What is age discrimination?
Stereotypes related to age — being less physically able or unfit to do certain tasks — are considered unfair treatment in the workplace. Some examples of ageism include negative reviews, being fired or being targeted for layoffs. If someone is treated unfairly based on age, they can file an age discrimination claim against you.
What is the Older Workers Benefit Protection Act?
The Older Workers Benefit Protection Act is an amendment to the Age Discrimination in Employment Act to better define the safeguards to prevent discrimination against employees based on age. The ADEA addresses all conditions of employment when it comes to age discrimination.
The OWBPA focuses specifically on benefits and legal waivers older employees might sign if they’re laid off or terminated. It’s a safeguard to prevent older workers from being laid off unfairly based on age discrimination. Protected employees have to receive certain benefits and provisions as part of severance agreements if they sign a release that waives their right to an age discrimination claim.
History of the OWBPA
An amendment to the ADEA, which went into effect in 1967, the OWBPA became law in 1990. At that time, many large corporations were cutting costs by pushing older employees into early retirement. Along with those staff-reduction programs, they required those older employees to sign waivers to prevent them from suing. The OWBPA keeps employers from forcing older employees into early retirement deals by requiring them to follow certain rules in those situations.
Purpose of the OWBPA
Companies often need to lay off employees for economic reasons, whether business is down or the company is restructuring. Some companies look at older employees first since they’re more likely to have higher salaries and be closer to retirement. Eliminating the highest salaries when downsizing makes economic sense. However, targeting older employees is considered age discrimination.
The OWBPA is a discrimination law designed to prevent older workers from being unfairly targeted. It requires employers to follow specific guidelines when laying off workers or offering voluntary staff reduction programs. It also requires waivers to meet certain requirements.
Who is protected by the OWBPA?
OWBPA regulations apply specifically to employees who are over 40 years old. All employers with 20 or more employees must follow the regulations established by the law. Some states have their own versions of age discrimination laws that might apply to businesses differently.
Requirements of the OWBPA
The OWBPA puts several regulations in place regarding older workers. It’s particularly focused on layoffs and staff reductions to avoid age discrimination during the process. It also covers benefits for older workers.
OWBPA benefits protection
This law protects the fringe benefits of older employees, which can include things such as life insurance, health insurance and retirement benefits. Those benefits can sometimes cost more for older employees. The OWBPA requires that employers provide equal benefits for employees of all ages.
For certain benefits, employers can offer lesser benefits for older workers if the benefits cost more for them, but the employer has to spend at least the same amount on that benefit for older employees as it does for younger employees. The employer might be able to decrease benefits to older workers when other benefits, either from the employer or the government, compensate for the difference.
OWBPA layoff regulations
When a company institutes layoffs, it has to meet certain requirements to comply with the OWBPA. You cannot target older workers for workforce reduction. Age can’t be used as the reason for termination. You can’t force older workers to sign waivers preventing an age discrimination claim.
Requirements for release of claims
If an employee over 40 is laid off, they might be asked to sign a release of claims. This waiver prevents the employee from filing a claim of age discrimination. Under the regulations of the Older Workers Benefit Protection Act, the release has to meet certain requirements.
The release must:
- Be written
- Use clear language without complex sentences or technical jargon
- Include accurate information that doesn’t mislead employees
- Reference ADEA
- Allow at least 21 days for consideration of the offer with the period restarting if any material changes happen
- Allow seven days after signing for a revocation period in case the employee changes their decision
- Be signed with knowing and voluntary consent with no external pressure
- Include written advice to seek legal counsel before signing
The purpose of these guidelines is to make sure employees sign them voluntarily and that they fully understand what they’re signing. If the waiver doesn’t meet all of the requirements, it’s essentially the same as not having a waiver. The employee can file a claim for age discrimination.
Incentives for release of claims
In exchange for employees signing the waiver, you typically offer a severance package or other incentive beyond what the employee is already entitled to receive. You can’t provide the last paycheck and benefits payouts the employee should receive anyway as part of the package. The incentives might include severance pay, health benefits, bonuses, relocation expenses and other types of reimbursement.
Group termination considerations
If you’re terminating a group of employees who are protected by the OWBPA, and you’re asking them all to sign waivers, you have additional requirements. This applies when you terminate two or more covered employees over age 40. The layoffs don’t have to happen at the same time. These regulations apply if they’re all related to the same decision-making process.
You must give the employees certain information about the other people who are involved. That includes:
- Ages of all terminated employees
- Job titles of terminated employees
- Ages of employees the company keeps
- Eligibility factors for the offer
The reasoning behind requiring this information is that it could be relevant to the employee’s decision whether to sign the waiver for an age discrimination claim. A group layoff situation also increases the consideration period from 21 to 45 days.
