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The 3rd U.S. Circuit Court of Appeals has ruled that an older worker’s signature on a release agreement promising not to pursue any lawsuits against his former employer constitutes a valid waiver of his rights even if the agreement contains a clause that prohibits the worker from bringing any charge before the Equal Employment Opportunity Commission. In Wastak v. Lehigh Valley Health Network, the court rejected the EEOC’s argument – made in an amicus curiae brief – that such a provision renders the entire release agreement invalid since the right to file a charge with the EEOC is protected by the Age Discrimination in Employment Act and cannot be waived. Writing for a unanimous three-judge panel, Judge Marjorie O. 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.” The ruling is a victory for attorneys Jonathan B. Sprague and A. James Johnston of Post & Schell who argued that plaintiff John R. Wastak had waived his right to pursue any lawsuits when he accepted a severance package and signed a release agreement. For the EEOC, the decision marks the second loss this year in a 3rd Circuit case in which the agency not only filed an amicus curiae brief, but participated in the oral argument. In March, the 3rd Circuit held in Spinetti v. Service Corp. International that an arbitration agreement that includes provisions that violate federal law – by requiring workers lodging discrimination claims to pay their own attorney fees regardless of the outcome as well as their share of the costs of arbitration – is nonetheless enforceable since federal judges have the power to “sever” the offensive provisions before sending the case to arbitration. In Spinetti, the EEOC had argued that courts must void the entire arbitration agreement instead of merely trimming its offensive portions. But Senior U.S. Circuit Judge Ruggero J. Aldisert disagreed, saying: “You don’t cut down the trunk of a tree because some of its branches are sickly.” Now, in Wastak, the 3rd Circuit has similarly ruled that a provision in a release agreement that bars a worker from even filing an EEOC charge does not render the entire release invalid. 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 Older Workers Benefit Protection Act. But Rendell said “there is no clear statutory indication that a waiver agreement that contains a provision that runs afoul of [OWBPA] is suspect, let alone invalid.” Instead, Rendell said, the language of OWBPA “suggests just the opposite.” 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. Both of the requirements, Rendell said, “appear to contemplate the validity of an underlying waiver of a legal action and deal only with the administrative process – namely, the right of the EEOC to do its job and the right of the employee to file a claim with the agency.” As a result, Rendell said, the most that can be read into the statutory language is that such a provision is unenforceable. 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 secured other employment during that time. If Wastak accepted a lower-paying job during the 36-week period, Lehigh Valley would cover the difference in salary, but Wastak’s benefits would terminate if he was able to secure a job at a salary equal to or exceeding his salary at Lehigh Valley, according to court papers. Lehigh Valley also promised Wastak the free use of a professional outplacement firm. Wastak was given 21 days to sign the agreement, and Lehigh Valley advised him to consult an attorney before signing. 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 removed the suit to federal court and moved for dismissal on the basis of Wastak’s waiver of his right to sue in the release. In March 2002, U.S. District Judge Herbert J. Hutton granted Lehigh Valley’s motion, rejecting Wastak’s claims that the waiver was void under OWBPA, or that the agreement was otherwise invalid because he did not enter into it knowingly and voluntarily. Now the 3rd Circuit has upheld Hutton’s ruling. Rendell, in an opinion joined by 3rd Circuit Judge Thomas L. Ambro and visiting 8th Circuit Senior Judge Frank J. Magill, found that the language of OWBPA does not call for invalidation of a release merely because it contains a faulty provision that bars the filing of an EEOC charge. Rendell found that the waiver provisions in OWBPA are divided into four subsections. The first, she said, “enumerates a list of mandatory prerequisites for a valid waiver,” and the second “sets forth a narrow exception to those requirements.” The third subsection, Rendell said, “allocates the burden of proof” whenever there are disputes about the first two subsections, placing on the party asserting the waiver the burden to prove that it was made knowingly and voluntarily. Finally, the fourth subsection “clarifies that even otherwise statutorily compliant waiver agreements cannot be used to interfere with the EEOC’s exercise of its duties, or with an employee’s right to complain to the agency.” Rendell found it was significant that the fourth provision was “crucially distinct from the list of necessary prerequisites for a valid waiver.” Such a structuring, Rendell said, shows that Congress did not intend for courts to invalidate waivers that violate the fourth subsection. “Had Congress intended that a charge-filing ban of the sort found here would operate to invalidate a waiver, it could have either stated so explicitly, or, more consistently with the structure of the statute, simply included a provision similar to [the fourth subsection] within the list of enumerated prerequisites in [the first subsection]. It did neither,” Rendell wrote. Wastak was represented by attorney Donald P. Russo of Bethlehem. (Copies of the 23-page opinion in Wastak v. Lehigh Valley Health Network , PICS NO. 03-0897, are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.)

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