OWBPA: Severance Agreements for Older Workers

from August 2023 HR Professionals Magazine

How to create a successful Mentorship Program

By SARAH RODEHORST

6. Waiver Period: The employee must be given at least 21 days to consider the waiver agreement. In the case of a group layoff, the employee must be given at least 45 days to consider the agreement.

7. Right to Counsel: The employee must be advised in writing of their right to consult with an attorney before signing the waiver agreement.

In addition to the seven general OWBPA requirements, there are a few additional requirements that apply specifically to severance agreements. These include:

• The waiver must be specific to the ADEA. This means that the employee cannot be asked to waive their rights under other laws, such as Title VII of the Civil Rights Act of 1964.

• The waiver must not waive future rights. This means that the employee cannot be asked to waive their right to file an age discrimination claim in the future, even if they are not aware of any specific instances of discrimination at the time they sign the waiver.

• The waiver must be accompanied by a written explanation of the ADEA’s anti-waiver provisions. This explanation must be written in plain language that the employee can understand.

OWBPA Requirements during a Layoff

The Older Workers Benefit Protection Act (OWBPA) has additional requirements for severance agreements in the case of a layoff that affects two or more employees who are 40 years of age or older. Most employers provide this additional information in an OWBPA Disclosure, often Exhibit A of the severance agreement. Employers must provide, in writing:

• The decisional unit, which is the group of employees who were considered for selection during a layoff.

0 For example, if an employer needs to reduce the overall headcount by ten employees, the decisional unit is likely “all employees.” If, on the other hand, the employer needs to eliminate five accountants, the decisional unit might be the “accounting team.”

• The eligibility factors for layoffs, which are the selection criteria that the employer used to identify the impacted employees from those considered.

Eligibility factors often correlate with the decisional unit; for example “All employees on the accounting team.” However, there has been some controversy about this.

• The time limit, which should be 45 days in the case of group layoffs. In addition to the 45-day period to consider and accept the terms of the agreement, employees must be given 7 days to revoke the agreement.

• The job titles and ages of all individuals in the decisional unit, including those whose positions are eliminated and those who are being kept on board.

In Summary

If an employer fails to meet any of the OWBPA requirements or provide the required disclosure, the waiver of ADEA rights may be void. This means that the employee may still be able to file an age discrimination claim with the EEOC, even if they have signed a waiver agreement. Here are some tips for employers who are drafting a severance agreement for older workers:

• Make sure your severance agreement includes a waiver and disclosure and includes all of the required information.

• Use clear and concise language.

• Make sure that the waiver is specific to the ADEA and does not waive future rights.

• Provide the employee with a copy of the severance agreement to review before they sign it.

• Give the employee enough time to consider the agreement before signing it.

• Explore workforce compliance solutions that automate the severance process to save time, reduce admin costs, and ensure you consistently apply OWBPA requirements each time.

Following these tips can help organizations ensure that severance agreements are compliant with the law, protecting the employer as well as the employee. But staying abreast of regulatory changes - especially on the state level - can be very challenging. Onwards HR helps employers ensure compliant employee separations, including mitigating the risk of age discrimination actions.

Sarah Rodehorst, CEO and Co-Founder Onwards HR

Sarah Rodehorst is an influencer, thought leader, visionary, and business leader. She has held leadership positions at startup and Fortune 500 companies and now leads Onwards HR as CEO and co-founder. As a women-in-tech evangelist and diversity, equity, and inclusion champion, Sarah’s thoughts on layoffs, women in technology, and DEI in the workplace have appeared in publications including Wall Street Journal, CNN Business, NPR, SHRM, HR Professionals, HR Executive, HR Brew, and Vibe. In 2021, she was a Women in Technology Woman of the Year Finalist in Engineering. You can reach Sarah via email at sarah@onwardshr.com