The Older Worker Benefits Protection Act (OWBPA)

Is your Municipality contemplating a reduction in force due to a budget shortfall?  Does your Municipality have more than 20 employees?  Is your Municipality offering a severance or early retirement agreement to employees over the age of 40 in exchange for a release of legal claims?  If so, the Older Workers Benefit Protection Act ("OWBPA") applies. 

In 1990, Congress passed the Older Workers Benefit Protection Act (OWBPA) which amended the Age Discrimination in Employment Act (ADEA) to safeguard older workers’ employee benefits from age discrimination. 

Whenever employers seek a release of federal age discrimination claims, they must comply with the requirements of the OWBPA.  At minimum, this means that the release must:

  •  be knowing and voluntary by the employee;
  •  be in writing and written in plain, clear language that avoids technical jargon and long,  complex sentences;
  •  provide the employee with additional consideration, above and beyond anything of value to  which he or she was already entitled;
  •  provide the employee with a specific amount of time (at least 21 days) to consider the release;
  •  inform the employee he/she has 7 days to change their mind and revoke the agreement after  it has been signed;
  •  not mislead or misinform the employee executing the release;
  •  not exaggerate the benefits received by the employee in exchange for signing the release, or  the limitations imposed on the employee as a result of signing the release;
  •  specifically refer to the ADEA;
  •  specifically advise the employee to consult an attorney before signing the release;
  •  not require the employee to waive rights or claims arising after the date the employee signs  the release; and
  •  not include provisions that prohibit employees from (a) filing a charge or complaint with the  EEOC, including a challenge to the validity of the waiver agreement; or (b) participating in any  investigation or proceeding conducted by the EEOC.

If a waiver does not comply with all the requirements, the wavier is invalid and will not hold up in court.  The U.S. Supreme Court has held that an employee who signed a deficient waiver could not only sue for age discrimination, but also did not have to return the severance pay she received from her former employer for signing the invalid waiver. (Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998).

For more information on the OWBPA, the ADEA or employment related topics you can  contact Suzanne Paulson, Associate General Counsel at spaulson@omag.org or Matt Love, Associate General Counsel at mlove@omag.org.

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