On January 14, 2021, the U.S. Equal Employment Opportunity Commission (EEOC) issued long-awaited and much-needed clarification on whether non-U.S. citizen employees working for a U.S. employer outside the United States must be included in the disclosure required for compliance with the Older Worker Benefit Protection Act (OWBPA). The EEOC stated a definitive “No” on this issue.
Some brief background on context is necessary. Generally, when an employer subject to the requirements of the federal Age Discrimination in Employment Act (ADEA) offers severance to two or more employees in exchange for a release agreement that includes a waiver of claims under the ADEA, specific requirements apply for an effective waiver of ADEA claims. That includes, among other requirements, offering employees age 40 and older a minimum of 45 days to consider whether to sign the release agreement and 7 days to revoke after signing.1 The release must also be accompanied with an “OWBPA disclosure” form that provides the following information:
(i) any class, unit, or group of individuals covered by [an exit incentive or other employment termination program offered to a group or class of employees], any eligibility factors for such program, and any time limits applicable to the program; and (ii) the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who [were considered but] who are not eligible or selected for the program.2
This “class, unit, or group” of individuals is known as the “decisional unit,” which is intended to reflect the decision-making process by which “the employer chose the persons who would be offered consideration for signing the waiver and those who would not.”3 Employees considered for the termination program within the applicable “decisional unit” must be included on the job listing in the disclosure. The purpose of each of these requirements, and in particular the OWBPA disclosure form, is to ensure that the employees being offered severance or other exit benefits in connection with an employment termination program have sufficient information about the program to make a “knowing and voluntary” waiver of claims under the ADEA. If these minimum requirements are not satisfied, the ADEA waiver may be invalid and unenforceable.
For years, lawyers, the EEOC and the courts have grappled with how to handle the OWBPA disclosure requirement when a U.S.-controlled employer considers international employees working outside the United States for termination in connection with an employment termination program that also affects U.S. employees. The OWBPA and the EEOC’s implementing regulations are not clear on this issue. On the one hand, the OWBPA regulations require employers to include in a disclosure all “employees” in a decisional unit considered for the program. If the employer considered international employees for the employment termination program, it may be difficult to justify the exclusion of international employees from the OWBPA disclosure if they are part of the same decisional unit by all other standards. On the other hand, non-U.S. employees working outside the United States are not covered by the ADEA and generally cannot pursue age discrimination claims in U.S. courts. Moreover, employees working in another country are often subject to different selection criteria and are not eligible for the same severance benefits as employees working in the United States, supporting the argument that international employees should not be included on the OWBPA disclosure. There are also data privacy concerns with respect to including international employees on an OWBPA disclosure.
The EEOC’s January 14, 2021 opinion letter clearly concludes that “employers subject to the requirements of the ADEA are not required to include in OWBPA disclosures employees working outside the United States who are not U.S. citizens because such individuals are not ‘employees’ for purposes of the ADEA.”
It is important to note what this statement also indicates. That is, U.S. citizens working internationally and international employees working in the United States for U.S.-controlled companies would need to be included on the disclosure if they otherwise meet the requirements for inclusion in the disclosure. Moreover, U.S. citizens working outside the United States for companies not controlled by a U.S. company would not. Employers that follow this opinion letter may rely on it to defend against a charge or lawsuit challenging the disclosure,4 and courts will likely defer to such agency-issued opinion letters.
As always, it is very important for employers to carefully draft release agreements to adequately comply with applicable laws and ensure the enforceability of ADEA and other employment discrimination waivers. Special attention is required when conducting group layoffs and ensuring that the OWBPA disclosure is accurate.