Aug 03, 2009

EEOC Offers Guidance on Waivers of Discrimination Claims

You won't be surprised to hear that the economic downturn has led to huge numbers of layoffs. According to the Bureau of Labor Statistics, more than half a million employees lost their jobs in a "mass layoff event" in the first quarter of 2009, the highest numbers on record. And this counts only incidents in which at least 50 employees at the same company were laid off in a five-week period, not the many more jobs lost in smaller layoff actions or at smaller employers every day.  

In recognition of these figures, the Equal Employment Opportunity Commission recently released some guidance on waivers of discrimination claims. Many employers who lay off workers condition severance payments on the employee signing a release, agreeing to give up (waive) the right to sue the company for any violations of employment law. To be enforced by a court, such waivers must be knowing and voluntary, and must give the employee something of value (typically money) in exchange.

Additional rules, intended to make sure that the waiver really is knowing and voluntary, apply when an employer asks an employee to waive the right to sue under the Age Discrimination in Employment Act (ADEA). And, an employee who is at least 40 years old and is part of a group that's laid off or offered an incentive to resign must be given certain statistical information on the program and the affected employees. These rules are described in the EEOC's regulations interpreting the ADEA, at 29 C.F.R. 1625.22 and 1625.23.

The EEOC's new guidance, written for an employee audience in the form of questions and answers, doesn't appear to create any new rules or requirements. But it does provide a good refresher for companies that are using releases, including a checklist and some sample language waiving discrimination claims that meets the EEOC's requirements. (If you're using an attorney to draft or review your releases -- as you should -- he or she will no doubt find the brevity of the EEOC's sample language humorous.)

For more information on using a release as part of a severance package, see Nolo's article Using Severance Agreements to Avoid Lawsuits.