September 2014 Bar Bulletin
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September 2014 Bar Bulletin

Withdrawal of Offers under the ADEA

By Karen Sutherland

 

The Age Discrimination in Employment Act (ADEA)1 protects individuals over the age of 40 from age discrimination in employment. In order for a waiver of claims to be valid under the ADEA, the waiver must comply with the Older Workers Benefit Protections Act (OWBPA),2 which sets forth the conditions that must be met for the waiver to be knowingly and voluntarily made.

The purpose of the requirements set forth in the OWBPA is to "guarantee that an employee has every opportunity to make an informed choice whether or not to sign the waiver."3 The requirements include, among other things, that the waiver provide the employee with at least 21 days to consider the offer. This time period is extended to 45 days in the event of a group layoff. The employee can sign at any time during the 21-day or 45-day period.4

Occasionally, questions have arisen regarding the effect of an employer's failure to meet the waiver requirements under the OWBPA. Courts that have addressed this issue have held that a release that fails to meet the requirements of the OWPBA is unenforceable with respect to age discrimination claims under the ADEA, but that the failure to meet the requirements of the OWBPA is not a violation of the ADEA.5 For example, an employer can withdraw an offer that contains a release of claims under the ADEA within the 21- or 45-day period.

The court in Ambers v. Village Family Service Ctr.6 succinctly explained the purpose of the 21-day provision and the effect of failing to give the employee 21 days to consider the waiver:

The twenty-one day provision only pertains to whether a waiver of an ADEA claim was knowing and voluntary. An employer's failure to give an employee twenty-one days to consider the waiver does not mean the employer violated federal law. It just means that if the employer attempted to enforce the waiver later, it would not hold up since it was not knowing and voluntary.7

The rationale behind the result in the Ambers decision is explained in an earlier case that is cited by Ambers that comes from the Eighth Circuit, Ellison v. Premier Salons International, Inc:8

The language at issue provides that a waiver may not be considered knowing and voluntary unless, among other things, "the individual is given a period of at least 21 days within which to consider the agreement." 29 U.S.C. 626(f)(1)(F)(i) (1994). This language does not state that the employer's offer is irrevocable for twenty-one days, or that the offer creates a twenty-one-day option contract, or even that the offer must be held open for twenty-one days. The language does not forbid such offers from being rejected or revoked for twenty-one days, nor does it state that common law contract principles are preempted. Contrary to Ellison's contention, the language of the OWBPA does not create an irrevocable power of acceptance. The OWBPA simply provides that the employee be given twenty-one days within which to consider an offered agreement if the waiver of potential ADEA claims is to be considered knowing and voluntary, and thus valid.

The court in Ellison noted that the employee had the ability to accept or reject the offer prior to the end of the 21- or 45-day period and held, "The statute similarly does not forbid an employer from revoking an offer before the twenty-one days expire."9 The court's reasoning on this point includes the following:


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