For Separation and Other Employment Settlement Agreements Be Sure You Comply with ADEA and OWBPA - American Society of Employers - Michael Burns

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For Separation and Other Employment Settlement Agreements Be Sure You Comply with ADEA and OWBPA

gavelLast week, by its ruling in Jackson v. General Electric, the Sixth Circuit Court of Appeals reminded employers that they must make sure any settlement type of agreement with an employee complies with the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefits Protection Act (OWBPA). This is not a new development, but the case reminds HR professionals and their legal counsel that any formal agreement settling discrimination or other claims by an employer with an employee, must give notice and allow the employee the requisite time for review – 21 days. Then after signature, seven days to revoke the agreement.

The Sixth Circuit Court of Appeals (includes Michigan) heard the case of Monica Jackson. Ms. Jackson was an employee of General Electric (GE).  She sued GE for race discrimination but not age discrimination. The case went to mediation, and the parties came to an agreement. This agreement was put in writing, and the parties even stated for the record in court that they had reached an agreement. The agreement template was entered into the Court record but with acknowledgement it needed some “minor modifications.”

The settlement agreement included terms in compliance with the ADEA that provided the employee 21 days to consider the agreement and an additional seven days after signature to revoke it. It was sent to the Plaintiff, but the Plaintiff then refused to sign it. GE filed a motion to enforce the agreement.

Both the lower District Court and the Sixth Circuit Court of Appeals held that although all the parties agreed to a deal, the Plaintiff still had the right to consider it for 21 days before signing and had seven days after that to revoke her acceptance. There was no deal until that time period played out, despite already orally agreeing to everything on Court record.

HR professionals should know that separation agreements entered into by an employee must include:

    • Notice the employee has 21 days to consider the agreement;
    • Notice that the employee has been advised to consult with an attorney before signing the agreement;
    • Notice that the party is waiving claims under the ADEA;
    • Has seven full calendar days to revoke the agreement. The agreement must also instruct the employee how to revoke; and
    • Is not waiving their ADEA claims that may arise after signing the agreement.*

*Law 360 Employment Expert Analysis

Employers and HR professionals should also keep in mind that such agreements for group terminations (two or more employees) must provide 45 days to consider the agreement, and the employee must also be provided information on job titles and the age of persons being terminated in the affected business unit. This information does not include names and birthdates.

The Law 360 Expert Analysis advises there are times when an employer may consider not including the OWBPA language in an agreement. These situations may include:

  • When an employee is no longer with the company, and the age discrimination issue has expired.
  • When the employee filed an age discrimination charge and more than 90 days has expired since they received notice of their rights from the EEOC.
  • When the employee is in the protected age group, but just barely – maybe 41 years old – and cannot plausibly claim she was discriminated against (Law 360 Expert Analysis (8/8/2022)).

In the above situations, legal counsel should be consulted to ensure that for any formal agreement, ADEA and OWBPA requirements are met.

This recent case is a reminder of what employers should do to properly protect themselves when discharging an employee and establishing a legal settlement that will hold up.


Source: Law 360 Employment Authority Expert Analysis. 6th Circuit Ruling Guides on Settlements with Older Workers. (8/8/2022) 


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