Age Discrimination in Employment Act (ADEA): How To Draft A Waiver of Rights
March 13, 2008
Age Discrimination in Employment Act (ADEA)
How To Draft A Waiver of Rights
Congress expressly provided that waivers may be valid and enforceable under the ADEA so long as the waiver is “knowing and voluntary.”
1. Waiver agreements must be drafted in plain language geared to the level of understanding of the individual party to the agreement or individuals eligible to participate. Employers should take into account such factors as the level of comprehension and education of typical participants.
Consideration of these factors usually will require the limitation or elimination of technical jargon and of long, complex sentences.
2. The waiver agreement must not have the effect of misleading, misinforming, or failing to inform participants and affected individuals. Any advantages or disadvantages described shall be presented without either exaggerating the benefits or minimizing the limitations.
3. The exit incentive or other employment termination programs offered should be conveyed “in writing in a manner calculated to be understood by the average participant.”
4. The waiver should specifically refer to rights or claims under the Age Discrimination in Employment Act (ADEA) by name in connection with the waiver.
5. The individual must be “advised in writing to consult with an attorney prior to executing the agreement.”
6. The waiver of future rights or claims that may arise following the execution of a waiver is prohibited. However, the ADEA does not bar the enforcement of agreements to perform future employment-related actions such as the employee’s agreement to retire or otherwise terminate employment at a future date.
7. A waiver may not be considered knowing and voluntary unless at a minimum… the individual waives rights or claims only in exchange for consideration in addition to anything of value to which the individual already is entitled in absence of a waiver.
8. An employer is not required to give a person age 40 or older a greater amount of consideration for the waiver than is given to a person under the age of 40, solely because of that person’s membership in the protected class under the ADEA.
9. A waiver may not be considered knowing and voluntary unless at a minimum… (i) the individual is given a period of at least 21 days within which to consider the agreement; or (ii) if a waiver is requested in connection with an exit incentive or other employment termination program offered to a group or class of employees, the individual is given a period of at least 45 days within which to consider the agreement. (The term “exit incentive or other employment termination program” includes both voluntary and involuntary programs.)
10. A waiver may not be considered knowing and voluntary unless at a minimum… the agreement provides that for a period of at least 7 days following the execution of such agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired. The 7 day revocation period cannot be shortened by the parties, by agreement or otherwise.
11. The 21 or 45 day period runs from the date of the employer’s final offer. Material changes to the final offer restart the running of the 21 or 45 day period and, conversely, non-material changes to the final offer do not restart the running of the 21 or 45 day period. The parties may agree, however, that changes, whether material or immaterial, do not restart the running of the 21 or 45 day period.
12. An employee may sign a release prior to the end of the 21 or 45 day time period, thereby commencing the mandatory 7 days revocation period. This is permissible as long as the employee’s decision to accept such shortening of time is knowing and voluntary and is not induced by the employer through fraud, misrepresentation, or threat to withdraw or alter the offer prior to the expiration of the 21 or 45 day time period, the employer may expedite the processing of the consideration provided in exchange for the waiver.
13. If the waiver is requested in connection with an exit incentive or other employment termination program, there is an additional requirement to provide the employee with enough information regarding the program to allow an informed choice as to whether or not to sign a waiver agreement.
Employers must disclose to the employee presented with the waiver request, the job titles and ages of employees affected by a program in an easy-to-understand format that compares them to unaffected employees in the same job classification. Presumably, this will provide affected employees with enough information, and adequate time to consult with an attorney, in order to decide if they want to sign a waiver agreement.
The rule prohibits employers from supplying age-related information in bands broader than one year (for example, describing a group as “age 20 to 30”). Finally, an employer seeking to establish the validity of a waiver agreement has the burden of proving that it was knowingly and voluntarily executed. The required information must be given to each person in the decisional unit who is asked to sign a waiver agreement.