Federal Law > Discipline & Termination > Older Workers Benefit Protection Act

Older Workers Benefit Protection Act

The Older Workers Benefit Protection Act (OWBPA) amended the Age Discrimination In Employment Act (ADEA) in 1990 and is concerned with three areas: (1) bona fide benefit plans, (2) early retirement and (3) releases/waivers of ADEA claims.

The OWBPA provides that bona fide seniority systems are lawful under the Act as long as the system does not require or permit the involuntary retirement of covered individuals because of their age.1
The Act also makes clear that employee benefit plans are lawful as long as the actual amount of payment made or cost incurred on behalf of an older worker is no less than that made or incurred on behalf of a younger worker, as permissible under 29 C.F.R. § 1625.10.2 Therefore, age-based discrimination in benefit plans requires evidence of cost differences for older versus younger employees.

The OWBPA allows early retirement incentive plans as long as they are voluntary and consistent with the purposes of the ADEA.3 The plan may provide for attainment of minimum age as a condition of eligibility for normal or early retirement benefits.4

In addition to addressing early retirement, seniority and bona fide benefit plans, the OWBPA also discusses the waiver of rights or claims under the ADEA.5 The OWBPA provides that an individual may not waive any right or claim under the ADEA unless the waiver is "knowing and voluntary."6

Valid waivers. A waiver is not considered valid under the ADEA unless it satisfies the following:

1. The waiver must be part of an agreement between the employee and employer that is understandable by the employee or the average individual.

2. The waiver must refer to rights or claims arising under the ADEA.

3. The waiver must provide that the individual does not waive rights or claims that might arise after the date the waiver is executed.

4. The employee must receive consideration in addition to anything of value to which the employee already is entitled.

5. The employee must be advised in writing to consult with an attorney prior to executing the agreement.

6. The employee must be given a period of at least twenty one days to consider the agreement.

7. The agreement must provide for a period of least seven days following the execution of the agreement for the employee to revoke the agreement.

Additional requirements are necessary under federal law if the release is sought in conjunction with an employment termination program offered to a group or class of employees. These requirements include that the employer give forty-five days to the group or class of employees to consider the offer, and the employer must inform the individuals in the group in writing the eligibility factors for the program, time limits applicable to the program, 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.7

Supreme Court Rules on validity of release under OWBPA when plaintiff retains settlement monies. In a U.S. Supreme Court decision an employee received a poor performance rating and her supervisor gave her the option of either improving her performance during the coming year or accepting a severance arrangement. The employee decided to accept the severance agreement and signed a release. She received $6,258 over the next four months. The Older Workers Benefit Protection Act (OWBPA) imposes specific requirements for releases covering ADEA claims, as described above, and the employer did not satisfy several of those requirements. The employee, Dolores Oubre, sued her former employer, and the employer moved for summary judgment and argued that Oubre had ratified the release by not tendering back the monies given her. The District Court dismissed the suit and the Fifth Circuit affirmed the decision. The Supreme Court found that the employer's failure to comply with the OWBPA invalidated the release, and the employee's failure to return the monies did not cause the employer to comply with the OWBPA. Oubre v. Entergy Operations, Inc. (January 26, 1998)

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Sources Federal Law-Discipline & Termination-Older Workers Benefit Protection Act


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