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Why Understanding the Older Workers Benefit Protection Act Is More Important Than Ever

5 minute read

The Older Workers Benefit Protection Act (OWBPA) was introduced as a precautionary measure for employees over 40. The OWBPA protects older employees from discrimination by employers based on their age during the hiring, working, and termination of employment process. It amends the Age Discrimination in Employment Act (ADEA) which preserves the rights of employees over 40 in all conditions of employment.

Older Workers Benefit Protection Act

Under the Older Workers Benefit Protection Act, employees over 40 are entitled to various employee benefits such as severance pay and cannot be pressured into signing legal waivers. It acts as a safety net to ensure older and vulnerable workers aren’t unfairly laid off from work and don’t experience age discrimination.

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Now more than ever, understanding the full terms of the Older Workers Benefit Protection Act is crucial for employees and employers, alike. Especially, when terminating one or more employees over 40 and when requesting a waiver of age discrimination claims. In order to protect themselves from lawsuits, employers must fully understand and comply with OWBPA and ADEA criteria.

Layoffs under the Older Workers Benefit Protection Act

When an organization decides to reduce their workforce, they need to take special care when terminating older workers who are protected by the OWBPA, namely employees over 40. Employers should be able to support their decision to lay off employees over 40 without any indication of age discrimination.

The OWBPA prohibits employers from:

  • Using the employee’s age as grounds for termination of employment.
  • Targeting older workers for reduction in force programs.
  • Forcing older workers to sign a waiver of age discrimination claims without consideration.

In addition to involuntary terminations and workforce reductions, the Older Workers Benefit Protection Act also applies to early retirement plans, exit incentive plans, and other voluntary departures.

To avoid potential litigation risks, employers must offer additional consideration to older workers in exchange for a release of liability that frees them of any age discrimination claims made under the OWBPA and ADEA.

Older Workers Benefit Protection Act

Release of Claims under OWBPA

Employers must comply with certain rules when drafting their release of age discrimination claims. In order for the release to be valid, the release must fulfill the following specifications:

  • Practice knowing and voluntary consent – Employees should sign the waiver of claims on their own accord without any external pressure.
  • Be in written form – The release must be in writing so that the employee can easily understand it.
  • Use simple language – Language should be plain, clear, and void of complex sentences and technical jargon.
  • Provide succinct and accurate information – Employers must not mislead or misinform the employee in any way. This includes exaggerating the benefits or limitations of signing the release of claims.
  • Refer to ADEA –The release of claims must specifically refer to the ADEA.
  • Encourage legal consultations – Employers must advise older workers (in writing) to consult an attorney before signing the release of claims.
  • Allow time to contemplate – Employees must be given enough time, depending on circumstances, to consider the waiver and its consequences. Employees have at least 21 days to consider the offer and an additional 7 days to revoke their signature.

Additionally, the employee must offer the older worker consideration or an exit incentive for voluntary termination. This includes consideration such as outplacement packages, severance pay, and benefits that are of greater value than what the employee is already entitled to receive by law or contract.

Older Workers Benefit Protection Act

For instance, employers cannot leverage the employee’s final pay to get them to sign the release as this is something they are already legally entitled to. Also, the OWBPA requires employers to provide the ages of the employees who are both terminated and retained.

These are the most common types of consideration employers offer their employees in exchange for a waiver of claims:

  • Severance pay
  • Notice pay
  • Health benefits
  • Bonuses
  • Unearned vacation pay
  • Outplacement services
  • Relocation expenses
  • Reimbursement

Only once the release of age discrimination claims comply with the above guidelines, will the release of claims be deemed valid. If not, then the waiver of release will be unenforceable and discarded.

Keep in mind there is no one-size-fits-all severance agreement and each should be drafted for individual employees being terminated. Consultation with HR professionals and attorneys is the best way to avoid unwanted age discrimination scenarios.

Group Termination Under OWBPA

When two or more employees over 40 are being released from employment, this group of employees receives even greater protection under the OWBPA and ADEA. Employers must provide these employees with detailed information regarding the employees offered severance packages and asked to sign a release of age discrimination claims. This is necessary even if there is a time gap between the group reductions. Unlike individual terminations that have a 21-day consideration period, group terminations are given 45 days to reach a decision.

Older Workers Benefit Protection Act

Under the OWBPA employers are required to share the following information with the employees:

  • The ages and job titles of all the employees being terminated.
  • The ages of all employees being retained.
  • Any eligibility factors and time limits applicable for this offer.

The purpose of providing this information to employees is so that they have enough resources to make an informed decision about whether or not they should sign the age discrimination waiver agreement.

FAQ About OWBPA

Employers have a lot of questions about the ADEA and OWBPA. Here are the most common ones:

Q: Can an employer limit jobs to applicants under a certain age?

A: Generally, employers cannot cherry pick employees based on their age. The OWBPA protects employees from age discrimination during the job selection process.

Q: Can an employer ask the applicants for their age?

A: Although employers can technically ask for an applicant’s age, they should avoid asking this question on job applications and during interviews.

Q: What factors make a waiver of age discrimination claims invalid?

A: A waiver of age discrimination claims is deemed invalid if the older worker was coerced into signing the waiver agreement with the employer using fraud or undue influence. Furthermore, a release of claims becomes unenforceable if there is mistake, omission or misstatement inside the waiver agreement.

Q: Are employees over 40 entitled to higher severance payments than younger employees?

A: No. Severance packages are based on individual circumstances depending on their position and output.

It’s completely up to employers to go over every detail in the waiver of age discrimination claims. If there’s even the tiniest mistake in the release of claims, then the employee can challenge the release and overturn its validity in court. This is why severance packages and waivers of age discrimination claims should be drawn up by an attorney or at the very least reviewed and approved by one. Only this way can employers ensure their release is in full compliance with the OWBPA and ADEA.

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