This is a common—and devastating—occurrence
for many “older workers.” We address this question in tomorrow’s class. “Older
workers” is in quotes because the U.S. has a law called the Older Worker
Benefits Protection Act (OWBPA). It amends the Age Discrimination in Employment
Act, a law that pertains to employees who are 40 years of age or more.
Perhaps you—or a friend, or parent, or spouse— has
experienced the following: They show up for work, and have a good (or better
work record), and they are suddenly told that this is their last day of
employment. They are presented with a severance agreement, where they waive
their right to sue for age discrimination or anything else (note: if there is
no severance agreement presented to the employee, there may be age
discrimination liability, but as you will see in a second, the OWBPA does not
apply).
Take my friend, over 60
years old, as an example: A short time ago, he was called into a meeting around
2:00 p.m. He was told that his employer was “going in a different direction.”
His email was cutoff while he was in the short meeting. He was given five
minutes to clean out his desk.
You would think he
did something wrong. Nope. This happens over and over again.
He was handed a severance agreement. He was asked to waive
any claim to legal action in exchange for about three months of severance pay.
I looked it over. The
agreement met OWBPA requirements. That did nothing to alleviate the shock and
humiliation my friend and his wife experienced—including their sudden need to
spend about $16,000 on new health insurance.
The OWBPA requires an employee to give a “knowing and
voluntary” waiver of his or her right to sue.
Here are the elements of the law (I am summarizing):
(A) the waiver is written
in plain language
(B) the waiver
specifically states what rights are being waived, e.g., right to sue for
discrimination;
(C) the individual does
not waive rights or claims that after the date the waiver is executed (e.g., if
a person is in a defined benefit pension and qualifies, there is no waiver of
the right to the pension);
(D) the individual receives
additional compensation, apart from accrued benefits (my friend received
severance pay, and after some discussion, his accrued, unsued vacation pay);
(E) the individual is
advised in writing to consult with an attorney prior to executing the
agreement;
(F) the individual is at
least 21 days within which to consider the agreement and seven days after
signing to rescind.
My friend’s experience was harsh but better than the cases that gave
rise to the OWBPA. Employers presented employees with these waivers, and
basically said if you want your pension or other accrued benefits, sign this
waiver of your right to sue.
My friend was spared that coercion due to the this 1980s law. But like
millions of employees since that time, he was likely terminated because his
employer wanted to hire a younger employee for much less money.
And that brings the waiver back into focus. That is age discrimination.
But my friend, like millions of people since the 1980s, waived his discrimination
claim because he didn’t have resources or time to sue, and he was getting a
severance payment.
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