Older Worker Benefit Protection Act Protections: Rights and Compliance

The Older Worker Benefit Protection Act (OWBPA) complements the Age Discrimination in Employment Act (ADEA) by setting strict standards for waivers of age discrimination claims. This article explains the protections OWBPA provides, how they apply to employers and employees, and practical steps to ensure compliance and clarity in waivers and severance agreements.

What The OWBPA Protects

The OWBPA primarily protects employees and former employees who are 40 years of age or older. It focuses on waivers of rights under the ADEA where an employer offers severance or other compensation in exchange for relinquishing the right to sue for age discrimination. The act requires waivers to be knowing and voluntary and to meet specific conditions so that older workers understand their rights and the consequences of signing away those rights.

Key Protections For Waivers

  • Right To Consider And Revoke: Employees must have a period to consider the waiver, and they may revoke the waiver within seven days after signing.
  • Age Threshold: The waiver must apply to rights under the ADEA by employees who are at least 40 years old.
  • Independent Legal Counsel: In most cases, for waivers of age discrimination claims in exchange for severance, each employee must have the opportunity to consult with an attorney who represents their interests.
  • Specificity Of Waiver: The waiver must clearly describe the rights being waived and reference the ADEA. It must not be overly broad or vague.
  • Voluntary Nature: The waiver must be voluntary, without pressure or coercion, and ensure that the employee understands the legal consequences.
  • Consideration: The amount or type of consideration (often severance pay or benefits) must be adequate and clearly stated, and must exceed what the employee would otherwise receive.

Requirements For Valid Waivers

To be enforceable under OWBPA, waivers generally must meet these criteria when offered in connection with a severance agreement:

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  • Written Waiver: The waiver must be in writing and understandable in plain language.
  • Opportunity To Review: The employee should be given a reasonable time to review the agreement, commonly at least 21 days for employment separations with new severance offers.
  • Right To Consider And Revoke: The employee must be informed of the ability to revoke the waiver within seven days after signing.
  • Specific Waived Claims: The document should specify the ADEA claims being waived, including potential rights to back pay, front pay, or other damages, and should note that the waiver does not cover rights that may arise after signing.
  • Language About Consultation: The waiver must state that the employee has been advised to consult with an attorney before signing and that independent counsel was available.
  • Only Applies To ADEA Claims: The waiver should explicitly pertain to ADEA rights and not to claims under other laws unless clearly stated and compliant with OWBPA.
  • Non-Coercive Context: The overall process must reflect a voluntary decision, with no threats, retaliation, or retaliation-based pressure to sign.

Common Violations And Consequences

Noncompliance with OWBPA can render a severance waiver unenforceable. Common violations include failing to provide independent legal counsel, offering insufficient consideration, or not allowing the required consideration period or revocation window. Consequences may include the employee retaining the right to pursue ADEA claims in court, potential damages for the employee, and legal exposure for the employer. Employers should also avoid contingent language that could be construed as coercive or that undermines the “knowing and voluntary” standard.

Practical Tips For Employers

  • Consult Legal Counsel: Involve counsel experienced with OWBPA and ADEA to draft or review waivers.
  • Use Clear, Plain Language: Produce waivers that are easy to understand, with explicit references to ADEA protections and the waivers’ scope.
  • Document Independent Counsel Availability: If waivers are offered, document that the employee had the opportunity to speak with an attorney and whether they did so.
  • Offer Meaningful Consideration: Ensure severance and benefits are fair and clearly stated, with a clear link to the waiver’s acceptance.
  • Respect Time Frames: Provide at least a 21-day consideration period and a seven-day revocation window, where applicable.
  • Assess Group Versus Individual Waivers: Group waivers may require special attention to ensure each employee’s understanding and voluntary consent.

Practical Tips For Employees

  • Read The Waiver Thoroughly: Take time to understand every term, especially the rights being waived and the consequences of signing.
  • Seek Independent Legal Advice: Consult an attorney who specializes in employment law to review the waiver’s language and scope.
  • Ask For Clarification: Request explicit details about the severance, ongoing benefits, and post-signing obligations.
  • Consider Future Implications: Consider how waiving ADEA rights might affect potential claims related to future events or changes in law.
  • Document Your Process: Keep written records of what was offered, timelines provided, and whether counsel was consulted.

Alternatives To Waivers

Some employers explore alternatives to traditional waivers, such as enhanced severance packages without waivers, transitional assistance programs, or voluntary separation packages that do not require surrender of ADEA rights. For employees, negotiating for additional protections, extended health coverage, or outplacement services can be beneficial without the complexities of an OWBPA-compliant waiver.

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