Failure to Comply with ADEA/OWBPA Does Not Entirely Invalidate Release
A Ninth Circuit opinion, Harmon v. Johnson & Johnson, held that a release of claims that did not comply with the Age Discrimination in Employment Act (“ADEA”), as amended by the Older Workers Benefit Protection Act (“OWBPA”), was still effective as to all claims except federal age claims under the ADEA.
The employee was terminated in connection with a reduction in force and was offered a severance package in exchange for signing a release of claims. The release did not comply with the ADEA/OWBPA, and, after signing, she sued for age discrimination under the ADEA and state law. The court upheld summary judgment in favor of the employer on the state-law age claim because the release was still valid as to that claim. It also found in favor of the employer as to the ADEA claim because the employer provided a legitimate, non-discriminatory reason for the termination — a reduction in force.
This case follows the U.S. Supreme Court decision of Oubre v. Entergy Operations, Inc. and other federal court decisions. These courts have held that the purpose of the OWBPA is to protect older workers by making sure that waivers of age claims under the federal ADEA are knowing and voluntary. For a waiver to be valid under the ADEA/OWBPA, it must (among other requirements) (a) provide at least twenty-one or, in the case of a reduction in force, forty-five days for employees age forty or older to consider the release and seven days to revoke the agreement once signed and (b) explicitly mention the ADEA in the release. Thus, although it is important to comply with the ADEA/OWBPA when drafting separation agreements and releases, it is likely only the employee’s ADEA claim (if any) will survive if the employer fails to comply.