Flawed Separation Agreement Does Not Bar ADEA Claims

​A former United Parcel Service (UPS) employee who signed a separation agreement that did not reference the Age Discrimination in Employment Act (ADEA) could still bring an ADEA claim, the U.S. District Court for the Northern District of New York ruled.

The employee was over 40 years old and claimed that UPS improperly disciplined him before wrongfully terminating his employment. Upon termination, the employee signed a separation agreement, negotiated by his union, in which he received payment for 342 hours of leave for 2017, despite departing at the end of 2016. In that agreement, he broadly waived employment law claims against UPS.

Nevertheless, after his termination, the employee filed a lawsuit against UPS under the ADEA and the New York Human Rights Law. He claimed that UPS intentionally discriminated against him on the basis of age and, after he reported the discrimination, retaliated against him by:

• Sending him warning letters in violation of the collective bargaining agreement and Department of Transportation regulations.
  
• Imposing an unfair workload on him to induce him to violate UPS rules and criticizing him when he was unable to work within mandated time constraints.
  
• Improperly conducting an examination of his work, in violation of the collective bargaining agreement.
  
• Suspending him to build a disciplinary record against him to support termination.
  
• Making false accusations against him concerning timeliness of deliveries, service failures, stealing and late returns to the UPS station.
  
• Repeatedly threatening to terminate him.
  
• Compelling him to sign a last chance agreement.
  
• Terminating his employment.
  
• Compelling him to sign a separation agreement in violation of the Older Workers Benefit Protection Act (OWBPA).
  

UPS filed a motion to dismiss the employee's claims under the terms of his separation agreement. The separation agreement waived all employment claims but did not comply with the conditions of the OWBPA regarding age-discrimination waivers. Contrary to OWBPA requirements, the separation agreement:

• Did not reference the ADEA.
  
• Required the employee to waive prospective rights and claims that may arise after signing the agreement.
  
• Did not advise the employee to consult an attorney prior to execution.
  
• Did not provide a period of seven days following execution before the agreement became effective and during which the employee could revoke his assent to the agreement.
  

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The employee claimed that these deficiencies enabled him to proceed with his claims, and he also moved to amend his lawsuit to include a claim for violation of the OWBPA. UPS argued that the New York Human Rights Law, as a state law, did not require UPS to comply with the federal OWBPA, and thus the state law claim should be dismissed based on the separation agreement's release provisions.

The court agreed with UPS that the separation agreement waived claims under the New York Human Rights Law. That state law did not require UPS to comply with the OWBPA, so UPS needed to show only that the employee knowingly and voluntarily released the state law claims in the separation agreement. Because the employee received significant compensation in the separation agreement and negotiated its terms through his union, the court found the release to be knowing and voluntary.

However, because the release did not comply with the OWBPA, it did not validly waive age-discrimination claims under the ADEA. Thus, the court denied UPS' motion to dismiss the employee's ADEA claims and allowed them to proceed to discovery, the stage of litigation when litigants obtain documents from the other side in hopes of finding evidence to bolster their case.

While the court recognized that UPS did not comply with the OWBPA concerning an age-discrimination waiver for an older worker, the court found that such noncompliance did not create a separate legal claim for the employee. The consequence of employer noncompliance under the OWBPA is that the separation agreement signed by the employee is ineffective to waive ADEA claims. Thus, the court denied the employee's motion to add an OWBPA claim, as it found that amendment would be futile if no freestanding claim existed.

Vallely v. United Parcel Service Inc., N.D.N.Y., No. 3:18-CV-0284 (Jan. 2, 2019).

Professional Pointer: Employers should remember that every separation agreement for an employee who is age 40 or older should include an ADEA waiver and the protections required by the OWBPA. Failure to include these provisions does not necessarily make the entire agreement invalid or create a separate legal claim, but the employee will have the ability to proceed with ADEA claims against the employer despite the payment he or she has received.

Jeffrey Rhodes is an attorney with Doumar Martin in Arlington, Va.