Make Sure Those Releases Are Effective!
December 30, 2002
When is a release not really a release? As one U.S. Court
of Appeals recently held,1 a release can be ineffective when it does not comply
fully with the law. Futhermore, the Court concluded that because the release
misled the employees into believing that they had properly waived their age
discrimination claims, they could sue even though they did not file age
discrimination charges within 300 days of their terminations. As a result, the
plaintiffs were entitled to recover for age discrimination.
The plaintiffs in this case were terminated in a reduction
in force. They signed releases that did not satisfy the requirements of the
Older Workers Benefits Protection Act (OWBPA). They initially did not file age
discrimination claims because they thought they had released them. One of the
plaintiffs later talked with a lawyer, who told him the release of age
discrimination claims was probably invalid. As a result, the plaintiffs filed
age discrimination charges more than 300 days after their terminations.
In the litigation, the defendant-employer admitted that the
releases did not comply with OWBPA and did not bar the plaintiffs’ ADEA claims.
It argued, however, that the plaintiffs should have known this and should have
filed their claims within 300 days of their terminations. The plaintiffs
contended, however, that the releases misled them. They claimed that they
understood and believed they had signed away all of their rights under the Age
Discrimination in Employment Act by signing a release form discharging their
former employer from all claims. One of them testified that he did not realize
the release was ineffective until he happened to discuss it with an attorney
with whom he was discussing an unrelated matter. They further argued that they
acted in a timely manner once they knew they had not released their age
discrimination claims.
The trial court held that the issue of whether the
defendant employer’s conduct led the employees not to file timely charges of
discrimination was a question for the jury. It stated that “[t]he filing
deadline is subject to equitable modification, i.e. tolling or estoppel, when
necessary to effect the remedial purpose of ADEA.” Thus, if the untimeliness in
filing the charge “results from either the employer’s deliberate design to delay
the filing or actions that the employer should unmistakably have understood
would result in the employee’s delay,” the late filing will not be held against
the employee. The court also said that the misleading conduct does not have to
be intentional. The jury decided for the employees.
Another interesting fact in the case is that the employer’s
own analysis of the data during the reduction in force (RIF) showed that there
was a possibility the RIF would have an adverse impact that correlated with
age. The court of appeals held that a statistical analysis comparing those age
50 and over with those under age 50 was an appropriate analysis, as several
courts of appeal have held. This differential statistical impact on older
employees, coupled with other evidence of age discrimination, allowed the jury
to consider whether the employer fired these individuals because of their
ages. Employers conducting reductions in force should examine the statistical
impact of their termination decisions to ensure that older workers are not
harder hit.
Drafting legal documents such as releases should never be
taken lightly. An inadvertent omission or misstatement can turn the desired
outcome on its head and lead to costly litigation, the outcome of which can be
even more costly. Merely “recycling” release forms used in other situations is
not a wise practice; be sure to have them reviewed by counsel to guard against
an undesired outcome.
For more information, contact Mary Ann B. Oakley, toll
free, at 888-688-8500.
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1 Tyler v. Union Oil Co. of California, 304 F.3d 379 (5th
Cir. 2002).
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