On April 7, 2008, the United States Equal Employment Opportunity Commission issued a press release announcing the settlement of its age discrimination lawsuit against Lockheed Martin Global Telecommunications for $773,000, on behalf of a class of eight older employees.  In the suit, the EEOC alleged that Lockheed Martin violated the Age Discrimination in Employment Act (ADEA) by firing the employees during a reduction in force.  The settlement amount was in addition to an earlier settlement for $131,000 in the same case regarding separate claims of retaliation.  The ADEA prohibits employment discrimination on the basis of age regarding employees 40 years of age or older, as well as retaliation against such individuals who engage in a “protected activity” under the ADEA.  One common form of protected activity is the filing of a charge of discrimination with the EEOC.

Aside from the substantial settlement amount paid, perhaps the most significant aspect of the case dealt with the retaliation claims.  One such claim concerned an employee who was offered severance benefits on the condition that she first sign a full release of all claims against Lockheed Martin.  The release further provided that the employee was precluded from pursuing any “charges” against the Company.  Rather than sign the release, the employee chose to file a charge of age discrimination with the EEOC.  She then asserted that she still had a right to receive the severance benefits.  Lockheed Martin sent her a letter stating that if she did not sign the release and dismiss her EEOC charge, she would forfeit the severance.  The employee still refused to sign the release.  On behalf of the employee, the EEOC brought suit against Lockheed Martin for retaliation in violation of the ADEA.

In a motion for summary judgment, Lockheed Martin argued in part that it had a legal right to deny severance benefits because the condition precedent to the payment of such benefits (i.e., the employee’s execution of the release agreement) had not been satisfied.  However, the United States District Court for the District of Maryland denied Lockheed Martin’s motion.  The Court found that the release agreement itself was retaliatory because it required the employee to waive the right to file charges with the EEOC.  At this point, the astute observer might ask:  but isn’t the point of a release agreement to waive one’s right to pursue legal claims against the party being released, in exchange for some benefit?  The Court in essence concluded that an EEOC charge is the means by which the EEOC is informed of possible discrimination in the workplace, and the EEOC’s purpose is to stop such discrimination through the enforcement of the ADEA and other anti-discrimination laws.  Thus, while an individual may waive his or her right to claims for monetary or other personal relief, such person cannot enter into a waiver that “interferes with the public interest in EEOC enforcement” of those laws. 

The Maryland federal court acknowledged that the issue of whether a release agreement can legally require the waiver of the right to file an EEOC charge was one of first impression in the Fourth Circuit.  To date, it appears that the Fourth Circuit Court of Appeals has not directly ruled on this issue.  However, and in view of the Lockheed Martin decision, employers should review their release agreements and get legal advice as to the types of claims that are being waived.  At a minimum, employers should be cautious about any language in their releases which references the waiver of “charges,” since this could be interpreted to include EEOC charges.  Also, and with regard to waivers of ADEA claims, employers should remember that in order to be enforceable such agreements must comply with the specific requirements set forth in the Older Workers’ Benefit Protection Act (an amendment to the ADEA) and related EEOC regulations.  Such requirements include an allowance of specific time periods for the employee to consider and revoke the agreement, clear reference to the waiver of claims under the ADEA and the right to consult an attorney, and (under certain circumstances) inclusion of information about other individuals who have or have not been selected for participation in the waiver.  Employers should always have an experienced employment counsel review the terms of such agreement prior to presenting it to the employee.

If you have any questions regarding this alert or other employment law related issues, please contact Robert Meyer at 704.342.5347 or rbmeyer@poynerspruill.com or Susie Gibbons  at 919.783.2813 or sgibbons@poynerspruill.com.