Older Workers Benefit Protection Act (OWBPA)
In 1990, Congress passed the Older Workers Benefit Protection Act (OWBPA) which amended the Age Discrimination in Employment Act (ADEA) to safeguard older workers’ employee benefits from age discrimination. Even with the OWBPA amendments, employers may observe the terms of “bona fide employee benefit plans” such as retirement, pension, or insurance plans that contain age-based distinctions, but only if the distinctions are cost-justified. Employers must pay the same amount for each benefit provided to an older worker as is paid for a younger worker. But the OWBPA does make provision for the increased costs of providing certain benefits, such as life insurance, to older workers.
Release of claims under Older Workers Benefit Protection Act
Most employers seek a general release from employees in connection with voluntary or involuntary severance payments or early retirement benefits to limit their exposure to lawsuits by employees challenging the company’s selection decisions.Whenever employers seek a release of federal age discrimination claims, they must comply with the OWBPA. It is important to note that the OWBPA’s requirements apply only to the release of age discrimination claims under the ADEA.The release of all other claims, such as state law claims, are not affected by compliance with the OWBPA.
The Older Workers Benefit Protection Act addresses four different release scenarios: 1) a release by an involuntarily terminated employee who has not filed an Equal Employment Opportunity Commission (EEOC) charge or lawsuit; 2) releases by employees who are involuntarily terminated under group reductions in force and who have not filed age discrimination claims or lawsuits; 3) releases in settlement of disputed claims, either pending EEOC charges or civil lawsuits; and 4) releases by employees who have voluntarily opted to sever employment under an incentive program.
In some circumstances, an employee’s rights under the OWBPA and the ADEA can be waived if specific criteria are met. Of utmost importance is the requirement that the waivers of potential age discrimination claims be “knowing and voluntary.”
State-by-state comparision of 50 employment laws in 50 states, including age discrimination
Layoffs and the OWBPA
Regarding restructuring and layofff programs and early retirement plans, the OWBPA requires employers to provide information about the ages of both terminated and retained employees to those who are considering releasing their age claims.
Deciding which employees comprise the group or organizational unit for the OWBPA’s disclosure requirements can be a logistical nightmare for an employer. Unfortunately, the OWBPA itself offers little guidance on what an appropriate definition might be.
The EEOC regulations, however, do offer some assistance in defining the scope of the group or organizational unit. The EEOC’s stance is that employers should examine their organizational structure and decision-making process.
Case law interpreting the OWBPA’s requirements is somewhat limited on how to define a group or organizational unit. Much like the EEOC’s regulations, however, courts have held that the definition of group or organization can include employees at multiple facilities.
Thus, to determine the appropriate group or organizational unit under the OWBPA and minimize the risk of an invalid waiver, companies should look at how they are organized and how they determined the employees who would and wouldn’t be included in its layoffs.
HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including discrimination