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Monday, January 11, 2010

Ledbetter Act Does Not Invalidate Validly Executed Waivers









Alabama@Work
By: Tommy Eden, Attorney

Recently, in Lerman v. City of Fort Lauderdale Fla., the 11th U.S. Circuit Court of Appeals answered the question of whether passage of the Ledbetter Act precludes employers from enforcing signed waivers of any ADEA claims. The 11th Circuit held that waivers are permissible and enforceable as long as the release contains the necessary language and otherwise meets the requirements for waiving age claims.

The City of Fort Lauderdale, Fla. Deferred Retirement Option Program (DROP) allowed participating firefighters and police officers to earn early retirement benefits even though they continued to work and draw a regular salary for a specified period of time. To participate officers were first required to execute an “Acknowledgment, Waiver and Release Agreement” releasing all claims of age discrimination against the City, and to submit an irrevocable letter of resignation that would become effective at the end of that employee’s DROP period. After executing the Release and later passage of the Ledbetter Act, 13 police officers sued the City, claiming that the DROP program discriminated based on age because younger officers had an opportunity to earn higher pension accruals before reaching the age for DROP eligibility.

The United States District Court and 11th Circuit upheld the City’s position that the waivers barred the employees’ claims. Both courts looked closely at the release language to make sure it complied with the requirements of the Older Workers Benefit Protection Act (OWBPA), which must be met whenever an employee releases a claim under the ADEA. The waivers contained the required language and 7 revocation period, were written in “plain English” that could be understood by the officers, and the waivers were knowing and voluntary. An additional argument by the officers was that the passage of the Ledbetter Act precluded employers from requiring officers to waive their ADEA rights in order to participate in the DROP. The 11th Circuit rejected this argument and reiterated the fact that employees may waive their rights under the ADEA if the waiver is knowing and voluntary and in compliance with the OWBPA.

Common Sense Counsel: A key element in the Ledbetter Act states that “a discriminatory compensation decision or other practice that is unlawful under such acts occurs each time compensation is paid pursuant to the discriminatory compensation decision or other practice, and for other purposes.” What this means for employers is that an employee may bring a lawsuit over an allegedly discriminatory compensation decision that was made years ago, as long as the employee continues to receive paychecks that are the result of the past compensation decision. However, the Ledbetter Act does not prohibit employers from obtaining valid waivers of discrimination claims. Although the requirements of the OWBPA may seem formalistic and unnecessary, failure to satisfy the OWBPA can expose the employer to liability for age discrimination, even when both the employer and the employee intended to release such claims. A well drafted release by an experienced Employment Counsel is highly advised. Legal Zoom is not your best course of action.


Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at teden@constangy.com or 334-246-2901. Blog at www.alabamaatwork.com