In this month’s legal update, Jon Vegosen fills us in on some issues surrounding age discrimination.
Not All Burdens Are Equal
There is some good news for employers facing age discrimination claims.
Just before the end of the U.S. Supreme Court’s most recent term, the Court held that an employee who brings a disparate impact claim under the Age Discrimination in Employment Act (ADEA) has the burden of persuading by a preponderance of evidence that age was the “but for” cause (i.e., the only cause) of the employer’s adverse employment decision.
The Court further held that the burden of persuasion does not shift to the employer to show it would have taken the action regardless of age, even when an employee has produced some evidence that age was a motivating factor in the decision. Gross v. FBL Financial Services, Inc. (June 18, 2009).
In so holding, the Court stated that the ADEA is materially different from Title VII cases, which prohibit discrimination by employers on the basis of race, color, religion, sex or national origin, when it comes to the burden of proof. The Court declined to apply the “mixed-motive” standard set forth in cases such as Price Waterhouse v. Hopkins, 490 U.S. 228 (1998). Price Waterhouse was a Title VII gender discrimination case which held that the burden of persuasion shifts to the employer when an employee provides evidence of a prohibited factor such as gender, religion, or race.
The decision was a close one: 5-4. There was a stinging dissent from Justice Paul Stevens, and some commentators have predicted that Congress will respond with an amendment to the ADEA to make it consistent with the Title VII standard. Whether or not there is amendment, whenever an employer is making an adverse employment decision about an employee, it behooves the employer to be sure that there is a justifiable, non-discriminatory basis for the action.
Releases and Age Discrimination Waivers
In exchange for conferring additional benefits on an employee, an employer may be able to obtain a general release from an employee of any and all claims against the employer. Before entering into any such agreement with an employee, an employer should consult with legal counsel, and an appropriate, tailor-made agreement should be prepared.
When dealing with employees who are 40 years of age or older, employers who seek releases must be sure to comply with the requirements of the Older Workers Benefit Protection Act (OWBPA).
The OWBPA was passed to permit an individual to waive his or her rights under the ADEA without the supervision of the Equal Employment Opportunity Commission. For an individual’s pre-charge waiver (i.e., a waiver before filing of an age discrimination charge) to be effective, it must, at a minimum, meet each of the following requirements:
- Plain English: The waiver must be part of an agreement between the individual and the employer that is written in a manner calculated to be understood by the individual, or by the average individual eligible to participate.
- Specificity: The waiver must specifically refer to rights or claims arising under ADEA.
- Timing: The individual must not waive rights or claims that may arise after execution of the waiver.
- Additional Consideration: The waiver must not be in exchange for something to which the individual is already entitled; it must be in exchange for something of additional value to the employee.
- Counsel: The individual must be advised in writing to consult with an attorney before signing the agreement.
- Review: The individual must be given at least 21 days to consider the agreement.
- Revocation: The agreement must provide that for at least seven (7) days following the individual’s execution of the agreement, he/she may revoke it, and that the agreement shall not become effective or enforceable until after the revocation period has expired. The revocation period cannot be waived.
The waiver may not require employees to waive claims that arise after the date it is signed. Pursuant to regulations interpreting ADEA and OWBPA, if material changes are made to the employer’s final offer to the employee, the 21 day period would have to restart unless the employee and the employer agree that changes to it do not restart the period.
When a waiver is sought “in connection with an exit incentive or other employment termination program offer to a group or class of employees,” the requirements are the same as those for an individual pre-charge waiver, with the following additional requirements:
- 45 days: The employee must be given at least 45 days (instead of 21 days) to consider the agreement.
- Additional Information: At the commencement of the 45-day period, the employer must inform the employee in “understandable language” of:
- any class, unit or group of individuals covered by such program, any eligibility factors for the program, and any time limits applicable to the program; and
- the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program.
Regulations endeavor to clarify several points concerning these requirements. It would be advisable to confer with counsel before pursuing an exit incentive or other employment termination program offered to a group or class of employees.
If an employer meets all of these criteria, it may rely on the waiver as an affirmative defense to an age discrimination claim. The burden, however, is on the employer to demonstrate its applicability and that each of the required criteria have been satisfied.
Jon Vegosen is a founding member of Funkhouser Vegosen Liebman & Dunn Ltd. and has more than 32 years experience practicing law. He is nationally recognized for his work in labor and employment relations and is sought after as an author and spokesperson on labor and employment issues.
Tags: age discrimination, Age Discrimination in Employment Act (ADEA), employment law, FVLD, Jon Vegosen, legal update, Older Workers Benefit Protection Act (OWBPA)
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