Skip to Main Content

Keeping you informed

Alleged Lie on ADEA Release Does Not Invalidate Its Terms

    Client Alerts
  • March 22, 2013

In order to obtain an effective release of age discrimination claims, the Older Worker Benefits Protection Act (OWBPA) requires that the release language contain specific disclosures to and information for the employee asked to sign the waiver. Last month, the Seventh Circuit Court of Appeals stated that allegations of misrepresentations in the release do not void its terms.

Yassan v. J.P. Morgan Chase & Co. involved an employee who signed a release as a condition of receiving a severance package after being told that his position was being eliminated for economic reasons. After he learned that another employee took his former job, he sued alleging age discrimination and fraud.

The Seventh Circuit applied state law in concluding that as long as the employee was not subject to a separate fraud apart from the specific claims contained in the release, the release cannot be voided based on alleged misrepresentations. The court noted the waiting period and advice to consult counsel contained in the release under the OWBPA as part of its reasoning that the plaintiff had opportunity to determine whether the basis for the termination was accurate.

The Seventh Circuit never discussed whether the OWBPA itself provides an independent basis for voiding the release. The OWBPA states that any release must be knowing and voluntary. In addition, for group releases, the law requires that the release provide an explanation of the selection criteria used to make the decision. Employers often attempt to soften the impact of a performance termination by telling the employee that their job is being eliminated. As demonstrated in this case, this tactic sometimes backfires when the employee in question concludes that they have been lied to, and that the actual reasons for the decision must have been concealed by the employer due to their illegality. Although more painful, honesty is the better policy with regard to termination decisions.