News & Updates


EEOC Releases Guidance to Employees on Severance Agreements

By Christopher B. Lunny

For many years now, the U.S. Equal Employment Opportunity Commission (EEOC) has issued technical assistance documents to guide employers on employment law concerns. The EEOC has, for example, issued enforcement guidance concerning reasonable accommodation standards under the Americans with Disabilities Act, the employment rights of undocumented workers and even gender favoritism. In May of 2007, the EEOC published a helpful guidance intended to aide employers in understanding their obligations to employees with caregiving responsibilities. Each of these bulletins were intended to assist employers by presenting the EEOC’s viewpoint on complex issues.

The labor marketplace, however, is changing. With layoffs and unemployment rising, the EEOC’s focus has shifted as well. On July 15, 2009, the EEOC published a technical assistance document entitled “Understanding Waivers of Discrimination Claims in Employee Severance Agreements.” The document was released during an EEOC public hearing to discuss shrinking employment opportunities and the attendant rise in age discrimination charges. The event featured speakers who discussed different age discrimination topics including policies which may adversely impact older workers and troubling stereotypes.

Part of the EEOC’s goal in the latest hearing and publication was to orient workers to issues that arise when an employer proposes to release age discrimination claims as part of a severance agreement. As most employers know, the Older Worker Benefit Protection Act (OWBPA) provides additional requirements in order for employees to validly waive and release claims under the Age Discrimination in Employment Act (ADEA). For example, the OWBPA requires employers to specifically mention the release of ADEA claims and give employees the right to revoke the release within seven (7) days after the document is executed by the employee. If the severance agreement does not include these and other provisions required by the OWBPA, the agreement may not release the employer from ADEA liability.

The EEOC’s latest guidance offers much more than a review of OWBPA obligations. For example, the EEOC advises that, even if an employee has signed a severance agreement, the employee may still file an EEOC charge without having to return any severance pay. In addition, the guidance states that “an employer cannot lawfully limit your right to testify, assist, or participate in an investigation, hearing, or proceeding conducted by the EEOC or prevent you from filing a charge of discrimination with the agency.” The publication includes an “Employee Checklist: What To Do When Your Employer Offers You A Severance Agreement” which recommends that employees “consider having an attorney review the severance agreement.”

The EEOC’s bulletin and public hearing signal the government’s continuing concern over the reduction in job opportunities, rise in severance agreements and attendant increase in age discrimination charges. Clearly, these events are no accident. In fact, the third sentence of the guidance removes any doubt of the regulator’s viewpoint. According to the EEOC, “[o]ften, employers terminate older employees who are eligible for retirement, or nearly so, because they generally have been with the company the longest and are paid the highest salaries.” Against this backdrop, one can reasonably expect the EEOC to remain active in this downturn, particularly with an eye toward alleged age discrimination.