To amend the Age Discrimination in Employment Act of 1967, the OWBPA is a federal law that requires employers to offer older workers (those who are at least 40 years old) benefits that are equal to or, in some cases, cost the employer as much as, the benefits it offers to younger workers. The OWBPA also sets minimum standards for an employee waiver of the right to sue for age discrimination, designed to ensure that the waiver is knowing and voluntary.
What is the purpose of the OWBPA Act?
The purposes of the Older Workers Benefit Protection Act OWBPA) are to make it illegal for an employer to:
- 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.
The OWBPA prohibits age discrimination in the provision of fringe benefits, such as life insurance, health insurance, disability benefits, pensions, and retirement benefits. However, employers are allowed to reduce benefits to older workers when justified by significant cost considerations. In most situations, employers must provide equal benefits to older and younger workers. For some types of benefits, however, employers can meet this nondiscrimination requirement by spending the same amount on the benefit provided to each group, even if older workers receive lesser benefits as a result.
Release of Claims under OWBPA
Employers must comply with certain rules when drafting their release of age discrimination claims. In order for the release to be valid, the release must fulfill the following specifications:
Practice knowing and voluntary consent –
Employees should sign the waiver of claims on their own accord without any external pressure.
Be in written form –
The release must be in writing so that the employee can easily understand it.
Use simple language –
Language should be plain, clear, and void of complex sentences and technical jargon.
Provide succinct and accurate information –
Employers must not mislead or misinform the employee in any way. This includes exaggerating the benefits or limitations of signing the release of claims.
Refer to ADEA –
The release of claims must specifically refer to the ADEA.
Encourage legal consultations –
Employers must advise older workers (in writing) to consult an attorney before signing the release of claims.
Allow time to contemplate –
Employees must be given enough time, depending on circumstances, to consider the waiver and its consequences. Employees have at least 21 days to consider the offer and an additional 7 days to revoke their signature.