Older Workers Benefit Protection Act of 1990 (OWBPA)
The Older Workers Benefit Protection Act forbids discrimination by employers based on age when providing employee benefits, like severance. The OWBPA also ensures that no employee is coerced or pressured into signing legal waivers of rights under the Age Discrimination in Employment Act (ADEA).
The OWBPA was enacted to “protect the rights and benefits of older workers” who are being laid off. The U.S. Supreme Court has interpreted the statute as requiring “‘strict, unqualified statutory stricture on waivers’” executed by these workers in exchange for compensation and benefits. The party defending a release’s validity bears the burden of proving compliance.
Under Federal age discrimination laws, employers with 20 or more employees may not discriminate on the basis of age against employees and job applicants who are 40 years old or older. Employment agencies, labor unions and local, state, and Federal government offices are also bound by the law.
The Older Workers Benefit Protection Act of 1990 (OWBPA) is also a Federal age discrimination law. It’s included in the Age Discrimination in Employment Act as an amendment. It prohibits employers from denying employee benefits to older workers based on age. The Equal Employment Opportunity Commission (EEOC) enforces both Acts.
States and municipalities may enact age discrimination laws that are equivalent to the ADEA. Such laws are enforced by state and local, EEOC equivalents. Depending on the circumstances, employees are protected by whichever law at the Federal, state or local level has the most protection.
Age discrimination claims are common when there is a reduction in workforce, particularly of long time employees. The Older Worker Benefits Protection Act (“OWBPA”), which amended the Age Discrimination in Employment Act (“ADEA”), prohibits discrimination in employee benefits. The OWBPA also established specific requirements for a “knowing and voluntary” waiver of ADEA claims. Employers commonly request such a waiver when offering an early retirement program or when implementing a reduction in workforce, whether voluntary or involuntary.
The OWBPA provides that a waiver of an individual’s rights under the ADEA must be “knowing and voluntary.” The statute specifies that, at a minimum, a release must:
- be “written in a manner calculated to be understood” by the employee;
- refer specifically to rights and claims available under the statute;
- not waive prospective claims;
- provide consideration in exchange for the release beyond something of value the employee is already entitled to;
- advise the employee, in writing, to consult with an attorney;
- give the employee at least 21 days to consider the agreement (or at least 45 days in the case of an exit incentive or other group termination program such as a RIF);
- give the employee at least seven days to revoke the agreement; and
- in the case of an exit incentive or other group termination program, contain information regarding: (a) the “job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program;” (b) any eligibility factors for the program; and (c) any time limits applicable to the program.
RECENT CASE LAW ON OWBPA
In Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998), the United States Supreme Court resolved this matter, holding that older workers are not required to give back severance money to their employers before filing ADEA lawsuits.
The reason for the Court’s decision was the an older worker often needs the severance money to make bills and that forcing the worker to give back the money in order to make a claim would be tantamount to financial blackmail to avoid a legitimate claim being filed.
In December 2000, the EEOC issued new regulations reaffirming and expanding the U.S. Supreme Court”s decision. The regulations, entitled "Waivers of Rights and Claims: Tender Back of Consideration", became effective January 10, 2001 and in summary, provide: An older worker does not have to "tender back" (give back) severance pay or other benefits before filing a lawsuit to challenge an ADEA waiver.