EQUAL OPPORTUNITY DIRECTIVE 1999-05

TO:	Bureau/Office Equal Opportunity Officers
FROM:	E. Melodee Stith, Director Office for Equal opportunity
SUBJECT:	Policy and Procedures Related to Settlement Agreements Waiving ADEA^1 Rights

This Directive is to advise you that Settlement Agreements resolving age discrimination claims must comply with the Older Worker's' Benefit Protection Act (OWBPA) 29 U.S.C. §626 (f)(1) and (f) (2), 29 C.F.R. § 1614.504(a), 29 C.F.R. § 1614.504(a).

In October of 1990, Congress enacted the OWBPA. Section 1 of this statute provides that an individual may not waive any right or claim brought under the Age Discrimination in Employment Act of 1967 (ADEA) unless such a waiver is knowing and voluntary.² Section 2 provides that a waiver in settlement of an age discrimination complaint brought under the federal sector provision of the ADEA shall not be considered knowing and voluntary unless it meets six criteria: (1) that the waiver is part of an agreement that can be clearly understood by the complainant; (2) that it specifically refers to rights or claims arising under the ADEA; (3) that the complainant does not waive rights or claims that arise after the waiver is executed; (4) that the complainant receives valuable consideration in exchange for the waiver, beyond what the complainant is already entitled to; (5) that the complainant is advised in writing to consult an attorney before executing the agreement; and (6) that the complainant is given a reasonable period of time to consider the agreement.³

OWBPA's purpose, defined broadly, is to "protect the rights and benefits of older worker's." More specifically the statute prevents age claimants from "unknowingly or involuntarily" waiving their ADEA rights.

To insure that the OWBPA requirements are met in resolving age-discrimination claims (ADEA), all such Settlement Agreements must meet the minimum requirements as described below:

(a) the agency must advise the complainant in writing to consult with an attorney prior to executing the agreement.

(b) the complainant be given a "reasonable"⁴ period of time to consider the agreement.

(c) the ADEA waiver must state the complainant knowingly waivers his/her rights under the ADEA when accepting the resolution of his/her complaint.

(d) the complainant does not waive rights or claims that arise after the waiver is executed.

(e) the complainant receives consideration in exchange for the waiver, over and above what the complaint is entitled to.

Sample language that can be used in Settlement Agreements for waivering ADEA claims follows:

The complainant acknowledges and understands in writing that he/she has filed claims, as described herein, under the Age Discrimination in Employment Act of 1967 (ADEA), as amended by the Older Workers Benefit Protection Act of 1990 (OWBPA). Complainant understands and acknowledges that by his/her signature on this agreement, he/she forever waives and withdraws with prejudice those ADEA claims. The parties hereby stipulate to the following:

a. Complainant was advised of his right to consult an attorney before signing this waiver and withdrawal of his ADEA claims;

b. Complainant was advised that he has a reasonable period from the date he/she is provided a copy of this agreement to consider this agreement before signing it;

c. The parties agree that seven days from the date that complainant is provided with a copy of the agreement constitutes a reasonable period to consider the agreement before signing it.

d. Complainant has received valuable consideration in exchange for the waiver beyond what the complainant was already entitled to.

Failure to comply with these minimum requirements under OWBPA, or if there is other evidence that the waiver was not "knowing and voluntary," will invalidate the waiver of ADEA claims even if, monetary consideration has already been paid to the Complainant. In those circumstances it is not necessary for the Complainant to tender back the monetary payment, although it could constitute a basis for set-off, restitution or recoupment in further proceedings. See Oubre v. Entergy Operations, Inc.,__U.S.__, 118 S. Ct. 838 (1998). See, also, EEOC's Notice of Proposed Rulemaking on ADEA Waivers: Tender Back of Consideration" (to be issued in the near future) that was sent to you for comment on December 29, 1998, EOD 1999-06. It should also be noted that any provisions that limit a Complainant's rights to challenge an ADEA waiver may be invalid. Please share this information with Bureau managers and supervisors.

INQUIRIES: Carmen J. Santana, Staff Assistant, Complaints, Office for Equal Opportunity, (202) 208-4016

EXPIRES: When Superseded

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¹ The Older Workers' Benefit Protection Act amended the Age Discrimination in Employment Act, effective October 16, 1990, and provides the minimum requirements for waiver of ADEA rights.

² 29 U.S.C. § 626(f)(1); 29 C.F.R. § 1614.504(a).

³ 29 U.S.C. § 626(f)(2); Swain V. Department of the Army, EEOC Request No. 05921079 n. 6 (June 3, 1993).

⁴ The OWBPA does not define what is considered to be a "reasonable" period of time for this purpose. We believe a period between 7 and 21 days will meet the reasonableness requirement in most cases for giving a complainant the opportunity to consider the agreement.