EEOC Issues Technical Assistance Document On Waivers In Severance Agreements
(Published August 3, 2009)
The Equal Employment Opportunity Commission (EEOC) recently released a technical assistance document that explains terminated employees' rights and obligations when offered severance pay in exchange for a waiver of discrimination claims under the Age Discrimination in Employment Act (ADEA), Title VII, the Americans with Disabilities Act (ADA), and the Equal Pay Act (EPA). The EEOC issued the document, in part, in response to a significant spike in age discrimination charges and amid increased layoffs involving waivers of rights.
While the document is written for employees and addresses the questions they may have, it contains important reminders for employers. The plain English, question-and-answer format allows both employers and employees to more readily understand the sometimes complicated requirements of enforceable waivers.
The document does not contain new guidance, but reminds employers that:
A waiver in a severance agreement is only valid when an employee knowingly and voluntarily consents to the waiver.
When it comes to determining whether a waiver of rights under Title VII, the ADA, or the EPA is knowing and voluntary, most courts will look at the totality of circumstances, including whether:
— it was written in a manner that was clear and specific enough for the employee to understand based on his/her education and business experience;
— it was induced by fraud, duress, undue influence, or other improper conduct by the employer;
— the employee had enough time to read and think about the advantages and disadvantages of the agreement before signing it;
— the employee consulted with an attorney or was encouraged or discouraged by the employer from doing so;
— the employee had any input in negotiating the terms of the agreement; and
— the employer offered the employee consideration (e.g., severance pay, additional benefits) that exceeded what the employee already was entitled to by law or contract, and the employee accepted the offered consideration.
For a waiver to be considered knowing and voluntary under the ADEA, it must comply with the factors outlined in the Older Workers Benefit Protection Act.
Waivers must comply with applicable federal and state laws. Note: A guidance footnote states that state law typically governs questions regarding the proper construction of a severance agreement and the validity of waivers.
Even if an employee signs a waiver releasing the company from all claims, the company cannot lawfully:
— require the employee to waive future rights;
— prevent an employee from filing a charge of discrimination with the EEOC;
— limit an employee's right to testify, assist, or participate in an investigation, hearing, or proceeding conducted by the EEOC; or
— require an employee to return the money or benefits received in exchange for waiving his/her rights if he/she does file a charge.
Related Topic(s): Termination/Waivers, Termination/OWBPA - Older Workers' Benefit Protection Act, Discrimination/ADEA - Age Discrimination in Employment Act
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