On August 31, 2006, the Court of Appeals for the Ninth Circuit increased the burden for employers who wish to obtain a release from employees of Age Discrimination in Employment Act ("ADEA") claims. The ADEA provides that employees may not waive rights or claims arising under the ADEA unless a waiver is "knowing and voluntary" and is written "in a manner calculated to be understood" by an average employee. However, the technical, legal requirements established by the ADEA also render drafting an agreement that may be readily understood by employees to be particularly challenging.
In Syverson v. International Business Machines, Corporation, No. 04-16449 (9th Cir. August 31, 2006), the Ninth Circuit held that employers may not satisfy the "manner calculated" test merely by advising employees to consult an attorney for an explanation of an ADEA release and covenant not to sue. In Syverson, IBM drafted a general release of all employment related claims that expressly included ADEA claims and a covenant not to sue that expressly excluded ADEA claims. The agreement was designed to comply with the complex requirements of the ADEA. However, the release and covenant not to sue, when read in tandem, incorrectly suggested to the plaintiff-employees that the exclusion of ADEA claims from the covenant not to sue preserved a right to sue under the ADEA.
The Ninth Circuit held that the language in the ADEA release and covenant not to sue was confusing for employees and that IBM could not overcome this ambiguity by directing employees to consult an attorney. Rather, the Court held that the ADEA requires that an agreement explain to employees how a release and the covenant not to sue operate with respect to ADEA claims in a manner that an average person can understand. Because IBM’s agreement did not meet this standard, the Court held that it could not be enforced.
The Syverson decision underscores the importance of consulting an employment attorney to evaluate existing ADEA releases or to draft future agreements. If you have questions about ADEA release issues or any other employment-related matter, please contact one of our Labor and Employment attorneys.