Benefits and Compensation

Invalid Releases Mean Employees Keep Money and Still Sue

Releases of claims under the Age Discrimination in Employment Act (ADEA) are typically part of ERIPs, but they have to be carefully drafted and managed say the attorneys. If they are not, employees probably can keep the money and still sue you.

Anderson, a member of Miller & Martin PLLC in Nashville, Tennessee, and Maxwell, who is an associate at the firm, offered their tips at a recent webinar sponsored by BLR.

Making Sure Releases Are Valid

How do employers structure releases of ADEA claims to ensure that these claims are valid? The OWBPA provides certain release requirements to make sure that decisions to waive claims have been informed and deliberate, say Anderson and Maxwell.

For Individual Terminations:

  • The OWBPA requires employers to provide at least 21 days to consider whether to sign but employees may voluntarily decide to sign at any time.
  • The release must state specifically that the employee is waiving ADEA claims. A provision releasing “any and all claims” is not sufficient.
  • The release can’t force employees to relinquish right to file an EEOC Charge. Again, avoid the “any and all claims” language unless you provide specific exception for administrative charges.
  • It is important to advise employees to consult with an attorney. Avoid stating that employees have a “right” to consult an attorney; be direct.
  • The OWBPA allows 7 days to revoke after signing. Thus, the release is not operable until the eighth day.

In addition, according to, the release must:

  • Be in writing.
  • Not contain long, complex sentences or technical or legal jargon.
  • Be written in “plain language” geared to the level of understanding of the individual or typical participant signing the waiver.
  • Not mislead, misinform, or fail to inform participants of the benefits and limitations of the waiver.
  • Not waive rights or claims that arise after the waiver is signed.
  • Provide something of value–“consideration”–beyond that to which the employee would have already been entitled without having signed the waiver.

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For Terminations Involving More than One Person

If the release or waiver is in connection with an exit incentive program or other employment termination program that applies to a group or class of employees, the EEOC also requires that the release or waiver:

  • State the class, unit, or group of persons covered by the program; eligibility factors; and applicable time limits of the program;
  • State the job titles and ages of all individuals eligible or selected for the program; and
  • State the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program.
  • Information detailing the employer’s offer must be given to each person in the “decisional unit” who is asked to sign an agreement.

Strict Compliance with Requirements

Federal courts have ruled that strict compliance with each provision of the OWBPA is necessary for a release to be considered “knowing and voluntary.”
Releases and waivers that do not comply with the law are not enforceable—meaning that an employee who signs an invalid release or waiver may still sue the employer under ADEA. In addition, the Supreme Court has ruled that if a release is invalid, not only may the former employee sue under ADEA, but he or she may also keep any money already received as part of the agreement or program.

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