ADEA Releases: OWBPA Requirements, Pitfalls, and Compliance Tips
In Verdi’s opera La Traviata, courtisan Violetta Valéry is discarded as soon as her health fails and her youth fades. Though still young by modern standards, as she ages, she outlives her usefulness. She dies alone, judged, and forgotten.
The role of Violetta requires significant technical prowess, emotional depth, and artistry that sopranos take many years to master. Yet, in an ironic twist, sopranos who have honed those skills may find themselves quietly moved out of the role, not because their voices have failed, but because of their age.
What’s worse is that this isn’t framed as discrimination. Instead, putting iconic sopranos out to pasture while at the top of their game is characterized as “artistic judgment.” So, sopranos who have lived long enough to have the life experiences and insight necessary to portray Violetta are, like the character herself, cast aside for someone younger.
That same story plays out in quieter ways every day in the workplace. Age becomes a liability, not just in hiring and promotion, but in layoffs and reorganization, especially when older workers are pushed toward the exit with severance offers that come wrapped in legal paperwork. The message is often clear: you’ve outlived your usefulness, sign the release in exchange for a modest severance, and fade into the sunset.
Opera singers often are contractors who don’t qualify for protection under age discrimination laws. However, in most workplaces, the decision to force older workers out in favor of younger ones raises serious legal questions.
The Age Discrimination in Employment Act (ADEA) protects workers over 40 from being treated unfairly based on age. The Older Workers Benefit Protection Act (OWBPA) helps protect employees when employers try to avoid liability through carefully worded agreements they ask departing employees to sign in exchange for a sometimes paltry severance, despite years of dedicated service.
This article discusses OWBPA act requirements, provides examples of inadequate employer disclosures, and provides best practices for employers for OWBPA compliance.
Core Requirements of a Valid ADEA Waiver
The Older Workers Benefit Protection Act (OWBPA) was enacted in 1990 as an amendment to the Age Discrimination in Employment Act (ADEA) to protect older workers from being pressured into waiving their ADEA rights without receiving complete information. The OWBPA focuses on waivers of ADEA rights, which typically occur via severance agreements.
Under the OWBPA, a waiver of age discrimination claims must meet the following requirements:
Clear and plain language: The agreement must be written so the average person can understand it.
Specific reference to ADEA claims: The waiver must mention that the employee is giving up rights under the ADEA. A general release of claims is insufficient.
No waiver of future claims: The employee may only release claims that arose before the agreement was signed.
Consideration beyond what is already owed: The employer must provide the employee something of value beyond what the employee is otherwise entitled to receive. This often is a cash payment beyond amounts otherwise payable to the employee.
Advice to consult an attorney: The agreement must advise the employee to seek legal counsel before signing.
Minimum time to consider whether to sign: The employee must be given at least 21 days to consider the waiver (or 45 days in a group termination).
Revocation Right: The employee has seven days to revoke the waiver after signing it.
Additional Disclosure Requirements in Group Terminations
When an employer conducts a reduction in force or offers severance as part of a group termination, OWBPA mandates that it disclose:
The decisional unit, the defined group of employees considered for termination or inclusion in the severance program
The eligibility factors for participation
The selection criteria used to determine who is selected for termination
The job titles and ages of all individuals in the decisional unit who were eligible, with indication who was selected for termination or other adverse employment action (and who wasn't)
The decisional unit or the group of individuals who were considered for termination must be defined based on legitimate business considerations, such as a particular department, geographic location, or job function. Also, the employer must not only disclose who was selected for termination but also the criteria used to make that selection.
Failure to disclose these criteria can invalidate the waiver and leave the employer open to an ADEA claim. Moreover, a court or agency may infer from the omissions that the employer is attempting to hide or justify an unlawful selection process. If a layoff disproportionately affects older workers and the decision-making criteria are not spelled out, the employer may struggle to defend itself from a disparate impact claim under the ADEA or other age discrimination laws.
Disparate Impact Risks
The way employers define the decisional unit and apply selection criteria can create legal risks, particularly if those choices lead to disparate impact on older employees (or any other protected group).
The same concerns apply to how selection criteria are applied within the group. Objective criteria, such as seniority, are preferred. Using subjective standards like “attitude,” “team fit,” or “adaptability” can make it difficult to prove that the process was free from bias. However, even objective criteria for selection, such as salary, can be unlawful if they have a disparate impact on older employees, who may have more experience and therefore are paid more than younger employees.
Illustrative Example – Decisional Unit with Disparate Impact
Consider a senior housing company that must reduce its staff, primarily nursing aides, due to low occupancy at its communities. The company has 35 aides, 15 under age 40 and 20 over age 40. The company has 12 part-time employees, all under age 30 (they are working part-time while furthering their nursing education. Twenty of the 23 full-time employees are over 40.
The company defines the decisional unit in the ADEA waiver as “all full-time employees in the Mid-Atlantic Region.” By excluding part-time employees, the employer established a decisional unit favoring termination of employees over age 40. By excluding a group (of part-time employees) comprised of younger workers from the decisional unit, the employer set itself up for a prima facie case of unlawful age discrimination.
Illustrative Example – Vague Selection Criteria
A financial services company must cut staff due to declining revenues. It has 40 employees: 15 under age 40, five in their 40s, ten in their 50s, and ten in their 60s.
The employer's decisions had a disproportionate impact on older employees. The employer made no changes to the status of employees under age fifty, laid off five of the ten employees who are over age 60, and reduced the salary of the remaining 15 employees who are over age 50.
It’s important to note that age discrimination can result from any adverse employment decision. Here, the disproportionate impact on older workers wasn’t limited to termination. Older workers disproportionately experienced a reduction in salary compared to younger workers.
The company states in the ADEA waiver that its selection criteria are “based on the company’s need to reduce revenues,” without explaining how individual employees were selected for termination or reduction in work hours. Decisions that have a disproportionate impact on older workers without objective criteria supporting them support a prima facie case of unlawful age discrimination.
Best Practices for OWBPA Compliance
To reduce the risk of litigation and ensure the enforceability of ADEA waivers, employers should meticulously comply with OWBPA requirements:
Evaluate the decisional unit for disproportionate impact on older workers before making any decisions regarding layoffs or other adverse employment decisions. If the decisional unit disproportionately affects older workers (or any other protected class), the employer should ensure it can articulate why that decisional unit was the best choice given business needs. If not, the employer should change the decisional unit.
Develop objective decisional criteria based on legitimate business needs before making any decisions. Seniority with the company is the recommended criterion whenever possible, with the least senior employees being terminated first. In contrast, selecting the most highly paid employees for termination is likely to disproportionately impact older workers, who have more experience and therefore tend to be paid more, and subject the employer to ADEA claims.
After applying the decisional criteria to the decisional unit and making selections, evaluate whether those selections have a disproportionate impact on older employees. If so, consider modifying the criteria so that older employees are not disproportionately impacted.
Ensure that OWBPA disclosures are complete and accurate. Departing employees in group layoffs generally will know how many employees work in their departments, as well as their approximate ages and their positions. Errors or omissions in this data not only can invalidate any release but also can contribute to an inference by employees, courts, and agencies that the employee is hiding something.
Offer fair and, if possible, generous severance payments in exchange for an ADEA release and treat employees with respect. Employees who are treated unfairly are less likely to agree to a release and more likely to file a claim.
While most employers only request ADEA releases from terminated employees, employees subjected to other adverse employment action, such as reduction in salary, also may pursue ADEA claims. Therefore, employers should consider also offering additional consideration and obtaining releases from older workers whose salaries or work hours are reduced in lieu of termination.
Include legal counsel in the process before finalizing decisions and review the release and disclosures to ensure they comply with applicable law. Paying an attorney early in the process is likely to cost less than defending an EEOC claim.
© 2025 by Elizabeth A. Whitman
Any references to clients and their legal situations have been modified to protect client confidentiality.
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