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Most savvy employers try to get a release from any employee who is leaving his or her employment. The days of employers believing: “We treated him well, he’d never sue” have gone the way of leisure suits (which have been replaced by law suits). Employers, and, let’s be honest, their law firms, often recycle releases and may not have reviewed the language of the “standard release” in quite some time. The recent case of Wastak v. Lehigh Valley Health Network, No. 01-2111 (3rd Cir. 2003) should send all interested parties back to their releases, although in the end, no changes may need to be made. 36 WEEKS OF SEVERANCE John Wastak was the Administrator of Lehigh Valley Health Network’s (LVHN) Department of Psychiatry when he was terminated after roughly seven years of employment. He was 57 years old at the time. On the date of his termination, Wastak was given a Separation Agreement and Release stating, in part, that he would not “file a charge, complaint lawsuit or other claim against [LVHN] . …” Furthermore, if he brought suit in the future, the “prevailing party” would be entitled to attorney fees. In exchange for the release, Wastak was offered 36 weeks severance, plus out-placement services. Under the Older Workers Benefits Protection Act (OWBPA), Wastak was given 21 days to consider the release and was expressly advised to consult with a lawyer. Wastak tried to find a lawyer, but was unable to do so. Nevertheless, he finally signed the release. Nine months after his termination, LVHN hired a 44-year-old woman as Wastak’s replacement. It took Wastak another eight months to find counsel, but when he did, he filed a charge of age discrimination with the EEOC, a mere 495 days after his termination. The EEOC dismissed the charge as untimely. Undeterred, Wastak filed suit in state court alleging a violation of the Age Discrimination in Employment Act and violation of Pennsylvania’s state anti-discrimination statute. LVHN removed the case to federal court and was subsequently granted summary judgment on the grounds that Wastak had waived any possible claims at the time he signed the release. RELEASE CHALLENGED ON APPEAL Wastak’s appeal to the 3rd U.S. Circuit Court of Appeals focused on the validity of the release. The initial challenge was based on the “discovery rule.” Wastak claimed that he had not waived his ADEA claim because he did not learn of the viability of such a claim until he learned that he had been replaced by a woman 13 years his junior. The court rejected this challenge on the grounds that a “cause of action accrues the moment the plaintiff either is aware or should be aware of the existence of and source of an injury.” The court found that the viability of Wastak’s claim was irrelevant to the cause of action. “[A] claim accrues in a federal cause of action upon awareness of actual injury, not upon awareness that this injury constitutes a legal wrong.” CHARGE FILING PROHIBITION The central challenge to the release was based on Wastak having agreed not to “file a charge” in addition to foregoing other rights. Wastak argued that the OWBPA specifically states that “no waiver agreement may affect the [EEOC's] rights and responsibilities to enforce [the ADEA].” As such, Wastak (joined by the EEOC) sought to invalidate the entire release. The court reviewed OWBPA in detail, along with the legislative history and other cases raising similar issues. The court found that the “statutory language can be read to mean only that a provision that purports to, for example, alter the EEOC’s rights to pursue and investigate a claim that is filed is unenforceable. [T]he statute is clear that any attempt by an employer to enforce a contractual provision prohibiting an employee from filing a charge or participating in an EEOC investigation would be ineffectual.” The court held, however, that the “mere presence of that contractual language would [not] void an otherwise knowing and voluntary waiver. ‘You don’t cut down the trunk of a tree because some of its branches are sickly.’ “ Wastak made a number of other arguments that were also rejected by the court. First, he claimed that the agreement that the prevailing party would receive attorney fees in the event of litigation, violated the regulation prohibiting retaliation for challenging the agreement itself. The court noted that the release only allowed fees to the prevailing party, not simply for the filing of a lawsuit. This “represents a recognized and accepted contractual arrangement for the shifting of fees at the termination of litigation.” Wastak next argued that there was no consideration for the release. The court seemed puzzled by this argument, finding that the 36 weeks of severance in excess of what he “was entitled to upon his termination — nothing.” FINANCIAL DISTRESS DOES NOT INVALIDATE RELEASE Finally, Wastak argued that the release was invalid because he had not signed it “knowingly and voluntarily” as required by the OWBPA. The court found that he understood the basic principles of the release and, while he may have been under great financial distress at the time “the law is clear that the existence of financial pressure to sign a waiver is insufficient to establish that it was executed involuntarily.” The case seems to reflect the strong judicial preference for enforceable settlements in employment cases. The prospect of re-opening volumes of long-settled cases because of a “sickly branch” or two would likely have flooded the already crowded employment law dockets. From a practitioner’s perspective, while language prohibiting an EEOC charge in a release likely will not invalidate the entire document, if the language serves no purpose, and cannot be enforced, it should be removed to avoid any possible mischief. Sidney R. Steinberg is a shareholder in the business law and litigation department of Post & Schell, (www.postschell.com). He concentrates his national litigation and consulting practice in the field of employment and employee relations law and may be reached at [email protected].

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