AARP’s brief argues that the federal law protecting older workers from victimization in separation packages requires arbitration agreements to be knowing and voluntary.
Elizabeth McLeod and 13 other older workers terminated by General Mills argue that their federal rights against age discrimination were violated in a large-scale layoff in 2012. Approximately 850 employees were let go, and employees age 40 or over argue that they lost their jobs at a much higher rate than younger employees. At the same time, the workers allege General Mills hired and promoted younger employees to replace the older workers. The severance package offered to those laid off included a waiver of all age discrimination claims and an agreement to individually arbitrate any disputes, including challenges to the waiver’s lawfulness, rather than pursuing collective actions in court.
The federal Age Discrimination in Employment Act (ADEA), as amended by the Older Workers Benefit Protection Act (OWBPA), provides very specific protections to older workers who are terminated, the right to enforce the law’s protections in a trial by jury, and the right to bring discrimination claims with others who are similarly-situated in “collective actions.” The OWBPA requires that if employees agree as part of a severance package to waive their rights under the ADEA, those waivers must be knowing and voluntary, which means (among other things) that employers must provide them with certain information, such as the job titles and ages of other employees being laid off. The question AARP’s brief addresses is whether an employer must prove to a court that it followed these rules in order to enforce a severance agreement that includes an arbitration agreement.
Arbitration is a non-court dispute resolution mechanism that was designed for business-to-business negotiations — where parties have equivalent sophistication and access to resources — but is increasingly being found in consumer, nursing home, and employment contracts. Arbitration can be expensive and does not provide the same procedural protections (for example, discovery rights, public hearings, adherence to precedent, and often a bar on class actions or collective actions) that courtroom proceedings do.
AARP’s friend-of-the-court brief, filed by attorneys with AARP Foundation Litigation, argues that the high-pressure and high-stakes environment of a large scale layoff makes it all the more important that the letter of the law be followed closely. The brief parses the statutory language of the ADEA and OWBPA as well as the legislative intent in enacting the laws and decisions subsequent to enactment that make it clear that severance packages resulting from layoffs must hew to the letter of the law requiring employers to prove to a court — not an arbitrator — that they followed the OWBPA’s prescriptions.
What’s at Stake
Forcing workers to arbitrate their claims individually, without ensuring that they genuinely agreed to do so, eviscerates enforcement of their hard-won and very specific rights under federal age discrimination laws specifically designed to protect them. Older workers are particularly vulnerable to layoffs and reductions-in-force and feel the effects more acutely as it is harder for them to reenter the workforce once laid off, and they have fewer working years to recoup income losses due to job restructuring.
McLeod v. General Mills is before the U.S. District Court for the District of Minnesota.