Labor & Employment Law Daily Separation agreement didn’t comply with OWBPA, but RIF’d worker can’t show pretext
Monday, November 26, 2018

Separation agreement didn’t comply with OWBPA, but RIF’d worker can’t show pretext

By Nicole D. Prysby, J.D.

A separation agreement failed to strictly comply with the requirements of the Older Workers Benefit Protection Act (OWBPA) and therefore it did not waive the age discrimination claims of an employee terminated in a reduction in force (RIF), held a federal district court in California. Nor was the employee estopped from suing because he retained the severance payment, since equitable estoppel does not apply to separation agreements that do not comply with the OWBPA. However, his age discrimination claims ultimately failed, because the employer presented a legitimate, nondiscriminatory reason for his selection for RIF—poor performance, and the fact that a coworker who was retained had more relevant experience—and the employee presented no evidence of pretext (Dormont v. Heurtey Petrochem, November 19, 2018, Frizzell, G.).

RIF. In 2016, the employer determined that it would need to terminate about 10 percent of its employees. In considering who would be selected for the RIF, it considered the job functions, number of employees performing the functions, and which employees could be terminated with the least amount of interruption to the business. The plaintiff, a 56-year-old employee, was discharged along with four other employees as part of the RIF. He had received a negative performance review in 2014, although his performance improved in 2015.

Sues despite severance agreement. During the termination meeting, the employee was offered severance pay in exchange for signing a severance agreement waiving the right to sue. The employer advised the employee to consult an attorney prior to executing the agreement. The employee executed the agreement about five days later. However, he then brought claims against the employer under the ADEA and Oklahoma Anti-Discrimination Act alleging his employer included him in the RIF because of his age.

The employer sought summary judgment, arguing that the separation agreement constituted a valid waiver of the employee’s claims and that the employee could not establish a prima facie case or identify any evidence of pretext.

No waiver of claims. The employee asserted the separation agreement did not satisfy the requirements of the OWBPA because it failed to inform him, in writing, of the job titles and ages of all individuals eligible or selected for the RIF or the job titles and ages of persons not eligible or selected. The court agreed. There was no evidence the employer provided the missing information and, pursuant to the OWBPA, the absence of one requirement invalidates a waiver, regardless of the surrounding circumstances. The court also rejected the employer’s argument that the employee was estopped from bringing his claims because he retained the severance payment; equitable estoppel does not apply to separation agreements that do not comply with the OWBPA.

Claims fail on the merits. The employee made his prima facie case, because his 2015 raise provided some evidence that he was performing satisfactory work at the time he was terminated, and the employer retained a younger individual in the same role held by the employee. However, the employer presented sufficient evidence of a legitimate, nondiscriminatory reason for the termination: his performance issues, as documented in his 2014 review. In addition, the employer had documented why it selected the employee for termination over the other individual in the same role: the retained employee had more relevant recent experience and better performance reviews. Even though the retained individual had a higher salary than the plaintiff, this did not undercut the employer’s stated reason that it needed to implement the RIF as a cost-saving measure.

The employee also asserted that of the employees laid off from his location, he believed at least three were over age 40. However, he presented no evidence of their ages, and even if the court could reasonably infer that three of five laid-off workers were over age 40, mere statistical assertions do not rebut nondiscriminatory factors, such as prior experience, performance, or skills. As such, this evidence did not support an inference of pretext.

The court also rejected the employee’s argument that a statement made by a supervisor showed pretext. The supervisor had allegedly told the employee that he was not being let go because of performance reasons. Aside from that one statement, the employer offered the same explanation for its RIF decision, and the supervisor’s statement was consistent with the evidence that the employer retained the other individual because of his recent experience with a competitor.

Finally, the employee presented no evidence that his termination did not accord with the company’s RIF criteria, that the RIF criteria was deliberately falsified or manipulated, or that the RIF generally was pretextual.

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