In Andrews v. Williams WPC-I, LLC et al., 4:19-cv-02200 (M.D. Penn. July 16, 2020), the U.S. District Court for the Middle District of Pennsylvania held that a severance package can be an adverse action under the federal Age Discrimination in Employment Act (ADEA). In Andrews, the plaintiff worked as a Senior Operations Technician. In 2019, the employer issued a voluntary separation agreement to all its employees who would be 55 years of age or older on December 31, 2019. The plaintiff was then 62. The proposed agreement offered the plaintiff a cash separation payment. Severance payments were on offered a first-come, first-served basis, and there was no guarantee that all employees who elected to take the severance package would be compensated. The plaintiff did not elect to take the severance.
Following the plaintiff’s decision, the employer announced that 350 employees had elected to take the voluntary severance package and that the company would be making additional involuntary reductions in the workforce.
The plaintiff filed suit, alleging age discrimination claims under the ADEA and under the Pennsylvania Human Rights Act. Defendants moved to dismiss the plaintiff’s age discrimination claim on the basis that the severance package offering was not an adverse employment action, and that there were no circumstances giving rise to an inference of intentional discrimination. The Court disagreed and held that a severance package can be an adverse employment decision that provides a basis for an independent claim of discrimination. The Court reasoned that because a severance package is a term, condition, or privilege of employment, it could be an adverse action. Additionally, the Court noted that the plaintiff had alleged that only employees over 55 received the severance package, that he was “threatened with termination” if he did not sign the agreement, and that younger employees did not feel the same pressure to leave their jobs. These allegations were enough, reasoned the Court, to show a prima facie case of age discrimination.
The lesson? During this uncertain time period where many employers may be considering voluntary severance packages as a way to reduce costs, employers should think critically before offering any such package to employees, especially when only offering voluntary severance to certain age groups. Although it may seem that offering voluntary severance as opposed to a RIF is a safer choice, a court may still find that a severance package constitutes an adverse action sufficient to make out a discrimination claim. Additionally, employers who do decide to offer voluntary severance should carefully consider the messaging surrounding the severance process. As always, it is best to consult legal counsel to discuss the specifics of any planned voluntary severance offering.