EEOC REQUESTS PUBLIC COMMENT ON ADEA PROPOSED RULE ADDRESSING RECENT SUPREME COURT RULING

PRESS RELEASE
4-22-99

WASHINGTON - The U.S. Equal Employment Opportunity Commission (EEOC) announced today that it is requesting public comment on a proposed rule which would support the vigorous enforcement of the Age Discrimination in Employment Act's (ADEA) provisions on the use of waivers in layoffs and reductions in force (RIFs). The Notice of Proposed Rulemaking (NPRM), scheduled for publication this week in the Federal Register, provides detailed guidance on the "tender back" issue addressed by the Supreme Court's 1998 decision in Oubre v. Entergy Operations, Inc.

In Oubre, the Supreme Court addressed a common practice whereby employers require employees to waive any legal claims they may have against the company in return for receiving enhanced severance benefits in RIFs and layoffs. The Court's ruling in Oubre resolved a split in the lower courts and held that workers are not required to return or "tender back" severance or other employer benefits given in exchange for a waiver agreement before they can bring a claim under the ADEA.

"Older workers who lose their jobs often depend on severance benefits to support themselves and their families," said EEOC Chairwoman Ida L. Castro. "As the Supreme Court recognized, it would be fundamentally unfair and inconsistent with the law to require these individuals to return those benefits before they can challenge the legality of a waiver."

Title II of the Older Worker Benefits Protection Act of 1990, which amended the ADEA, includes strict standards governing how employers may seek waivers from employees who are 40 years of age or older. During the termination process, an employer may ask workers to waive any legal rights they have against the company in exchange for additional benefits, such as severance pay or early retirement. Although employers may ask for waivers, they must also comply with the ADEA requirements to ensure that the process is a fair one.

"Due to the importance of the 'tender back' issue, EEOC has determined that it would be useful to provide guidance to the public in light of the Supreme Court's ruling in Oubre," Ms. Castro said. "I look forward to receiving comments on the proposed rule from the public at large."

The proposed rule provides guidance to employers and employees on the meaning and implications of the Oubre decision. Highlights of this guidance include:

• An individual may retain severance benefits, even if he/she challenges the validity of a waiver agreement under the ADEA.
• Employers may not avoid the "no tender back" rule by using other means to limit an employee's right to challenge a waiver agreement. Accordingly, they may not require employees to agree to a covenant not to sue or to any other arrangement that would limit employees' ability to raise their claims.
• An employer may, under appropriate circumstances, be able to claim restitution, recoupment, or set off against an employee's recovery of damages if the employee, who has received consideration for a waiver, ultimately recovers in an ADEA discrimination lawsuit.
• Even if one or more persons successfully challenges the validity of a waiver, the employer must still honor its agreement to other employees.

The EEOC did not address the "tender back" issue in its recently published June 5, 1998, final rule on ADEA waivers (29 C.F.R. Section 1625.22).

Written comments on the NPRM must be submitted to the Commission no later than June 22, 1999. Comments should be sent to Frances M. Hart, Executive Officer, Executive Secretariat, EEOC, 1801 L Street, NW, Washington, D.C. 20507. The NPRM, and other information about EEOC, is available on the agency's web site (www.eeoc.gov).

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.

This page was last modified on April 22, 1999.