When completing employment settlement or separation
agreements for employees over 40 years old, an employment attorney might feel
tempted to simply recycle the language which the attorney has used in prior
settlement agreements, in order to ensure that the agreement complies with the
provisions of the Older Workers Benefit Protection Act (“OWBPA”). However, a recent United States District
Court decision out of the District of Colorado discusses several different ways
in which employees can challenge the legal sufficiency of such language, and
therefore the binding effect of the underlying agreement, and its waiver of
claims. Indeed, as the plaintiff-employee’s
challenges, in that case, to an employer’s OWBPA language was successful in at
least some regards, the case serves as a useful lesson, for employees’ and
employers’ counsel alike, about the importance of making sure that OWBPA
language is worded correctly, so as to ensure enforceability of the underlying
agreement.
I.
Attorney Consultation
In Foster v. Mountain Coal Co., LLC, No. 12-CV-03341-LTB-MJW, 2014
U.S. Dist. LEXIS 67637 (D. Colo. May 16, 2014), the Court held that a severance
agreement did not comply with the OWBPA, because it did not state that the
employee-plaintiff should consult an attorney before signing the severance
agreement. As the severance agreement
merely stated that the employee “may” consult with a lawyer, rather than
stating that the employee “should” or “ought” to do so, the release was held
not to be enforceable, and the Court held that the plaintiff-employee could
proceed with a claim under the Age Discrimination in Employment Act (“ADEA”),
as well as claims under state law.
The Court noted that the OWBPA
“provides that a waiver is not valid unless the individual executing the
release is ‘advised in writing to consult with an attorney prior to
executing the agreement.’” Foster, 2014 U.S. Dist. LEXIS 67637 at *18 (quoting
29 U.S.C. § 626(f)(1)(E) (emphasis added in Court’s opinion; emphasis is not in
statute). In holding that the language
of the separation agreement at hand did not meet that requirement, the Court
noted as follows:
The
language does not advise Plaintiff Fisk to consult with an attorney prior to
signing the Agreement, or even that he ‘should’ or ‘ought to’ consult with an
attorney before signing the Agreement. Instead it provides in passive language
and in past tense that Plaintiff Fisk had the ‘opportunity for consideration and consultation with attorney,’ and that
Plaintiff Fisk ‘may discuss the Agreement with his[] attorney.’
I read the statutory
language as requiring the waiver to affirmatively advise the employee to
consult with an attorney, or that the employee is affirmatively advised that he
‘should’ or ‘ought’ to consult with an attorney. See Am. Airlines, 133 F.3d at
118. This is so because the provisions of the OWBPA are precise, ‘strict,
unqualified’ requirements for employers imposed by Congress, and courts cannot
relax requirements that Congress lawfully imposes. Oubre, 522 U.S. at 427. The word
‘advise’ means ‘to give advice to,’ ‘caution,’ ‘warn,’ ‘recommend,’ or
‘inform.’ Merriam-Webster’s Collegiate Dictionary 19 (11th ed. 2004); see also Cole v. Gaming
Entm't, LLC, 199 F. Supp. 2d 208, 214 (D. Del. 2002). The language
in the Agreement is passive and does not ‘advise’ Plaintiff Fisk to do
anything. Additionally, portions of it are in the past tense, and past
directives are also insufficient. The language does not ‘give advice to,’
‘caution,’ ‘warn,’ ‘recommend,’ or ‘inform’ Plaintiff Fisk to consult with an
attorney; it only makes Plaintiff Fisk aware of a right that he has, but does
not ‘advise,’ him to take advantage of, act
on, or take any action regarding that right. Am. Airlines, 133 F.3d at 118. An
employee, such as Plaintiff Fisk, is not required to infer the right to consult
an attorney from language such as ‘may’ or ‘has had.’ See Cole, 199 F. Supp. 2d at 214.
Additionally, Defendants argue that the fact that Plaintiff Fisk saw a workers'
compensation attorney satisfies this requirement. However, the language
mandates strict compliance, which the Agreement did not satisfy.
As the Agreement fails
to advise Plaintiff Fisk to consult with an attorney prior to signing it, as
explicitly required by the statute, the release is invalid and cannot be
enforced against Plaintiff Fisk. Accordingly, Defendants are not entitled to
summary judgment on Plaintiff Fisk’s ADEA claim.
Foster, 2014 U.S. Dist. LEXIS 67637 at
*18-20.
II.
Decisional Unit
In Foster, since the plaintiff-employee had been fired as a part of a
group termination, the Court also considered the provisions of the OWBPA (29
U.S.C. § 626(f)(1)(H)) which require that the employer provide the employee
with detailed information concerning a group termination program. Foster,
2014 U.S. Dist. LEXIS 67637 at *20-21.
The plaintiff claimed that he either did not receive, or did not recall
receiving, the required information at the time of his termination and receipt
of the Agreement – rather, he claimed that he received that information at a
later time. Id. at 21. The employer, in rebuttal, pointed to the
testimony of plaintiff’s supervisor, who claimed that each employee was given
an envelope containing both the agreement and the required disclosures. Id. at 22. Since the plaintiff testified that he did not
remember whether he received the document at the time in question, as compared
to the supervisor’s testimony which was couched in certain terms, the Court
held that no reasonable jury could find for the plaintiff-employee on this
point, and that the Court could not conclude that there was a genuine issue of
material fact on this point. Id. at
23-24.
The Plaintiff-employee also
challenged whether the notice in question adequately described the relevant
decisional unit. Id. at *31. As the Court noted, the OWBPA and its
regulations provide that “flexible, manipulable, subjective criteria – even
criteria couched in purportedly quantified terms, such as ‘performance’
rankings – are impermissible means of creating a decisional unit”, and “given
the concerns regarding an employer’s incentive to manipulate statistics and the
relevant decisional pool, the regulations understandably prohibit an employer
from arguing, tautologically, that its ‘decisional unit’ is simply ‘the
employees it decided were eligible.’” Id.
at 30. Here, on the other hand, the
Court noted that the decisional unit which the employer used, the “Production
Group”, could be objectively defined, and was not based upon a “subjective
criteria based on flexible or manipulable terms,” and that “basing a decision
on a group, such as the Production Group, does not pose the risks the
regulations are designed to prevent.” Id.
at *31-32.
III.
Eligibility Factors
Ms. Foster also challenged whether the employer’s notice had
adequately described the relevant factors.
As the Court briefly discussed:
Section 626(f)(1)(H) requires
employers to provide employees who are terminated as part of a termination
program, such as a RIF, with information about the program. In particular,
employers must supply the terminated employee with the criteria for eligibility
for the program and with lists of the ages and positions of both, employees who
were terminated through the program, and those who were retained. Id. § 626(f)(1)(H)(i, ii). An
‘employment termination program’ takes place when a group or class of employees
are involuntarily terminated and ‘offered additional consideration for their
decision to sign a waiver.’ 29 C.F.R. § 1625.22(f)(1)(iii)(A). ‘Typically, an
involuntary termination program is a standardized formula or package of
benefits that is available to two or more employees.’ Id. § 1625.22(f)(1)(iii)(B).
Foster, 2014 U.S. Dist. LEXIS 67637 at
*32-33. The Court concluded that the
employer had satisfied both provisions, as the disclosure in question “clearly
state[d] its eligibility criteria”, and it also “included the required list
which provided the job titles and ages of the employees terminated with the
decisional units, as well as the job titles and ages of all retained employees
within the decisional units.” Id. at
*33. Similarly, the Court rejected the
employee’s argument that the employer was required to provide the criteria for
selection in the RIF program. As the
court noted, with citation to case law:
Instead, the OWBPA
requires only the disclosure of the eligibility factors for a Severance Plan. See
id. § 1625.22(f)(1)(iii)(A, B) (defining ‘program’ as the package of
benefits offered, not the involuntary termination program); see
also Recchia v. Kellogg Co., 951 F. Supp. 2d
676 (D. N.J. 2013); Rupert v. PPG Indus., Inc., Nos. 07-0705,
08-0616, 2009 U.S. Dist. LEXIS 16639, 2009 WL 596014, at *56-57 (W.D.Pa. Feb.
26, 2009) (following the EEOC regulations and finding that ‘program’ refers to
the benefits plan); Ricciardi v. Elec. Data Sys. Corp., No. 03-5285,
2007 U.S. Dist. LEXIS 11758, 2007 WL 576323, at *4 (E.D. Pa. Feb. 20, 2007)
(holding that a release needed to include only the criteria for eligibility in
the severance plan, not the criteria for termination).
Foster, 2014 U.S. Dist. LEXIS 67637 at
*33-34.
IV.
State Anti-Discrimination Claims:
Failure to Tender Back Consideration
In Foster, the employer argued that the plaintiff’s claims under state
law had to be dismissed under Colorado’s “ tender back” doctrine, because he
had retained the $8,800 severance payment which had been paid to him to release
those claims, and that the plaintiff had to tender that amount back to the
employer before he could challenge his waiver of those claims. Id. at 35. While the employer cited case law from the
Tenth Circuit to support its position, Bennett
v. Coors Brewing Co., 189 F.3d 1221, 1228 (10th Cir. 1999), the Court in
Foster found the citation to that case to be “misplaced”, as that opinion had
dealt with state common law claims, and not, as here, with claims of
discrimination under the Colorado Anti-Discrimination Act. Foster, 2014 U.S. Dist. LEXIS 67637 at *35-36. The Court looked to a Supreme Court opinion,
Oubre v. Energy Ops., Inc., 522 U.S. 422, 427, 118 S. Ct. 838, 139 L. Ed. 2d
849 (1998), which had rejected an employer’s argument that claims under the
ADEA could be barred by the tender back doctrine. As the Court in Foster noted:
There, as here, the employer moved for summary
judgment, contending that the employee had ratified a release of all claims
against the employer by failing to return the monies she had received. [Oubre, 522, U.S. at 422]. The Court held that the release signed by the
plaintiff did not comply with the OWBPA’s specific requirements regarding
releases covering ADEA claims. Id.; see also 29 U.S.C. §§ 626(f)(1)(B), (F), (G). The Supreme
Court concluded that because it failed to comply with the OWBPA, the release
should not bar the plaintiff’s ADEA claim, even if the employee retained the
monies she received in exchange for the release. Id. at 842.
In so holding, the
Court reasoned that enforcement of the tender back and ratification rules ‘would
frustrate the statute's practical operation,’ and explained that:
In many instances a
discharged employee likely will have spent the monies received and will lack
the means to tender their return. These
realities might tempt employers to risk noncompliance with the OWBPA’s waiver
provisions, knowing it will be difficult to repay the monies and relying on
ratification. We ought not to open the door to an evasion of the statute by
this device.
Id.
Foster, 2014 U.S. Dist. LEXIS 67637 at
*36-37. Noting that Colorado courts had
an “expressed desire and intention to look to federal cases for guidance in
applying the Colorado Anti-Discrimination Act”, the Court in Foster extended the reasoning of Oubre to this case, and held that the
plaintiff’s state law claims were not barred by the tender back doctrine. Id. at 37-38. Thus, the Court also denied the employer’s
motion for summary judgment as to the plaintiff’s state law claims. Id. at *39.
V.
Conclusion: Importance of Strict
Compliance with OWBPA
While most of Mr. Foster’s arguments
discussed above were rejected by the Court, the fact that he won at least one
of those arguments with regard to his ADEA claims was enough for those claims
to survive summary judgment. The
relevant paragraph of the Court’s opinion makes this point very clearly and
succinctly:
[B]ecause I
concluded that Defendants failed to show that all the strict statutory
requirements of the OWBPA were met, summary judgment on Plaintiff Fisk’s ADEA
claims is denied. See Butcher v. Gerber Prods. Co., 8 F. Supp. 2d
307, 314 (S.D. N.Y. 1998) (‘The absence of even one of the OWBPA’s requirements
invalidates a waiver.’) Furthermore, because the release is invalid, discussion
of its validity under the totality
of the circumstances approach is not warranted.
Foster, 2014 U.S. Dist. LEXIS 67637 at
*34-35. Further, as the above discussion
demonstrates, it was that same shortcoming (failure to follow the OWBPA’s
requirements strictly), which ultimately led to the plaintiff’s state law
claims surviving as well, notwithstanding the fact that the employee did not
pay back to the employer the underlying settlement monies, which he had been
paid following his execution of the underlying settlement agreement. Thus, to repeat the admonition at the opening
of this post, the importance of strict compliance with the OWBPA’s provisions,
and the consequences for failure to do so, simply cannot be overstated.
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