Many employers who implement reductions in force have struggled with the requirements of the Older Workers Benefit Protection Act ("OWBPA"). In order to obtain a valid release of federal age discrimination claims, OWBPA requires the employer to provide the employees with data concerning the ages of persons eligible for an exit incentive program, and the job titles and ages of those in the same "job classification" or "organizational unit" who were not selected or not eligible for the program. The Eleventh Circuit on July 11, 2006 addressed what it described as the "ambiguous" notice provision of OWBPA. The court upheld releases signed by a group of former McDonald’s Corporation employees, thereby barring their effort to retain severance benefits and also sue McDonald’s for age discrimination. In rejecting a claim that nationwide data should have been provided by McDonald’s, the court found it was sufficient to provide the affected employees with data limited to the three regions affected by the reduction.
The Eleventh Circuit’s decision in Burlison v. McDonald’s Corp. is helpful to employers in that it rejected an overly-broad reading of the OWBPA advocated by the former employee-plaintiffs. The decision also lends clarity to the notice provisions of OWBPA and the implementing regulations previously published by the Equal Employment Opportunity Commission ("EEOC").
The OWBPA. In 1990, Congress enacted the OWBPA to protect older workers from discrimination in employee benefits, including severance benefits. The OWBPA, which amended the federal Age Discrimination in Employment Act ("ADEA"), ensures that older workers are not pressured into waiving their rights under the ADEA. The OWBPA established detailed requirements for valid releases of federal age discrimination claims. In order to obtain a valid release of federal age discrimination claims, the employer must provide to the affected employees (1) consideration in addition to any separation pay or other benefits the employer would provide even without a waiver/release; (2) a period of forty-five days to consider the proposed separation agreement and release; (3) a period of seven days after the employee executes the agreements for the employee to revoke his or her assent; and (4) complete and accurate information concerning the selection of criteria for the program, any time limits involved, the ages of those eligible for the program, as well as the ages and job titles of those persons in the "same job classification or organizational unit" who are not eligible or selected for the program.
A non-compliant waiver or release is invalid and will not bar a federal age discrimination claim – although it may bar other types of employment claims, including state law age discrimination claims. If the waiver is noncompliant, and therefore invalid, the terminated employee may keep the severance benefit and nevertheless bring a federal age discrimination claim. That is exactly what the former McDonald’s Corp. Employees attempted to do in Burlison.
In Burlison, the Eleventh Circuit considered the "ambiguous" notice provisions of the OWBPA and held that region-specific information provided to employees terminated as part of a nationwide reduction-in-force was sufficient for courts to enforce the plaintiffs’ waiver of claims.
At issue in Burlison were the provisions in the OWBPA mandating that:
if a waiver is requested in connection with an exit incentive or other employment termination program offered to a group or class of employees, the employer [must] inform[] the individual in writing in a manner calculated to be understood by the average individual eligible to participate, as to—
(i)any class, unit, or group of individuals covered by such program, any eligibility factors for such program, and any time limits applicable to such program; and
(ii) the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program.
29 U.S.C. § 626(f)(1)(H).
Take the Severance and Sue Anyway. The plaintiffs in Burlison were long-time employees of McDonald’s, age 40 or older, who were terminated in conjunction with a 2001 nationwide restructuring in which McDonald’s reduced its workforce by approximately 500 employees. Each of the plaintiffs had been employed in McDonald’s Atlanta, Nashville, or Greenville regions, which, as part of the restructuring, were merged to create a single region based in Atlanta. The general manager of the new region selected 66 of the 208 employees in the three former regions for termination as a result of the restructuring.
The plaintiffs accepted a severance package from McDonald’s and signed releases that included an OWBPA information sheet. The information sheets provided region-specific data but not data on the nationwide reduction-in-force. The sheets (1) listed the job titles and ages of the 208 employees in the three former regions; (2) identified which of those employees had been selected for discharge and offered severance packages; and (3) identified which of those employees were not being discharged. Despite signing the releases and accepting the severance, plaintiffs sued McDonald’s for age discrimination. Relying on the statutory language in the OWBPA, the plaintiffs argued that their waivers were not valid because McDonald’s had not supplied them with the job titles and ages of "all individuals" nationwide selected for termination and severance packages. The U.S. District Court for the Northern District of Georgia agreed with plaintiffs and held that their age discrimination suit against McDonald’s was not barred by the releases plaintiffs had signed.
The Eleventh Circuit Enforces the Waivers. The Eleventh Circuit reversed, holding that the releases complied with the OWBPA’s notice requirements. The Court acknowledged the ambiguity of the statutory language and turned to EEOC regulations to interpret the statute. According to those regulations, the Act’s references to "class," "unit," "group" or "job classification" must be determined by in light of the "decisional unit": i.e., "that portion of the employer’s organizational structure from which the employer chose the persons who would be offered consideration for the signing of a waiver and those who would not be offered consideration for the signing of a waiver." 29 C.F.R. § 1625.22(f).
Because the general manager of the new Atlanta region had been responsible for selecting the plaintiffs for discharge, the Eleventh Circuit held that McDonald’s use of region-specific information met the requirement to provide information by "decisional unit." McDonald’s provision of information limited to the new Atlanta region, held the Court, "makes good practical sense" and provided the plaintiffs with the data they needed "to consider whether anything suggests that older employees in their unit were unjustifiably terminated in favor of younger ones."
The lesson of Burlison is that terminated employees must be provided information sufficient to test the impact of the selection decisions made about them. In determining the sufficiency of age discrimination waivers, courts will look to match the decision-maker’s authority to the scope of the data provided.
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