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New rules add to difficulty of reductions-in-force.

Reductions-in-force (RIF). The phrase strikes fear into employees. And with the recent changes made by Congress, it can also strike fear into employers. Employees stand to lose their jobs because of RIF. An employer can lose money, legal fees, back pay and management flexibility as a result of a poorly planned and poorly executed RIF. The landmines of RiF are numerous, including: age discrimination, race discrimination, sex discrimination, handicap discrimination, employment manual violations, retaliatory discharge and wrongful discharge. To make the terrain more treacherous, Congress has added a few more landmines by making it more difficult to get an employee's settlement and waiver in advance. Under the Older Workers' Benefit Protection Act (OWBPA), passed October 16, 1990 and effective immediately, Congress has established standards for an older employee's settlement and waiver of claims of age discrimination. To be effective, an individual's waiver must meet all of the following criteria: * The waiver must be written in a manner "calculated to be understood" by the individual. * The waiver must specifically refer to rights or claims arising under the Age Discrimination in Employment Act (ADEA). * Rights or claims that arise after the date that the waiver is executed may not be waived. * Rights or claims may be waived only in exchange for consideration in addition to anything of value to which the individual is already entitled. * The individual must be advised in writing to consult an attorney prior to executing the waiver. * The individual must be given at least 21 days in which to consider the agreement. * The agreement must provide that, for

a period of at least seven days following

its execution, the individual may

revoke the agreement. The agreement

does not become effective or

enforceable until the revocation period

has expired.

The burden of proof that the waiver was knowing and voluntary is on the employer. Even then the Equal Employment Opportunity Commission may still investigate and enforce the ADEA.

The standards present numerous grounds for overturning a waiver. For instance, what is meant by "language calculated to be understood by such individual or by the average individual eligible to participate"? First, there are no accepted forms available. Second, it is apparently no defense if the employee actually understood the language with the advice of counsel, if the language was not calculated to be understood by him alone.

What constitutes additional consideration? Will the sufficiency or the amount of consideration become an issue to overturn a waiver? If so, what standards will be developed?

Employers enter into settlement agreements to resolve potential disputes and make a one-time payment to avoid litigation. Although OWBPA has not eliminated that option, it has removed some of the certainty of a settlement.

This column is not intended as legal advice. it is suggested that specific legal advice be sought before acting with regard to this subject.
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Title Annotation:Management News
Author:Kinsella, Daniel V.
Publication:Modern Casting
Date:May 1, 1991
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