Laid Off Over 40? You Have Unique Rights When Offered Severance
April 12th, 2022
Older workers’ experience, insights, and institutional knowledge can be valuable assets to a business. All too often, however, companies see older workers as a liability, leaving more seasoned employees vulnerable to prohibited age discrimination, including wrongful termination. That’s why federal law provides older workers, who are laid off over 40, with robust protections, rights, and remedies in the event of layoffs, downsizings, or firings. If you’re over 40 and receive a pink slip and proposed severance agreement, it’s critical that you understand your rights under the federal Older Workers Benefit Protection Act (OWBPA).
Most Older Workers Have Seen or Experienced Age Discrimination
In a culture that often venerates youth over experience, workplace age discrimination is an unfortunate and common occurrence. Approximately 453,000 American workers filed age discrimination claims with the Equal Employment Opportunity Commission between 1997 and 2020, while about one in five workers over 40 and one in four workers over age 60 believe they have experienced age discrimination in the workplace, according to a Senior Living survey.
Wrong and illegal as age discrimination is, employers may decide to flaunt the law and terminate older employers anyway. Rapidly changing technologies and a hypercompetitive landscape can create the perception that youth gives businesses a competitive advantage. And to create a subterfuge for making decisions based on age, a company may mask its illegal motive by claiming a need to “reorganize,” “downsize,” or implement a “reduction in force” (RIF). Even if a claimed reorganization is real, many companies use this excuse to illegally jettison older employees, including managers and those in the C-Suite.
But rare is the company that will admit it’s terminating an employee because of age. Such firings usually come under other pretenses — often using common “code words” like “reorganization”, “position elimination”, “reduction in force” (RIF), and “moving in a different direction”— and those let go may not realize the real reason behind the layoffs is about making room for younger employees. Then, to minimize the risk of future litigation, many employers offer severance packages to departing employees and executives. These packages are offered in exchange for a release or waiver of any employment-related claims, including age discrimination, and in hopes that employees will sign the severance agreement without considering whether their termination is the result of age discrimination.
Severance Requirements for Older Workers Under the OWBPA
Recognizing that employers were pressuring older workers to sign waivers without having adequate information or time to evaluate their situations, Congress passed the OWBPA into law in 1990 as an amendment to the Age Discrimination in Employment Act of 1967 (ADEA). The OWBPA applies to workers age 40 and over at companies with at least 20 employees. It addresses age discrimination in several ways, including requiring employers to follow specific procedures when asking employees to waive claims under the ADEA as part of severance agreements. The purpose is to ensure the release or waiver is knowing and voluntary. If an employer doesn’t follow these requirements, any waiver that employees signed may be void and unenforceable.
For employers covered by the OWBPA, a valid waiver of claims for any employee age 40 and over must meet certain requirements to ensure the employee has an adequate understanding of what rights and claims they are waiving and sufficient time to gain that understanding. Specifically:
- The employer must not use undue pressure to get the worker to sign a waiver of the individual’s rights;
- The proposed waiver must be succinct, accurate, and reasonably understandable to an ordinary person;
- Any release of claims must be in writing;
- The waiver must explicitly state that the employee is releasing their claims under the ADEA;
- The employer must encourage the employee to consult with an attorney before signing the agreement; and
- The employer must give the employee up to 21 days to consider the severance offer (or 45 days if the termination is part of a layoff of more than one employee). Upon signing, the employee has seven days to revoke their signature.
In addition to the above, an employer claiming to implement a reduction in force, defined as a termination of two or more employees, must also provide the terminated employee with the following information:
- The job titles and ages of any other workers in the employee’s unit or department who are also being laid off;
- The job titles and ages of all other workers in the employee’s unit or department who are being retained, that is, who are not being laid off; and
- The eligibility factors used to determine who was laid off and who was retained.
The purpose of this requirement is to provide the employee with information they can use to evaluate whether older employees have been targeted for termination, whether a particular employee has been targeted, or whether the RIF appears to be implemented fairly. In this situation, the advice of an experienced employment attorney is particularly important because they can help employees analyze the information provided and decide whether to pursue legal action against the employer or accept the severance and agree to the waiver.
If you’re over 40 and have been recently terminated or offered a severance package, it’s crucial that you meet with an experienced employment attorney so that you fully understand your rights and ensure that you get the best possible terms and benefits. Please contact Halunen Law or call us at (612) 260-5383 for a free consultation.
Clayton Halunen, the founder of Halunen Law, represents employees, executives in severance negotiations, whistleblowers in individual and qui tam/False Claims Act cases, and other courageous clients pursuing justice.
Under his leadership, Halunen Law has achieved a national reputation as a fearless, tenacious, and successful plaintiffs’ law firm, bringing a laser focus on delivering results for its clients and creating meaningful social change.
Image Credit: dragana991 / Getty Images