[Federal Register Volume 64, Number 78 (Friday, April 23, 1999)]
[Proposed Rules]
[Pages 19952-19957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10143]
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EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
29 CFR Part 1625
Waivers of Rights and Claims: Tender Back of Consideration
AGENCY: Equal Employment Opportunity Commission (EEOC).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Equal Employment Opportunity Commission (EEOC or
Commission) is publishing this notice of proposed rulemaking (NPRM) to
address issues related to the United States Supreme Court's decision in
Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998).
DATES: To be assured of consideration by EEOC, comments must be in
writing and must be received on or before June 22, 1999.
ADDRESSES: Written comments should be submitted to Frances M. Hart,
Executive Officer, Executive Secretariat, Equal Employment Opportunity
Commission, 1801 L Street, N.W., Washington, D.C. 20507.
FOR FURTHER INFORMATION CONTACT: Carol R. Miaskoff, Assistant Legal
Counsel, or Paul E. Boymel, Senior Attorney-Advisor, 202-663-4689
(voice), 202-663-7026 (TDD).
SUPPLEMENTARY INFORMATION:
A. Background
1. Introduction
In Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998), the
Supreme Court held that an individual was not required to return
(``tender back'') consideration for a waiver in order to allege a
violation of the Age Discrimination in Employment Act of 1967 (ADEA),
29 U.S.C. 621 et seq., as amended by the Older Workers Benefit
Protection Act of 1990 (OWBPA). The Court explained that, because the
release did not comply with the ADEA, plaintiff's retention of the
consideration did not constitute a ratification that made the release
valid. Moreover, the employer could not invoke the employee's failure
to tender back consideration as a way of excusing its own failure to
comply with the statute.
EEOC is issuing proposed legislative regulations to address issues
raised by the Oubre decision. In summary, EEOC's position is that: (1)
an individual alleging that a waiver agreement was not knowing and
voluntary under the ADEA is not required to tender back the
consideration as a precondition for challenging that waiver agreement;
(2) a covenant not to sue or any other condition precedent, penalty, or
other limitation adversely affecting any individual's right to
challenge a waiver agreement is invalid under the ADEA; (3) although in
some cases an employer may be entitled to setoff, recoupment, or
restitution against an individual who has successfully challenged the
validity of a waiver agreement, such setoff, recoupment, or restitution
cannot be greater than the consideration paid to the individual or the
damages awarded to the individual, whichever is less; and (4) no
employer may unilaterally abrogate its duties under a waiver agreement,
even if one or more of the signatories to the agreement successfully
challenges the validity of that agreement under the ADEA.
2. The Older Workers Benefit Protection Act of 1990
Title II of OWBPA amended the ADEA to set out rules governing the
validity of a waiver agreement. Section 7(f)(1) of the ADEA provides
that ``[a]n
[[Page 19953]]
individual may not waive any right or claim under [the ADEA] unless the
waiver is knowing and voluntary.'' Section 7(f)(1) provides a list of
minimum requirements that must be met in order for a waiver to be
knowing and voluntary. The statutory language and legislative history
of OWBPA make it clear that the listing in Sec. 7(f)(1) is
nonexhaustive, and that even waiver agreements meeting the stated
minimum requirements would not satisfy the ADEA if, under the totality
of the circumstances, the waiver were not knowing and voluntary. As
recognized in Oubre, the ADEA waiver rules extend to the tender back
situation.
3. Tender Back Requirement Before Oubre
Prior to the Supreme Court's decision in Oubre, the circuits were
split on the issue of whether an individual who signed an agreement
waiving rights and claims under the ADEA was required to tender back
any consideration paid by the employer in order to challenge the
validity of the waiver in court. Several courts took the position that
an individual who accepted consideration in exchange for a waiver
agreement was not required to tender back that consideration to the
employer before challenging in court either the validity of the waiver
agreement or any employment discrimination. See, e.g., Long v. Sears
Roebuck & Co., 105 F.3d 1529 (3d Cir. 1997), cert denied, 118 S.Ct.
1033 (1998); Oberg v. Allied Van Lines, Inc., 11 F.3d 679 (7th Cir.
1993). Other courts took the position that the tender back of
consideration was necessary before an individual could challenge the
waiver and the discrimination in court. These courts concluded that by
retaining the consideration, the individual ``ratified'' the waiver
agreement and therefore could not challenge the agreement in court.
See, e.g., Blistein v. St. John's College, 74 F.3d 1459, 1465-66 (4th
Cir. 1996); Wamsley v. Champlin Refining & Chemicals, Inc., 11 F.3d 534
(5th Cir. 1993).
4. The Oubre Decision
In Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998), the
Supreme Court resolved the split among the circuits on the question of
tender back. The facts in Oubre involved an employee who, upon her
termination, signed an agreement waiving all claims against her
employer in exchange for payments totalling $6,258. The waiver
agreement failed to comply with at least three of the requirements of
Sec. 7(f)(1) of the ADEA. It did not: (1) give her the statutorily
mandated 21 days to consider the waiver agreement, but instead provided
only 14 days; (2) give her seven days to revoke the agreement; or (3)
make specific reference to ADEA claims. Oubre, 522 U.S. at 424. After
the employee received all of the consideration for the waiver, she
filed an ADEA suit against the employer without tendering back the
consideration. The lower courts ruled that she could not proceed with
her lawsuit because she had not offered to return the consideration to
the employer, agreeing with the employer's arguments under state
contract and common law. See Oubre v. Entergy Operations, Inc., 112
F.3d 787 (5th Cir. 1996), rev'd 522 U.S. 422 (1998).
The Supreme Court reversed the Fifth Circuit's decision, stating
that under Sec. 7(f)(1) of the ADEA:
[T]he employee's mere retention of monies [did not] amount to a
ratification equivalent to a valid release of her ADEA claims, since
the retention did not comply with the OWBPA any more than the
original release did. The statute governs the effect of the release
on ADEA claims, and the employer cannot invoke the employee's
failure to tender back as a way of excusing its own failure to
comply.
Oubre, 522 U.S. at 428. Thus, the Court allowed the employee's case to
proceed even though she had not tendered back the consideration for the
waiver agreement.
In its decision, the Court addressed three main concerns. First,
the Court stated that the ADEA foreclosed the employer's argument that
state contract law and common law principles apply to ADEA waiver
issues. The Court emphasized that ``the OWBPA sets up its own regime
for assessing the effect of ADEA waivers, separate and apart from
contract law.'' 522 U.S. at 427. The Court also noted that the contract
law principles cited by the employer ``may not be as unified as the
employer asserts.'' Id. at 426.
Second, the Court reasoned that the practical effect of the
employer's position, requiring tender back of consideration as a
condition of bringing suit, could frustrate the purposes of the ADEA
and lead to an evasion of the statute:
In many instances a discharged employee likely will have spent
the monies received and will lack the means to tender their return.
These realities might tempt employers to risk noncompliance with the
OWBPA's waiver provisions, knowing it will be difficult to repay the
monies and relying on ratification.
Oubre, 522 U.S. at 427.
Finally, the Court observed that lower ``courts may need to inquire
whether the employer has claims for restitution, recoupment, or setoff
against the employee, and these questions may be complex where a
release is effective as to some claims but not as to ADEA claims.'' 522
U.S. at 428. The Court saw no need to resolve such questions in this
case, however, and simply reversed the Fifth Circuit's judgment and
remanded for further proceedings consistent with its opinion. Id.
5. EEOC Negotiated Rulemaking on Waivers Under OWBPA
In 1995 and 1996, EEOC conducted a negotiated rulemaking on ADEA
waivers under OWBPA. Although the Rulemaking Committee considered the
issue of tender back and ratification during its deliberations, the
Committee decided that it would not reach consensus and the issue was
not addressed in the regulatory language recommended by the Committee
to the Commission. EEOC promulgated a final regulation at 29 CFR
1625.22 on June 5, 1998, 63 FR 30624. The preamble to the final
regulation confirmed that the issues raised in Oubre would not be
addressed in that section, but that the tender back issue would be
covered in other guidance.
B. Purpose and Discussion of This Proposed Rule
1. Purpose: Pursuant to its regulatory authority under Sec. 9 of
the ADEA, EEOC has developed this proposed legislative regulation to
address issues related to the Oubre decision. This proposal would add a
new legislative regulation at 29 CFR Sec. 1625.23.
2. Discussion: This regulation sets forth EEOC's position on
several important issues concerning tender back.
a. An individual alleging that a waiver agreement was not knowing
and voluntary under the ADEA is not required to tender back the
consideration given for that agreement before filing either a lawsuit
or a charge of discrimination with EEOC or any state or local fair
employment practices agency. Retention of consideration does not
foreclose a challenge to any waiver agreement; nor does the retention
constitute the ratification of any waiver. A clause requiring tender
back is invalid under the ADEA.
(i) The Oubre Decision: The Court in Oubre made it clear that
``[a]n employee `may not waive' an ADEA claim unless the waiver or
release satisfies the OWBPA's requirements. . . . Courts cannot with
ease presume ratification of that which Congress forbids.'' 522 U.S. at
427. The Court emphasized that ``the employee's mere retention of
monies [does not] amount to a ratification
[[Page 19954]]
equivalent to a valid release * * *'' Id. at 848.
The facts of the Oubre case concerned a waiver agreement that
clearly did not satisfy at least three of the requirements of
Sec. 7(f)(1), and thus was invalid on its face. However, the holding
and rationale of Oubre, which are based on the ADEA as well as
important public policy concerns, are not limited to cases in which the
terms of the waiver agreement are facially invalid. The ADEA's
overarching standard is that waivers must be knowing and voluntary, and
the specific provisions in Sec. 7(f)(1) are only minimum requirements.
While a waiver agreement that fails to meet these minimum criteria
cannot be knowing and voluntary, even agreements that do meet these
criteria still may not be knowing and voluntary under the ADEA.
For example, a waiver agreement that meets all of the enumerated
requirements in Sec. 7(f)(1) still would not be knowing and voluntary
if the employer obtained an employee's signature by force or
compulsion. As another example, an agreement might state on its face
that an individual had 45 days to accept the offer. If the individual
in fact were given only 5 days to make this decision, the waiver would
not be knowing and voluntary under the ADEA. See 29 CFR 1625.22(e).
Finally, with regard to the informational requirements under
Sec. 7(f)(1)(H), it is impossible to assess an employer's compliance by
a mere examination of the waiver agreement. These requirements depend
on the unique facts of a particular workforce reduction or voluntary
termination program. See 29 CFR 1625.22(i); see, e.g., Griffin v. Kraft
General Foods, Inc., 62 F.3d 368 (11th Cir. 1995)(analyzing the
validity of the information provided under Sec. 7(f)(1)(H), the court
found that, where the employer may have considered several plants for
closure before it decided to close the plant at issue, it might need to
provide information about employees at multiple facilities).
In summary, compliance with Sec. 7(f)(1) of the ADEA cannot be
determined based solely on the face of a waiver document. Because a
waiver agreement may be invalid due to circumstances beyond the
document itself, the Supreme Court's rationale in Oubre precludes
tender back as a condition for any lawsuit or charge.
(ii) ADEA Statutory Language and Legislative History: In the ADEA,
as amended by the OWBPA, Congress clearly contemplated that courts
would decide the validity of waiver agreements. A requirement of tender
back would, as the Oubre Court pointed out, effectively prevent access
to the courts for many employees and therefore would undermine this
statutory scheme.
Section 7(f) of the ADEA contemplates that the courts have the
authority to determine the validity of a waiver agreement. Section
7(f)(3) states that:
In any dispute that may arise over whether any of the
requirements [of Secs. 7(f)(1) or (2)] have been met, the party
asserting the validity of a waiver shall have the burden of proving
in a court of competent jurisdiction that a waiver was knowing and
voluntary pursuant to paragraph (1) or (2).
(Emphasis supplied). Thus, the statute does not envision a waiver
agreement as a complete bar to litigation, but rather suggests that a
waiver is an affirmative defense. A tender back requirement would be
inconsistent with this statutory design.
A tender back requirement is inconsistent with the OWBPA
legislative history, which also shows that Congress contemplated that
litigation would be available for deciding the validity of waiver
agreements. Here, Congress expressly stated that the burden of proof
described in Sec. 7(f)(3) establishes ``an affirmative defense.'' See
S. 1511, Final Substitute Statement of Managers, 136 Cong. Rec. 13596-
97 (1990). In reference to an earlier version of the OWBPA legislation,
the Senate Committee on Labor and Human Resources explained:
The Committee expects that courts reviewing the ``knowing and
voluntary'' issue will scrutinize carefully the complete
circumstances in which the waiver was executed. * * * The bill
establishes specified minimum requirements that must be satisfied
before a court may proceed to determine factually whether the
execution of a waiver was ``knowing and voluntary.''
S. Rep. No. 101-263, at 32 (1990), reprinted in 1990 U.S.C.C.A.N. 1509,
1537 (hereinafter ``Senate Report'').
The law also is clear that a waiver agreement cannot interfere with
an individual's right to file a charge of discrimination or assist EEOC
in any administrative or legal proceedings. Section 7(f)(4) of the ADEA
states:
No waiver agreement may affect the Commission's rights and
responsibilities to enforce [the ADEA]. No waiver may be used to
justify interfering with the protected right of an employee to file
a charge or participate in an investigation or proceeding conducted
by the Commission.
See also 29 CFR 1625.22(i); EEOC Enforcement Guidance on Non-Waivable
Employee Rights under EEOC Enforced Statutes, #915.002, April 10, 1997,
3 EEOC Compl. Man. (BNA) No. 2345. In light of the Oubre Court's
concern about the chilling effect of a tender back requirement,
imposition of such a requirement as a condition for filing an EEOC
charge clearly would ``interfer[e] with the protected right of an
employee to file a charge * * *,'' and therefore would contravene the
statute. 29 CFR Sec. 1625.22 (i).
b. A covenant not to challenge a waiver agreement, or any other
arrangement that imposes any condition precedent, any penalty, or any
other limitation adversely affecting any individual's right to
challenge a waiver agreement, is invalid under the ADEA, whether the
covenant or other arrangement is part of the agreement or is contained
in a separate document. A provision allowing an employer to recover
costs, attorneys' fees, and/or damages for the breach of any covenant
or other arrangement is not permitted.
(i) Covenants not to sue and other similar arrangements purport, on
their face, to bar an individual's right to challenge a waiver
agreement in court.1 Like a tender back requirement, such a
covenant or other arrangement directly offends the congressional intent
to afford an individual the right to challenge the validity of a waiver
agreement. The ADEA clearly envisions that courts would have authority
to determine the validity of the waiver and, therefore, necessarily
contemplates that individuals would have the opportunity to bring such
a challenge. See Sec. 7(f)(1) of the ADEA (setting out the specific
standards for a court to determine the validity of a waiver agreement);
Sec. 7(f)(3) of the ADEA (referring to a ``court of competent
jurisdiction'' as the entity expected to decide the validity of a
challenged waiver); accord Senate Report at 32. See also Raczak v.
Ameritech Corp., 103 F.3d 1257, 1271 (6th Cir. 1997) (``[i]t was the
intent of Congress that waivers would not preclude parties from
bringing suit under the OWBPA''), cert. denied, 118 S.Ct. 1033 (1998).
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\1\ No waiver agreement, covenant, or other arrangement may
prohibit any person from filing a charge of discrimination or
assisting EEOC in its law enforcement activities. See 29 CFR
1625.22(i).
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(ii) Covenants not to sue and other such arrangements also carry
with them the threat of a counterclaim for breach of the covenant and
liability for costs, attorneys' fees, and damages. The threat of such a
counterclaim or a similar threat, 2 with the prospect of
being
[[Page 19955]]
forced to pay defendant's legal expenses, easily could chill persons
with valid claims from challenging waiver agreements. This chilling
effect runs counter to the purposes of the ADEA, a remedial civil
rights statute that encourages employees to challenge illegal conduct
by employers. See generally, Commonwealth of Massachusetts v. Bull HN
Information Systems, Inc., 16 F.Supp. 2d 90, 106 (D. Mass. 1998)
(``[u]nder Bull's proffered interpretation, employers could
functionally insulate themselves from ADEA suits and ignore the waiver
provisions of the OWBPA simply by including a drastic penalty provision
in the waiver as Bull has done. This interpretation offends the intent
of Congress. * * *''); Carroll v. Primerica Financial Services
Insurance Marketing, 811 F.Supp. 1558 (N.D.Ga. 1992); Isaacs v.
Caterpillar, Inc., 702 F.Supp. 711, 713 (C.D.Ill. 1988); EEOC v. United
States Steel Corp., 671 F.Supp. 351, 358-59 (W.D.Pa. 1987) (the court
enjoined a waiver provision wherein an employee promised not to file a
charge or claim under the ADEA since the waiver ``has the potential of
deterring individuals from participating in ADEA claims. * * * [I]f an
individual is deterred from bringing such an action in the first
instance, the validity of the waiver of rights will not be able to be
determined.'')
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\2\ For example, it would be impermissible for an employer to
bring an independent legal action, such as a state or federal breach
of contract lawsuit, because an employee filed a charge of
discrimination or challenged a waiver agreement in court. Such
lawsuits would constitute retaliation under Sec. 4(d) of the ADEA
and intentional discrimination for purposes of liquidated damages
under Sec. 7 of the ADEA.
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A position permitting covenants not to sue or similar arrangements
would render the OWBPA amendments and the Oubre decision a nullity.
Such provisions, coupled with the threat of counterclaims, would as a
practical matter undo the ADEA's carefully crafted criteria for a
knowing and voluntary waiver by encouraging employers to ignore those
provisions. This in turn would undermine the ADEA's objective to
``ensure that older workers are not coerced or manipulated into waiving
their rights to seek legal relief under the ADEA.'' Senate Report at 5.
EEOC does not find cases allowing covenants not to sue persuasive,
because they are fundamentally at odds with the holding and rationale
of the Supreme Court in Oubre. See, e.g., Astor v. International
Business Machines Corp., 7 F.3d 533, 540 (6th Cir. 1993) (covenant not
to sue permissible in release of ERISA rights); Artvale Inc. v Rugby
Fabrics Corp., 363 F.2d 1002, 1008 (2d Cir. 1966).
(iii) An employer does not need to bring a counterclaim to obtain
what it purchased with the waiver. With a valid waiver, an employer
receives an affirmative defense against ADEA claims. See Isaacs v.
Caterpillar, 765 F.Supp. 1359, 1371 (C.D.Ill. 1991); Senate Report at
53. Assuming that a waiver agreement is upheld in court, and
consequently serves as an affirmative defense to a discrimination suit,
the employer has received the benefit of its bargain. If the waiver is
not upheld because it is not knowing and voluntary under the ADEA, the
employer has no right to the benefit of its bargain.
c. In some circumstances an employer may be entitled to
restitution, recoupment, or setoff against an employee's recovery of
damages in court (or in the administrative process).
In Oubre, the Court commented that, ``[i]n further proceedings in
this or other cases, courts may need to inquire whether the employer
has claims for restitution, recoupment, or setoff against the employee.
* * *'' 522 U.S. at 428.3 In EEOC's view, restitution,
recoupment, or setoff should be in the discretion of the court but
never exceed the lesser of the consideration given or the damages won.
In the context of the Oubre decision, with its overriding prohibition
of tender back requirements, permitting any restitution beyond the
lesser of the amount the plaintiff wins in court, or the amount of
consideration given, would operate constructively as a tender back
penalty for bringing suit. Such a tender back penalty would interfere
with the plaintiff's exercise of ADEA rights, impose significant
hardship, and be contrary to public policy. Additionally, Oubre
dictates that general contract principles are not applicable to ADEA
cases if their application would deter protected individuals from
vindicating their statutory rights or encourage employers to evade
their statutory responsibilities. See generally Daley v. United
Technologies Corp., Civil No. 3:97 CV 00439 (AVC) (D.Conn. March 23,
1998); Pace v. United Technologies Corp., Civil No. 3:97 CV 00481(AVC)
(D.Conn. March 23, 1998) (post-Oubre cases stating that the employer
would be entitled to a setoff consisting of all or part of the
severance benefits paid if the plaintiffs should prevail on their ADEA
claims); Rangel v El Paso Natural Gas Co., 996 F. Supp. 1093, 1099
(D.N.M. 1998) (post-Oubre Title VII waiver case concluding that setoff
against damages would be the proper way to handle reimbursement); 50
C.J.S. Judgment Sec. 674 (stating that set-off ``is not demandable as
of course, but rests in the discretion of the court'').
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\3\ The terms ``recoupment'' and ``setoff'' refer to the
ability of a defendant to reduce the plaintiff's award of damages by
amounts otherwise due to the defendant. Recoupment and setoff serve
to limit the defendant's recovery to no more than the amount of
plaintiff's damages. Black's Law Dictionary (6th ed. 1990), at 1275
and 1372. ``Restitution is a return or restoration of what the
[employee] has gained in a transaction.'' 1 Dan B. Dobbs, Law of
Remedies, Damages-Equity-Restitution Sec. 4.1(1) at 551 (1993).
Generally, restitution is required to avoid the ``unjust
enrichment'' of the party who previously obtained the money or
property. Dobbs Sec. 4.1(2) at 557. There are several exceptions to
the unjust enrichment doctrine that are relevant to ADEA waivers,
including when restitution would: (1) interfere with the rights of,
or otherwise be inequitable to, the party who received payment; (2)
cause significant hardship because an individual changed position
based upon the payment; or (3) be contrary to public policy
considerations. Id . at 563.
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This limit also ensures that employees would not be penalized for a
challenge to a waiver agreement when the amount of damages awarded is
low (for example, when the employee has mitigated damages by finding
new employment). Moreover, as stated in section b., above, covenants
not to sue or other similar arrangements are not permitted. Therefore,
an employer is not entitled to restitution, recoupment, or setoff for
any costs, attorneys' fees or other amounts claimed as damages
attributable to an alleged breach of such a covenant or other
arrangement.
Finally, in a case involving more than one plaintiff, the reduction
must be awarded on a plaintiff-by-plaintiff basis. Thus, no
individual's award can be reduced based on the consideration received
by any other person.
The following is a nonexhaustive list of the factors that may be
relevant in calculating the proper amount of reduction to avoid unjust
enrichment. These factors reflect, in the ADEA context, equitable
principles that a reduction should be allowed only if it would promote
justice, and should not be allowed if it results in injustice. See
generally 50 C.J.S. Judgment Sec. 674. These factors also reflect the
Oubre Court's recognition that determining the proper amount of
reduction may be complex when the waiver encompasses claims other than
those arising under the ADEA. Oubre, 522 U.S. at 428. The factors
include:
(i) Whether the employer apportioned the amount paid for the waiver
agreement among the rights waived, if the waiver purports to waive
rights other than ADEA rights. If the employer did not apportion the
consideration among the rights waived, the apportionment should be done
on an equitable basis;
(ii) Whether the employer's noncompliance with the ADEA waiver
requirements was inadvertent or was in bad faith or fraudulent;
(iii) The nature and severity of the underlying employment
discrimination
[[Page 19956]]
in the case, including whether the employer willfully violated the
ADEA. If a willful violation occurred, any deduction from the award
should be made after the damages are doubled pursuant to Sec. 7(b) of
the ADEA;
(iv) The employee's financial condition;
(v) The employer's financial condition;
(vi) The effect of the reduction upon the purposes and enforcement
of the ADEA and the deterrence of future violations by the employer.
d. No employer may unilaterally abrogate its duties under a waiver
agreement to any signatory, even if one or more of the signatories to
the agreement or EEOC successfully challenges the validity of that
agreement under the ADEA.
In his concurrence in Oubre, Justice Breyer expressed concern that
a successful challenge to a waiver agreement by one or more individuals
not be construed to relieve an employer of its obligations to other
individuals who did not challenge that agreement. Oubre, 522 U.S. at
431 (Breyer, J., concurring). Such an abrogation would penalize
innocent employees for the employer's noncompliance with the ADEA, and
would therefore be void as against public policy. See generally 17A Am.
Jur. 2d Contracts Sec. 327 (1991) (stating that an illegal contract
will be enforced if refusal to enforce it ``would produce a harmful
effect on the party for whose protection the law making the bargain
illegal exists'').
e. The rules set out in this regulation apply to cases within the
EEOC administrative process as well as to cases in court, and are fully
consistent with the provisions of EEOC's regulation at 29 CFR
1625.22(i)(3).
Comments: As a convenience to commentors, the Executive Secretariat
will accept public comments transmitted by facsimile (``FAX'') machine.
The telephone number of the FAX receiver is 202-663-4114. (Telephone
numbers published in this Notice are not toll-free). Only public
comments of six or fewer pages will be accepted via FAX transmittal in
order to assure access to the equipment. Receipt of FAX transmittals
will not be acknowledged, except that the sender may request
confirmation of receipt by calling the Executive Secretariat staff on
202-663-4066.
Comments received will be available for public inspection in the
EEOC Library, Room 6502, 1801 L Street, N.W., Washington, D.C. 20507,
by appointment only, from 9:00 a.m. to 5:00 p.m., Monday through
Friday, except legal holidays. Persons who need assistance to review
the comments will be provided with appropriate aids such as readers or
print magnifiers. Copies of this Notice are available in the following
alternative formats: large print, braille, electronic file on computer
disk, and audio tape. To schedule an appointment or receive a copy of
the Notice in an alternative format, call 202-663-4630 (voice), 202-
663-4399 (TDD).
Executive Order 12866, Regulatory Planning and Review
Pursuant to Sec. 6(a)(3)(B) of Executive Order 12866, EEOC has
coordinated this NPRM with the Office of Management and Budget. Under
Sec. 3(f)(1) of Executive Order 12866, EEOC has determined that the
regulation will not have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State or local or tribal
governments or communities. Therefore, a detailed cost-benefit
assessment of the regulation is not required.
Paperwork Reduction Act
EEOC certifies that the rule as proposed does not require the
collection of information by EEOC or any other agency of the United
States Government. The rule as proposed does not require any employer
or other person or entity to collect, report, or distribute any
information.
Regulatory Flexibility Act
EEOC certifies under 5 U.S.C. 605(b), enacted by the Regulatory
Flexibility Act (Pub. L. 96-354), that this regulation will not result
in a significant economic impact on a substantial number of small
entities. For this reason, a regulatory flexibility analysis is not
required. A copy of this proposed rule was furnished to the Small
Business Administration.
In addition, in accordance with Executive Order 12067, EEOC has
solicited the views of affected Federal agencies.
List of Subjects in 29 CFR Part 1625
Advertising, Age, Employee Benefits, Equal Employment Opportunity,
Retirement.
Signed at Washington, D.C. this 19th day of April, 1999.
Ida L. Castro,
Chairwoman.
It is proposed to amend chapter XIV of title 29 of the Code of
Federal Regulations as follows:
PART 1625--AGE DISCRIMINATION IN EMPLOYMENT ACT
1. The authority citation for part 1625 continues to read as
follows:
Authority: 81 Stat. 602; 29 U.S.C. 621; 5 U.S.C. 301;
Secretary's Order No. 10-68; Secretary's Order No. 11-68; sec. 12,
29 U.S.C. 631; Pub. L. 99-592, 100 Stat. 3342; sec. 2, Reorg. Plan
No. 1 of 1978, 43 FR 19807.
2. In part 1625, Sec. 1625.23 would be added to Subpart B--
Substantive Regulations, to read as follows:
Sec. 1625.23 Waiver of rights and claims: Tender back of
consideration.
(a) An individual alleging that a waiver agreement was not knowing
and voluntary under the ADEA is not required to tender back the
consideration given for that agreement before filing either a lawsuit
or a charge of discrimination with EEOC or any state or local fair
employment practices agency. Retention of consideration does not
foreclose a challenge to any waiver agreement; nor does the retention
constitute the ratification of any waiver. A clause requiring tender
back is invalid under the ADEA.
(b) A covenant not to challenge a waiver agreement, or any other
arrangement that imposes any condition precedent, any penalty, or any
other limitation adversely affecting any individual's right to
challenge a waiver agreement, is invalid under the ADEA, whether the
covenant or other arrangement is part of the agreement or is contained
in a separate document. A provision allowing an employer to recover
costs, attorneys' fees, and/or damages for the breach of any covenant
or other arrangement is not permitted.
(c) Restitution, recoupment, or setoff. (1) Where an employee
successfully challenges a waiver agreement and prevails on the merits
of an ADEA claim, courts have the discretion to determine whether an
employer is entitled to restitution, recoupment, or setoff
(hereinafter, ``reduction'') against the employee's damages award.
These amounts never can exceed the lesser of the consideration the
employee received for signing the waiver agreement or the amount
recovered by the employee. Consistent with paragraph (b) of this
section, an employer is not entitled to restitution, recoupment, or
setoff for any costs, attorneys' fees or other amounts claimed as
damages attributable to an alleged breach of such a covenant or other
arrangement.
(2) In a case involving more than one plaintiff, any reduction must
be applied on a plaintiff-by-plaintiff basis. No individual's award can
be reduced
[[Page 19957]]
based on the consideration received by any other person.
(3) A nonexhaustive list of the factors that may be relevant to
determine whether, or in what amount, a reduction should be granted,
includes:
(i) Whether the employer apportioned the amount paid for the waiver
agreement among the rights waived, if the waiver purports to waive
rights other than ADEA rights. If the employer did not apportion the
consideration among the rights waived, the apportionment should be done
on an equitable basis;
(ii) Whether the employer's noncompliance with the ADEA waiver
requirements was inadvertent or was in bad faith or fraudulent;
(iii) The nature and severity of the underlying employment
discrimination in the case, including whether the employer willfully
violated the ADEA. If a willful violation occurred, any deduction from
the award should be made after the damages are doubled pursuant to
Sec. 7(b) of the ADEA;
(iv) The employee's financial condition;
(v) The employer's financial condition;
(vi) The effect of the reduction upon the purposes and enforcement
of the ADEA and the deterrence of future violations by the employer.
(d) No employer may unilaterally abrogate its duties under a waiver
agreement to any signatory, even if one or more of the signatories to
the agreement or EEOC successfully challenges the validity of that
agreement under the ADEA.
[FR Doc. 99-10143 Filed 4-22-99; 8:45 am]
BILLING CODE 6570-01-P