HR Roundtable panel member Bill Pinto gives his opinion about how the EEOC is actually encouraging employees to challenge the validity of their waiver of claims, even when the waivers are completely legitimate:
Employers sometimes offer terminated or laid-off employees severance payments when their employment ends, especially in a mass-layoff situation. Usually, employers secure a waiver of claims in exchange for the severance or enhanced severance payment. Like any contract, the idea is to offer the outgoing employees something to which they are not otherwise entitled in consideration for their agreement not to sue the employer or to “waive” any claims they have at the time the agreement is signed. Employers enter into such agreements to provide some assurance that they can move forward with their business without the threat of litigation.
Recently, however, the Equal Employment Opportunity Commission (EEOC) issued a policy document under the auspices of helping employees “understand” waivers of discrimination claims. In fact, the document provides a road map for employees to use to challenge the validity of any waiver, especially waivers of claims under the Age Discrimination in Employment Act (ADEA).
The EEOC’s policy document explains what waivers are intended to do and the factors that courts consider when evaluating their validity. But more than that, the EEOC is planting the seed in employees’ heads that any waiver is subject to challenge. I tell clients all the time that anyone can file a lawsuit if they pay the filing fee, but that does not mean that everyone who files a lawsuit has a viable claim. The EEOC’s policy document encourages employees – even ones who have signed waivers and cashed their severance checks – to challenge the validity of their waivers. The unstated presumption is that employers can afford to pay for litigation over the validity of these agreements so there is no harm in filing challenges – even when the agreements meet statutory or common law requirements for validity. In response to the EEOC’s stated agenda regarding waivers, HR managers could include language in the waiver document that shifts the burden for attorney’s fees to the loser of any validity challenge.
The EEOC policy document also states that severance agreements cannot attempt to waive an employee’s right to file an EEOC charge. In response, HR managers could include language in the agreement that waives an employee’s right to recover in his or her own lawsuit or a lawsuit brought by the EEOC on the employeeis behalf. The EEOC’s policy document should be taken as a warning to HR Managers who often are responsible for the administration of severance agreements. Given the EEOC’s position regarding waivers, HR managers and employers should have their legal counsel review any severance agreements to ensure that they are drafted in a way that preserves their validity and maintains their enforceability.
In the comments, discuss your experiences with these kinds of waivers. Have you ever had to administer a severance agreement or group of agreements in a mass layoff? Have you ever been asked by an employer to sign a waiver or a release of claims in exchange for a severance or some other form of payment? Did you read it or have an attorney review it?