Employers offering early retirement programs must provide more generous benefits if they want employees to sign away their rights to sue later for age discrimination, the Equal Employment Opportunity Commission clarified.
"You must make sure this extra benefit is solely for those who sign the waiver," said Susan Daley, partner in the Chicago law firm of Altheimer & Gray. Companies can't ask employees accepting early retirement to sign waivers if they don't get extra benefits, she noted.
A Supreme Court decision last year in Lockheed vs. Spink also ruled that companies could make additional retirement benefits conditional on their signing away future legal claims.
The EEOC's proposal formalizes the agency's informal interpretation of the Age Discrimination in Employment Act.
Under the proposal, expected to become final by year end, employers also must give detailed information to all affected employees about the specific job categories affected within a certain division, department or other "decisional unit" as well as ages of all employees being laid off or offered early retirement.
If a company decides to lay off 10% of a division, for example, the decisional unit would be the entire division.
Companies also must give affected employees information about those who were not selected for layoff or early retirement.
"You are providing people ammunition for age discrimination cases, and (letting them know that) maybe they shouldn't be waiving their age discrimination rights," Ms. Daley said.
This provision in the proposal fulfills a requirement of the law that age discrimination waivers are legal only if they are "knowing and voluntary" - that the individuals made an informed decision and were not coerced.
The proposals also clarify that employees can decide to sign the waiver before the full 21 or 45 days are up - three weeks for a negotiated severance package offered to one person or 45 days for a group package - but companies still must wait seven days after receiving the waiver to give employees the right to change their minds.
Under no circumstances can you waive the seven-day revocation right, Ms. Daley noted.
However, the proposal fails to offer any guidance on the issue of whether employees who signed a waiver that did not comply with the rule (making the document invalid) must return the money if they later decide to sue or if accepting the money means they signed away their rights to sue, Ms. Daley said.
