As part of a reduction in force or involuntary termination program, employers often offer former employees severance packages. In exchange, careful employers request releases to limit any potential liability.
Specific requirements of the Older Worker Benefit Protection Act (OWBPA) frequently cause employers difficulty. This statute requires that releases of age discrimination claims be:
Any failure to comply with the provisions of the OWBPA will render the entire release ineffective to waive age discrimination claims. For example, merely stating in the release that an employee "has been" advised to consult with an attorney is insufficient to meet the requirement that the employer advised the employee in writing to consult with an attorney prior to signing the release. See Cole v. Gaming Entertainment LLC, 199 F.Supp.2d 208, 214 (D.Del. 2002). In addition, the 8th Circuit Court of Appeals recently held that a waiver of a age claim was ineffective as a matter of law as it was not written in a matter calculated to be understood by the terminated employee as required by the OWBPA. Thomforde v. IBM, 406 F.3d 500 (8th Cir. 2005).
In order to obtain the full benefit and piece of mind from any accepted severance payment, employers should draft releases carefully. For more information about the OWBPA or for assistance in preparing an effective release or severance agreement, please contact Mary Elizabeth Davis.