Separation agreements and older workers

Your sales team is underperforming, so you’ve decided to cut the 5 employees with the worst records. Or, your employer is undergoing reorganization, and you’ve heard that your department is going to be downsized by 10%. Even though employment may be “at will,” employers often offer separation agreements to departing employees. Those employees get some payment or benefits, in exchange for a release of claims against the employer.

Simple enough, right? Not if the business has 20 or more employees, terminates more than one employee, and any one of the terminated employees is 40 years old or older.

The Older Workers Benefit Protection Act (OWBPA) is a federal law enacted to strengthen the Age Discrimination in Employment Act (ADEA).

Failure to comply with the OWBPA requirements can invalidate an employee release or waiver in a separation agreement, and lead to an investigation by the Equal Employment Opportunity Commission.

So, what must a separation agreement include under the OWBPA? To be in compliance, the agreement must:

  • -Specifically refer to the ADEA
  • -Identify the “decisional unit” from which employees were chosen so that terminated employees can determine if younger employees were retained over older employees
  • -Identify the job titles and ages of all employees who were selected to be terminated and job titles and ages of all employees who were not selected.

The OWBPA also mandates that employees must have 45 days to consider a separation agreement, and that employers advise the employee to consult an attorney.

These and other statutory requirements are intended to allow employees to make an informed decision about whether to sign a separation agreement.

The requirements for enforceable separation agreements involving older workers are complex when terminating one employee, and more complex when terminating multiple employees.

FOS attorneys can make sure that you comply with your obligations under federal law and ensure that, if you issue separation pay, your agreement is enforced.