Age Discrimination Settlement Agreements

Employers who are terminating the employment of older employees often enter into settlement agreements with these employees in which the employer provides benefits to the employee in return for the employee’s release of his or her claims against the employer. The release usually focuses on waiving rights that the employee may otherwise have to bring claims of age discrimination under the Minnesota Human Rights Act or the ADEA. Such releases will usually be upheld if the agreement contains specific language notifying the employee of his or her 15-day right of rescission under the Minnesota Human Rights Act and/or the 7-day right of rescission under the ADEA, as applicable.249

Under the ADEA, the employer must provide the employee with at least 21 days to consider an individual agreement and to consult with legal counsel before signing the agreement, and another seven days to rescind the agreement after having signed it. The employer may revoke its settlement offer during the 21 day review period before the employee accepts. If the waiver is requested in connection with an exit incentive program such as an early retirement program discussed in the previous section, the employer is subject to additional specific notice requirements and the 21 day review period for the employee is increased to 45 days. Be aware that when an employer requests waivers from two or more employees, it may be considered an exit incentive type program under the ADEA and that additional information must be included in the release document in order for it to be enforceable.

Settlement Agreement Enforceability

To be enforceable, an agreement which contains a release of age claims in exchange for benefits must describe in clear and understandable language the time periods for review and rescission, the specific rights that the employee is waiving, advice as to the employee’s right to consult with an attorney and the fact that the agreement does not waive rights of the employee which arise after the agreement is signed.250 These requirements are strictly interpreted and the EEOC from time to time issues regulations and Guidance documents describing its view on the requirements of a knowing and voluntary waiver of ADEA claims. In fact, a release of age discrimination claims that does not satisfy all of the statutory requirements is not an effective waiver of claims and does not prevent the assertion of an ADEA claim even if the employee signs the waiver and release agreement it and keeps the money or other consideration offered in connection with the release of claims.251 Therefore, these (as well as all other) release agreements should be implemented only with the advice of legal counsel.

Also, there must be no hint of coercion or undue pressure on the employee. The amount of consideration (benefits) provided generally depends upon the employee’s salary, the length of employment and other like factors.

249. Minn. Stat. § 363A.31 (2007).
250. Older Workers Benefit Protection Act § 201, 29 U.S.C. § 626(f)(1) (2007).

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