Do You Know Someone Over 40 Who Was Suddenly “Let Go”?

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.