Age Bias Claims: EEOC Clarifies Rules For Challenging ADEA Waivers

It’s not uncommon for employers to offer older workers early retirement or severance benefits in exchange for having them waive potential age-bias claims they might have under the federal Age Discrimination in Employment Act (ADEA). But employees sometimes have second thoughts—after they have accepted the benefits. Now the Equal Employment Opportunity Commission has issued new regulations spelling out employers’ and employees’ rights and obligations if an employee later contests an ADEA waiver and tries to recover damages for age discrimination.

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EEOC Waiver Rules

Here are the highlights of the new EEOC regulations, which took effect on Jan. 10, 2001:

 

1. No repayment required. The rules incorporate a 1998 U.S. Supreme Court decision, which held that older workers cannot be required to repay or “tender back” severance or other benefits as a condition of filing an age-bias lawsuit and challenging their waiver. This protects individuals who may have already spent severance payments.

    

2. No penalty provisions. You may not penalize or discourage workers from trying to invalidate their prior waiver. For example, you cannot require in a release of claims form that the employee agree to pay damages or your attorneys’ fees simply because they make an age-discrimination claim after signing the release. But, this does not preclude employers from recovering attorneys’ fees or costs otherwise authorized by law, such as those awarded to the prevailing party.

    

3. Employers must continue payments. If a waiver is challenged, you have to continue making retirement or other payments while the lawsuit is pending.

    

4. Employers may recover payments. If an employee succeeds in setting aside the waiver, proves age discrimination and is awarded damages, the court can reduce the damages by the amount you paid the person for the waiver. But the setoff can’t exceed the total amount of the judgment.