in-force (RIF), and that the waiver of claims provided in exchange for severance pay was therefore invalid. As a result of the Court’s ruling, 16 plaintiffs were permitted to retain severance pay and to pursue age discrimination claims against their former employer.

Although the decision binds only the district courts in Oklahoma, Kansas, New Mexico, Colorado, Wyoming, and Utah, the Tenth Circuit is the first U.S. Circuit Court of Appeals to consider the issue, and other courts may find the Tenth Circuit’s reasoning persuasive.

All employers should review their existing practice with respect to OWBPA notices, and ensure that they provide outgoing employees with sufficient information to knowingly and voluntarily release an age discrimination claim, including information regarding why each employee was selected for RIF. Employers must supply specific and detailed reasons for making these employment decisions in order to obtain a valid release of age discrimination claims. Because each case is unique, employers should consult with counsel before providing OWBPA notices to employees from whom they intend to obtain releases. For assistance in drafting an OWBPA release or advice regarding other employment issues, please contact Mary Elizabeth Davis.

Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.