EEOC ISSUES FINAL RULE ON ADEA TENDER BACK ISSUE

New Regulation Addresses Supreme Court Ruling on Waivers under Age Bias Law

WASHINGTON - The U.S. Equal Employment Opportunity Commission (EEOC) today announced the publication of a final regulation prohibiting the return, or "tender back," of consideration in connection with challenges to waivers under the Age Discrimination in Employment Act (ADEA). The new rule, scheduled to appear in today's Federal Register, addresses the Supreme Court's 1998 decision in Oubre v. Entergy Operations, Inc. (522 U.S. 422) and related issues regarding waivers.  The full text of the rule, as well as a supplementary question- and-answer document, will be available shortly on the Commission's Web site at www.eeoc.gov.

"The issuance of this regulation supports the vigorous enforcement of the ADEA's provisions  regarding the use of waivers in layoffs and reductions in force, in accordance with the Supreme Court's  decision in Oubre," said EEOC Chairwoman Ida L. Castro. "By providing detailed guidance on the tender back question, the rule will enhance the ability of both employers and employees to understand and comply with the law." 

An ADEA waiver is an agreement between an employer and employee in which the employee gives up the right to pursue an age discrimination claim against the employer in exchange for severance or early retirement benefits or something else of value.  Employees are often asked to sign waivers in connection with layoffs or RIFs. 

Under Title II of the Older Workers Benefits Protection Act of 1990 (OWBPA), which amended the ADEA, Congress decided to permit these waivers but set out a series of specific requirements with which waivers must comply to be valid.  Although employers may ask for waivers, they must also comply with the ADEA requirements to ensure that the process is fair.

Consistent with the Supreme Court's ruling in Oubre, the regulation provides that an employer may not require an employee to return, or "tender back," severance pay or other benefits in order to challenge a waiver as inconsistent with the ADEA.

In addition, the rule prohibits the imposition of other financial penalties against an employee simply for challenging a waiver in court.  It does, however, protect an employer's ability to recover attorney's fees if a challenge is filed in bad faith. The rule also sets out standards regarding when an employer may obtain restitution of funds it has paid an employee and what an employer's duties are when a waiver is challenged.

EEOC published a Notice of Proposed Rulemaking on the tender back issue in the Federal Register on April 23, 1999 .  The Commission subsequently received 27 comments from representatives of employers and employees.  After careful consideration of the comments, EEOC approved the revised final regulation in accordance with the federal rulemaking process.

This is EEOC's second regulation  interpreting OWBPA's waiver provisions.  EEOC previously issued a negotiated rule addressing waivers in June 1998 (29 C.F.R. Section 1625.22) which, among other things, prohibited any requirement that an older worker return severance or other benefit payments before filing an administrative charge of age discrimination with EEOC. However, the rule did not address tender back with respect to ADEA lawsuits.

In addition to enforcing the ADEA, which prohibits discrimination against individuals 40 years of age or older, EEOC enforces Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex, and national origin; sections of the Civil Rights Act of 1991; the Equal Pay Act; Title I of the Americans with Disabilities Act, which prohibits discrimination against people with disabilities in the private sector and state and local governments; and the Rehabilitation Act's prohibitions against disability discrimination in the federal government.

Further information about the Commission is available on its Web site at http://www.eeoc.gov/.