The Equal Employment Opportunity Commission recently published a technical assistance document addressing waivers of discrimination claims in employee severance agreements. Although much of the guidance is a restatement of standards already established by statutes, regulations and case law, it serves as a helpful reminder to employers about requirements for making releases valid and enforceable.

The technical assistance document also provides some insight into issues the EEOC is likely to focus on if asked to consider enforceability of a release, particularly in the context of waivers signed by employees age 40 and older in connection with group terminations.

Valid Waivers—Key Considerations

The technical assistance document is directed primarily toward employees and includes a checklist of steps employees should take when they are offered severance benefits in exchange for a waiver of claims. It states that in order for a waiver of discrimination claims to be valid, it must:

• Be knowingly and voluntarily signed by the employee
• Provide consideration, such as additional compensation, in exchange for the waiver
• Not require the employee to waive rights that may arise after the date the waiver is signed
• Not require the employee to waive other claims that may not be waived as a matter of law, such as claims for unemployment compensation, workers' compensation benefits, claims for health insurance benefits under COBRA, or claims with regard to vested benefits under a retirement plan governed by ERISA
• Otherwise comply with applicable state and federal laws

The EEOC's increased focus on the enforceability of waivers and its decision to publish a document specifically to aid employees who are offered releases should cause employers carefully to review their release forms and the procedures they follow to obtain waivers. Every employer who offers severance benefits in exchange for a waiver of claims should make sure its form of release:

• Is written in a manner that is easily understood
• Specifically identifies the new consideration being offered in exchange for the release
• Is not signed by the employee under duress or because of undue influence by the employer
• Otherwise complies with applicable legal requirements (for example, any waiver of claims under the Minnesota Human Rights Act must give the employee a 15-day post‑signing period to revoke the release unless the claim has been asserted in a lawsuit or charge)

EEOC Position Regarding "Covenants Not To Sue"

Although a waiver may preclude the employee from recovering damages related to the waived claims, it may not prohibit the employee from filing a charge of discrimination with the EEOC or similar state administrative agency. Similarly, the EEOC takes the position that a release may not limit the employee's right to testify, assist or participate in an investigation, hearing or proceeding conducted by the EEOC or similar state administrative agency. Doing so, according to the EEOC, constitutes unlawful retaliation in violation of employment rights statutes.

The "Employee Checklist" included in the EEOC technical assistance document specifically advises employees to ensure that the requested release does not include a waiver of the right to file a charge, testify, assist or cooperate with the EEOC. For these reasons—including a blanket prohibition against filing or participating in an administrative charge or lawsuit, often referred to as a "covenant not to sue"—could draw the EEOC's ire.

Waivers of Federal Age Discrimination Claims

The EEOC technical assistance document includes a separate section on the Older Workers Benefit Protection Act (OWBPA), a 1990 amendment to the Age Discrimination in Employment Act (ADEA) (which prohibits age discrimination against individuals age 40 and older) which imposes very specific requirements if an employer wants to obtain a valid release of federal age discrimination claims. Specifically, for any release of ADEA claims to be considered "knowing and voluntary" the release must satisfy several criteria. These criteria, which are discussed in differing degrees of detail in the EEOC's recent guidance, include:

• Clear Language. The release must be drafted in clear language geared to the level of comprehension and education of the average individual eligible to receive consideration in exchange for signing the release. This means the release should not include technical jargon or long, complex sentences.
• ADEA-Specific Waiver. The release must include a statement specifically stating that the employee is waiving claims under the Age Discrimination in Employment Act. A release that simply includes a broad statement, such as "I agree to release any and all claims I may have under all applicable federal, state and local laws" does not effectively waive claims under the ADEA.
• Specific Advice on Consulting With Attorney. The release must specifically advise the employee to consult with an attorney prior to signing it. According to the EEOC, including a broad statement in the release such as "I have had reasonable and sufficient time and opportunity to consult with an independent legal representative" is not sufficient.
• Consideration Period. In the case of a severance offer made to one employee, the release must inform the employee that he or she has 21 days to consider whether to sign the release. This consideration period is increased to 45 days if the release is requested in connection with a "group" termination program; a group termination program being any exit incentive or other employment termination program involving two or more employees. If, however, the waiver is obtained in settlement of a charge or lawsuit then no specific consideration period is required; but the individual must be given a "reasonable period of time" to consider the release.
• Revocation Period. The release must inform the employee that he or she has seven days to revoke the release after signing it, unless the release is obtained in settlement of a charge or lawsuit (but see reference above to the 15-day revocation period under Minnesota law).
• Group Termination—Decisional Unit Disclosure. If the release is requested in connection with a group termination program, the release must inform the employee as to the class, unit, or group of individuals covered by the "program." Federal regulations refer to this group as the "decisional unit." There may be one or more decisional units, depending on how the organization is structured and how employees were selected or ruled out for termination of employment. Unfortunately, cases interpreting the decisional unit requirement do not provide clear guidance on this issue, and the EEOC's recent technical assistance document does not offer any new helpful insights on appropriate disclosure of the decisional unit.
• Group Termination—Disclosure of Eligibility Factors. Any release of claims under the ADEA requested in connection with a group termination program must also identify the "eligibility factors" for the program. Under the EEOC's regulations, which the EEOC relied upon in drafting the sample OWBPA disclosure included in its technical assistance document, eligibility is disclosed by identifying who is eligible for the program (for example, "all employees in the manufacturing plant are eligible for the program"). The EEOC's recent guidance, however, also acknowledges certain federal cases have interpreted "eligibility factors" to mean the selection criteria, such as ability to transfer responsibilities to other employees, performance, or location, applied by the employer in making termination selection decisions. Under this interpretation, an employer is not required to disclose why each individual was selected but must include a short statement disclosing which selection criteria were considered for the identified decisional unit(s).
• Group Termination—Disclosure of Ages and Job Titles. If the release is requested in connection with a group termination program, the release must also identify the job titles and ages of all individuals offered benefits in exchange for signing a release of claims and the same information for individuals who were considered for the program but not offered severance benefits. The OWBPA, federal regulations and case law do not provide consistent guidance on this requirement. The statute refers only to "job title." EEOC regulations interpret this to require an employer also to disclose any established subcategories within a job title or category, such as job grade or level, for all considered and selected employees. Similarly, the OWBPA does not specify how age should be disclosed. At least one court has held that disclosing birth dates, rather than each employee's age, is not acceptable. The example included in the EEOC's recent guidance simply includes job title and age expressed in terms of years.

To ensure your company is complying with all applicable laws, we recommend you consult with legal counsel about any form release your company has developed, particularly if you intend to use such release in connection with a group termination.