Court: Rights Waiver Valid Despite Illegal EEOC Complaint Ban

June 13, 2003 ( - A company may have had an illegal clause in a waiver of rights release agreement prohibiting an older worker from filing a federal discrimination claim, but that shouldn't invalidate the entire release document, an appeals court ruled.

>Plaintiff John Wastak waived his right to pursue any employer lawsuits when he accepted a severance package from his former employer and signed the release, the 3 rd  US Circuit Court of Appeals ruled, according to The Legal Intelligencer.

The appeals judges turned away an argument from the US Equal Employment Opportunity Commission (EEOC) that the waiver’s clause prohibiting the worker from filing a complaint with the federal anti-discrimination agency should cause the entire release agreement to be thrown out. Agency lawyers advanced the argument in a friend-of-the-court brief. The right to file an EEOC complaint is protected by the Age Discrimination in Employment Act (ADEA) and cannot be waived, the agency lawyers pointed out.

Writing for a unanimous three-judge panel, Circuit Judge Marjorie Rendell found that while the ADEA clearly prohibits employers from enforcing such charge-filing bans, “there is no indication that the mere presence of that contractual language would void an otherwise knowing and voluntary waiver.”

Court Background

According to court papers, Wastak was hired in 1990 by Lehigh Valley Health Network as the administrator for its department of psychiatry. Wastak held the position for eight years and says he thought Lehigh Valley was satisfied with his performance and that his employment was secure.

But in 1997, when Wastak began negotiations to lease office space for the department, he claims that the department chair told him to cease the discussions and later instructed another worker to take on the task. In March 1998, Wastak was fired at the age of 57 and was told his termination was the result of his conducting inappropriate lease negotiations, according to the suit.

Wastak says he was given a proposed “separation agreement and release” along with a letter explaining and supplementing its provisions. In exchange for his signing the release, Lehigh Valley offered Wastak “income protection” for 36 weeks, meaning that Wastak was guaranteed pay equal to his Lehigh Valley salary whether or not he got a job during that time.

Wastak was given 21 days to sign the agreement, and Lehigh Valley advised him to consult an attorney before doing so.  But Wastak claims his attempts to secure counsel were unsuccessful, and that none of the three lawyers he contacted could or would represent him. Nonetheless, he signed the release.

On the day of his termination, the suit says, Lehigh Valley told Wastak that it intended to hire a replacement for him. Nine months later, in December 1998, Wastak says he learned that Lehigh Valley had replaced him with a 44-year-old woman.

It was only then, Wastak says, that he suspected that he was fired as a result of age discrimination. In July 1999 – 495 days after his termination – Wastak filed a discrimination charge with the EEOC. But, since the law requires all charges to be filed within 300 days, the EEOC later dismissed the charge as untimely.

Wastak filed suit in the Lehigh County Court of Common Pleas claiming age discrimination under the ADEA and the Pennsylvania Human Relations Act.

Lehigh Valley successfully got the the suit moved to federal court and asked for a dismissal on the basis of Wastak’s waiver of his right to sue in the release. In March 2002, US District Judge Herbert Hutton granted Lehigh Valley’s motion, rejecting Wastak’s claims that the waiver was void under the Older Workers Benefit Protection Act (OWBPA), or that the agreement was otherwise invalid because he did not enter into it knowingly and voluntarily.    The 3rd Circuit upheld Hutton’s ruling.

The EEOC Position

EEOC attorney Benjamin Gutman argued that the court should invalidate the entire release because “a charge-filing ban like the one in Wastak’s waiver will deter many employees from exercising their right to file age discrimination charges even if the ban is never enforced. This chilling effect would hamper the EEOC’s enforcement efforts as employees refrained from coming forward with information about discriminatory conduct in the workplace.”

Rendell disagreed, saying “any attempt” by an employer to enforce such a provision would merely be “ineffectual” due to the strict limits Congress set on waivers of rights by older workers in the OWBPA.

Rendell found that OWBPA, which amended the ADEA, “essentially states that, whatever its provisions, a privately executed waiver agreement cannot alter or obstruct the EEOC’s ability to exercise its rights and responsibilities, and that an employer may not invoke a waiver in an attempt to impede an employee’s participation in EEOC procedures.

The case is In Wastak v. Lehigh Valley Health Network .