The OWBPA - Older Workers Benefit Protection Act

The OWBPA – Older Workers Benefit Protection Act curleyrothman.com

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TTHHEE OOWWBBPPAA -OLDER WORKERS BENEFIT

PROTECTION ACT

“Not only are people working longer, but the demise of the concept of “lifetime employment” has led to many of those older workers actively searching for employment at any given point of time.”

Charles Curley Pennsylvania Employment Attorney

http://www.curleyrothman.com/


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Experts tell us that by the year 2050 older Americans (age 65 and older) will

outnumber their younger (age 21 and younger) counterparts for the first time in

recorded history. As the average life expectancy in American continues to

increase, more and more people are working long past what was once commonly

considered retirement age. Not only are people working longer, but the demise of

the concept of “lifetime employment” has led to many of those older workers

actively searching for employment at any given point of time. This, in turn, has

created an increase in age discrimination in the workplace. The good news is

that there are state and federal laws that protect older workers, including the

Older Workers Benefit Protection Act, or OWBPA.


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The Need for Clarification – Why the OWBPA Was Passed

During the height of the Civil Rights Movement in the 1960s a number of anti-

employment discrimination laws were passed by the federal government,

including the Age Discrimination in Employment Act, or ADEA, in 1967. While the

ADEA was certainly a step in the right direction, it became clear over time that

there were gaps in the ADEA that left older workers prime targets for certain

types of employment discrimination, specifically in the area of employee benefits.

The solution was the passage of the Older Workers Benefit Protection Act, or

OWBPA. During the 1970s and 1980s there was a considerable amount of

confusion, as well as litigation, surrounding the issue of whether or not the

protections afforded older workers in the ADEA applied to employee benefits. In


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Public Employees Retirement System of Ohio v. Betts, 109 S.Ct. 256 (1989) the

question was answered in the negative. This left older workers without recourse

when an employer discriminated in the area of employee benefits. In 1990, the

following year, the OWBPA was passed, making it illegal for an employer to do

any of the following:

• Use an employee’s age as the basis for discrimination in benefits

• Target older workers for their staff-cutting programs

• Require older workers to waive their rights without observing certain

safeguards

Benefits under the OWBPA

One focus of the OWBPA is the way in which benefits, including retirement and

pension as well health, disability and life insurance, are handled with regard to

older employees. The

OWBPA prohibits an

employer from

discriminating against older

employees when

determining the type and

amount of benefits offered

to employees unless the

employer can prove that

the disparity in benefits is

the result of “significant cost considerations.” An employer is not necessarily


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required to offer the same benefits to older employees as those offered to their

younger counterparts though. An employer may offer less benefits to an older

employee as long as the employer has spent the same amount of money on the

older employee as was spent on younger employees. For example, life insurance

typically becomes more expensive as an insured ages. Therefore, an older

employee might only receive half the coverage that a younger employer would

for the same premium. The fact that the older employer receives less coverage

would not likely violate the OWBPA as long as the employer spent the same

amount in premiums for all employees.

Severance Releases under the OWBPA

Companies often face the need to downsize for one reason or another.

Downsizing typically entails a reduction in the workforce. From a purely economic


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standpoint, it often makes sense to target older workers during a workforce

reduction because they usually cost an employer more both in terms of salary

and benefits. Not surprisingly, older workers may find this practice to be

discriminatory. To prevent an older worker from pursuing an age discrimination

lawsuit, employers often require an employee to sign a release or waiver before

providing the employee with a severance package. The release or waiver

prohibits the employee from filing an age discrimination lawsuit in the future.

While the OWBPA does not prohibit an employer from requiring an employee to

execute a waiver or release before giving the employee his or her severance

package, the OWBPA does require the release/waiver to contain very specific

language and requires certain procedures to be followed for the release/waiver to

be enforceable. Specifically, the waiver or release an employee is required to

sign must:

• Be in writing and be in language the average person can understand.

Complex sentences and legal jargon should not be used.

• Not misinform or mislead the employee in any way.

• Not exaggerate the benefits being offered or the limitations being

imposed on the employee for singing the release.

• Specifically refer to the ADEA.

• Specifically advise the employee to consult with an attorney.

• Not require the employee to waive rights or claims arising after the

date the employee signs the release.


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In addition, the following must also be true for the release or waiver to be valid:

• Time to consider -- the employee must have a minimum of 21 days to

consider the release/waiver before being required to sign it.

• State of mind -- the employee must sign the release knowingly and

voluntarily.

Consideration -- the employee must receive something of value beyond that

which the employee was already entitled to without signing the release. For

instance, if the employee was already entitled to retirement benefits the employer

cannot offer those benefits to the employee in return for signing the

release/waiver.

Group Terminations for Older Employees – Special Rules

Often, an employer is faced with laying off an entire group of workers. If that

group includes employees in the “over 40” age group the employer must follow

even more rules under the OWBPA. Any time two or more workers over the age

of 40 are let go as part of the same “departure plan”, the following rules must be

followed for a release or waiver to be enforceable:

• The time frame an employee must have to consider the release/waiver is

increased from 21 days to 45 days.

• The employer must provide targeted employees with the following

information:


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o The class, unit or group of employees covered by the exit program,

whether voluntary or involuntary;

o Factors used to determine eligibility for the program and time limits, if

any, applicable to the exit program;

o Job titles and ages of employees eligible for voluntary exit incentive

programs or who were selected for involuntary termination programs;

o Ages of all employees in the same job classification or organizational

unit either ineligible for the voluntary exit incentive program, or not

selected for an involuntary termination program.

Whether you are an employee or an employer it is vital that you understand the

requirements under the Older Workers Benefit Protection Act. As an employer,

failing to understand the rules could lead to an age discrimination lawsuit down


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the road. As an employee, failing to understand the OWBPA rules could result in

giving up rights and benefits to which you are entitled. Always consult with an

experienced Pennsylvania employment law attorney if you have questions about

the OWBPA requirements and how they apply to you.

EEOC, Older Workers Benefit Protection Act

NOLO, Older Workers Benefit Protection Act

HR Hero, Older Workers Benefit Protection Act

http://www.eeoc.gov/eeoc/history/35th/thelaw/owbpa.html

http://www.nolo.com/legal-encyclopedia/free-books/employee-rights-book/chapter7-7.html

http://topics.hrhero.com/older-workers-benefit-protection-act-owbpa/


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About Curley & Rothman, LLC

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The OWBPA - Older Workers Benefit Protection Act

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