New York Employment Lawyer Blog

On July 11, 2011, in Ridinger v. Dow Jones & Co Inc., the Second Circuit ruled that a 62-year-old employee's age discrimination claim brought under the Age Discrimination in Employment Act ("ADEA") was barred due to a valid separation agreement that the employee had signed.

In his separation agreement, the employee agreed to waive and release all claims up to the point of his termination, explicitly including those claims for discrimination under the ADEA. Despite signing it and accepting all the benefits of the severance package, the employee nonetheless sued for discrimination, arguing that the release was invalid because it violated the Older Workers Benefit Protection Act ("OWBPA"), which requires that an employee waive his or her ADEA claim in a "knowing and voluntary" way and that a separation agreement be "written in a manner calculated to be understood."

The employee also argued that the waiver provision violated Equal Employment Opportunity Commission ("EEOC") regulations, which require a waiver to be drafted in plain language, not using "technical jargon" or "long, complex sentences," and "geared to the level of understanding" of the employee, taking into consideration the typical employee's education level.

The Second Circuit rejected the employee's arguments and held that the separation agreement was in fact enforceable, as it was written by the employer in a "manner calculated to be understood" by the relevant employees. Comparing the language in this agreement to those found in cases in which the court invalidated a company's separation agreement, the Court found that the terms in this separation agreement were sufficiently clear and complied with the OWBPA.

This decision should serve as a reminder to all employers of the importance of drafting separation agreements in a clear manner using plain language. In addition, if you signed a severance or separation agreement as an employee, it's always smart to have a New York Severance Agreement attorney review the agreement, especially if it includes provisions related to age discrimination.

Many people wonder why severance agreements often advise the employee "to consult with an attorney before signing this agreement." Employers don't include this language out of the kindness of their heart or out of concern for the employee, but rather because it's mandated by the Age Discrimination in Employment Act ("ADEA") - meaning that this language is only required in agreements where the employee is waiving any rights she or he might have relating to discrimination on the basis of age. In fact, this is not the only requirement for an age discrimination waiver to be valid and enforceable.

In order for employees to waive their rights under the ADEA, a written waiver must meet special requirements that do not apply to other employment discrimination statutes. Embodied in the Older Workers Benefit Protection Act ("OWBPA"), the requirements are designed to give employees the information and time they need to evaluate whether they have a valid ADEA claim before waiving their rights.

To be valid and enforceable, the waiver must:

1. Be written in "a manner calculated to be understood" by the employee or "the average individual eligible to participate;"
2. Specifically refer to rights or claims arising under the ADEA;
3. Not call for the waiver of rights or claims that arise after the date the waiver is signed;
4. Provide the employee with "consideration in addition to anything of value to which the individual is already entitled;"
5. Advise the employee "in writing to consult with an attorney" prior to signing the waiver;
6. Give the employee twenty-one (21) days to consider the agreement or, in the event of a group termination or exit incentive program, forty-five (45) days; and
7. Give the employee seven (7) days after signing the agreement to revoke the agreement.

Before signing a severance or separation agreement, we always recommend that employees have a New York severance agreement attorney review the agreement to ensure that the employee understands the terms of the agreement and the ramifications of signing it.