[Federal Register Volume 62, Number 46 (Monday, March 10, 1997)]
[Proposed Rules]
[Pages 10787-10793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5745]


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EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

29 CFR Part 1625


Waiver of Rights and Claims Under the Age Discrimination in 
Employment Act (ADEA)

AGENCY: Equal Employment Opportunity Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: EEOC is publishing its notice of proposed rulemaking on 
agreements waiving rights and claims under the Age

[[Page 10788]]

Discrimination in Employment Act, in order to set forth procedures for 
complying with the Older Workers Benefit Protection Act of 1990.

DATES: To be assured of consideration by EEOC, comments must be in 
writing and must be received on or before May 9, 1997.

ADDRESS: Written comments should be submitted to Frances M. Hart, 
Executive Officer, Executive Secretariat, Equal Employment Opportunity 
Commission, 1801 L Street, NW, Washington, DC 20507.

FOR FURTHER INFORMATION CONTACT: Joseph N. Cleary, Assistant Legal 
Counsel, or Paul E. Boymel, Senior Attorney-Advisor, ADEA Division, 
Office of Legal Counsel, 202-663-4692 (voice), 202-663-7026 (TDD).

SUPPLEMENTARY INFORMATION:

A. History

    Congress amended the ADEA by enacting the Older Workers Benefit 
Protection Act of 1990 (OWBPA), Pub. L. No. 101-433, 104 Stat. 983 
(1990), to clarify the prohibitions against discrimination on the basis 
of age. In Title II of OWBPA, Congress addressed waivers of rights and 
claims under the ADEA, amending section 7 of the ADEA by adding a new 
subsection (f), 29 U.S.C. sec. 626(f).
    Section 7(f)(1) provides that ``an individual may not waive any 
right or claim under the [ADEA] unless the waiver is knowing and 
voluntary.'' Section 7(f) sets out the minimum criteria for determining 
whether a waiver is knowing and voluntary.
    In light of the OWBPA amendments, EEOC published an Advance Notice 
of Proposed Rulemaking (ANPRM) in the Federal Register, 57 FR 10626 
(March 27, 1992), seeking information from the public on various issues 
under both titles of OWBPA. In response to the ANPRM, EEOC received 
approximately 40 comments, many of which presented detailed analyses of 
Title II issues, requesting EEOC to provide formal guidance on waivers 
of rights and claims under the ADEA. Since the publication of the 
ANPRM, EEOC also has received numerous written and telephone inquiries 
requesting information on how to comply with Title II.
    On August 31, 1995, EEOC announced in the Federal Register, 60 FR 
45388 (August 31, 1995), its intent to use negotiated rulemaking to 
develop a proposed Title II rule.

B. Purpose of Negotiated Rulemaking

    Negotiated rulemaking, under procedures set out in the Negotiated 
Rulemaking Act, 5 U.S.C. 561 et seq., Pub. L. 101-648, is a relatively 
new tool used by agencies in connection with the development of 
regulations. In using negotiated rulemaking, EEOC has reached out to 
employers, employees, and their representatives to take into account 
the concerns of all interested communities in the development and 
drafting of the proposed rule. This procedure contrasts with the more 
traditional ``notice and comment'' rulemaking where an agency receives 
public input only after the proposed rule is published for comment. The 
advantages of negotiated rulemaking include:
    1. The negotiated rulemaking process allows public input from the 
start, permitting the stakeholders--individuals, organizations, and 
businesses actually affected by the rule--to explain their concerns and 
help shape the rule;
    2. The agency gains the benefit of the expertise of the 
stakeholders, enabling it to draft a rule that reflects the realities 
of the workplace, not just the agency's views;
    3. The negotiated rulemaking process requires consensus of the 
committee members. By involving stakeholders from all sides of the 
issues to be addressed, the stakeholders will be more willing to accept 
the regulation without legal challenge. While no stakeholder will be 
happy with every provision of a rule, each will know that the rule 
represents a reasonable solution to shared problems.

C. Negotiated Rulemaking on Title II of OWBPA

    The August 31, 1995 Federal Register notice set out nine issues 
that EEOC suggested might be discussed during the negotiated rulemaking 
process. EEOC left open the possibility that the Negotiated Rulemaking 
Committee would add other issues to the proposed rule and/or choose not 
to address one or more of the enumerated issues.
    The notice also invited members of the public who were interested 
in serving on the Committee to inform EEOC of their interest and 
qualifications. EEOC received over 70 requests to participate on the 
Committee, representing a wide diversity of interests and backgrounds. 
EEOC chose 18 Committee participants from members of the public 
representing labor, management, and employee interests, along with 2 
EEOC representatives to serve on the Committee. The members of the 
Committee were:

Elizabeth M. Barry, Esq., Harvard University, Cambridge, MA
William H. Brown, Esq., Schnader, Harrison, Segal & Lewis, 
Philadelphia, PA
Joseph N. Cleary, Esq., Equal Employment Opportunity Commission, 
Washington, DC
John C. Dempsey, Esq., AFSCME, AFL-CIO, Washington, DC
Raymond C. Fay, Esq., Bell Boyd & Lloyd, Washington, DC
Burton D. Fretz, Esq., National Senior Citizens Law Center, Washington, 
DC
Peter Kilgore, Esq., National Restaurant Association, Washington, DC
Lloyd C. Loomis, Esq., Atlantic Richfield Co., Los Angeles, CA
Benton J. Mathis, Esq., Drew, Eckl & Farnham, Atlanta, GA
Thomas R. Meites, Esq., Meites, Frackman, Mulder & Burger, Chicago, IL
Niall A. Paul, Esq., Spilman, Thomas & Battle, Charleston, WV
Markus L. Penzel, Esq., Garrison, Phelan, Levin-Epstein & Penzel, and 
National Employment Lawyers Assn. New Haven, CT
L. Steven Platt, Esq., Arnold and Kadjan, and National Employment 
Lawyers Assn., Chicago, IL
Pamela S. Poff, Esq., Paine Webber Inc., Weehawken, NJ
Michele C. Pollak, Esq., American Association of Retired Persons, 
Washington, DC
Jaime Ramon, Esq., Jackson Walker, Dallas, TX
Patrick W. Shea, Esq., Paul Hastings, Janofsky & Walker, Society for 
Human Resource Management, Stamford, CT
Paul H. Tobias, Esq., Tobias Kraus & Torchia, Cincinnati, OH
Ellen J. Vargyas, Esq., Equal Employment Opportunity Commission, 
Washington, DC
Robert Williams, Esq., McGuiness & Williams, Equal Employment Advisory 
Council, Washington, DC

    The Negotiated Rulemaking Committee began work on December 6, 1995. 
Committee meetings were held on December 6-7, 1995, January 23-24, 
1996, March 6-7, 1996, April 16-17, 1996, June 18-19, 1996, and July 
23-24, 1996. The Committee discussed in detail the issues set out in 
the August 31, 1995, Federal Register notice, as well as other issues 
that the Committee considered needed to be resolved. The Committee 
functioned by consensus which it defined as the absence of objection by 
any Committee member.
    The Committee unanimously forwarded a recommended proposed rule to 
EEOC for its consideration. As a result of the recommendations received 
from the Committee, and its deliberations regarding such

[[Page 10789]]

recommendations, EEOC is publishing for public comment the Committee's 
negotiated rule in this Notice of Proposed Rulemaking.
    Because the recommendation was based on a consensus of the 
Committee members, it did not include issues on which the Committee 
could not reach a consensus. EEOC recognizes that this Notice of 
Proposed Rulemaking does not address certain issues that arise under 
Title II of OWBPA. EEOC emphasizes that no inference should be drawn on 
any issue by reason of the proposed regulation's silence with respect 
to that issue.
    Following the end of the 60 day comment period, members of the 
Negotiated Rulemaking Committee will be given a period of 30 days to 
provide EEOC with their written views relating to the proposed rule and 
the comments received. At the expiration of that 30 day period, EEOC 
will review all comments and determine the content of the final 
regulation.
    As a convenience to commentors, the Executive Secretariat will 
accept public comments transmitted by facsimile (``FAX'') machine. The 
telephone number of the FAX receiver is 202-663-4114. (Telephone 
numbers published in this Notice are not toll-free). Only public 
comments of six or fewer pages will be accepted via FAX transmittal. 
This limitation is necessary in order to assure access to the 
equipment. Receipt of FAX transmittals will not be acknowledged, except 
that the sender may request confirmation of receipt by calling the 
Executive Secretariat staff on 202-663-4078.
    Comments received will be available for public inspection in the 
EEOC Library, Room 6502, 1801 L Street, NW, Washington, DC 20507, by 
appointment only, from 9:00 a.m. to 5:00 p.m., Monday through Friday, 
except legal holidays. Persons who need assistance to review the 
comments will be provided with appropriate aids such as readers or 
print magnifiers. Copies of this notice of proposed rulemaking are 
available in the following alternative formats: Large print, braille, 
electronic file on computer disk, and audio-tape. To schedule an 
appointment or receive a copy of the notice in an alternative format, 
call 202 663-4630 (voice), 202-663-4399 (TDD).

Executive Order 12866, Regulatory Planning and Review

    Under section 3(f)(4) of Executive Order 12866, EEOC has determined 
that this regulation would be a ``significant regulatory action;'' 
therefore, EEOC has coordinated this NPRM with the Office of Management 
and Budget. However, under section 3(f)(1) of Executive Order 12866, 
EEOC has determined that the regulation will not have an annual effect 
on the economy of $100 million or more or adversely affect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State 
or local or tribal governments or communities. The rule will not create 
a serious inconsistency or otherwise interfere with an action taken or 
planned by another agency. Therefore, EEOC has not needed to prepare a 
detailed cost-benefit assessment of the regulation.

Paperwork Reduction Act

    The rule as proposed does not require the collection of information 
by EEOC or by any other agency of the United States Government. 
However, the provisions of Title II of OWBPA do require employers to 
provide certain information to employees (but not to EEOC) in writing.
    Accordingly, EEOC, as part of its continuing effort to reduce 
paperwork and respondent burden, is, as required by the Paperwork 
Reduction Act for all collections of information, soliciting comments 
concerning the proposed rule with regard to the paperwork requirements 
contained in Title II of OWBPA. The provisions of the proposed rule 
dealing with informational requirements have been submitted to the 
Office of Management and Budget for review under section 3507 of the 
Paperwork Reduction Act.
    The public reporting and recordkeeping burden for this collection 
of information is estimated to be 41,139 hours in order for employers 
to collect the information and to determine: (1) what information must 
be given to employees; (2) which employees must be given the 
information; (3) how the information should be organized.
    The estimated burden of collecting and distributing the information 
was calculated as follows:
    Collection Title: Informational requirements under Title II of the 
Older Workers Benefit Protection Act of 1990 (OWBPA), 29 CFR Part 1625.
    Form Number: None.
    Frequency of Report: None required.
    Type of Respondent: Business, state or local governments, not for 
profit institutions.
    Description of the Affected Public: Any employer with 20 or more 
employees that seeks waiver agreements in connection with exit 
incentive or other employment termination programs (hereinafter, 
``Programs'').
    Responses: 13,713.
    Reporting Hours: 41,139.
    Number of Forms: None.
    Abstract: This requirement does not involve record keeping. It 
consists of providing adequate information in waiver agreements offered 
to a group or class of persons in connection with a Program, to satisfy 
the requirements of the OWBPA.
    Burden Statement: There is no reporting requirement nor additional 
record keeping associated with this rule. The only paperwork burden 
involved is the inclusion of the relevant data in waiver agreements. 
The rule applies only to those employers who have 20 or more employees 
and who offer waivers to a group or class of employees in connection 
with a Program.
    There are 542,000 employers who have at least 20 employees. 
Programs come into play when, as a result of business activity, 
employers are forced to cut their work force. Based on statistics from 
EEOC's private employer survey, it is estimated that in any one year 
4.6% of employers are involved in activities, such as mergers or 
downsizing, which occasion the use of Programs. It is further 
estimated, based on figures from a General Accounting Office study, and 
the Bureau of Labor Statistics, that at most 55% of those who use 
Programs require waivers and thus are affected by this rule.
    Applying the above factors to the total number of employers: 
[(542,000 x .046 x .55)=13,713] yields 13,713 employers that are 
affected by this requirement. The larger employers are assumed to have 
computerized record keeping, and thus can produce the requisite 
notification with a minimum of effort, while smaller employers have far 
less information to process.
    Therefore, it is estimated that, on the average, a notification can 
be produced in approximately 3 hours. This would then produce a maximum 
of (13,713 x 3)=41,139 hours annually.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should submit written comments on 
or before April 9, 1997. This deadline does not affect the deadline for 
the public to comment to EEOC on the proposed regulation itself. 
Address comments to: Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10235, New Executive Office 
Building, Washington, D.C. 20503, Attention: Desk Officer for the 
United States Equal Employment Opportunity Commission. Comments also 
should be sent to EEOC at the address listed at the beginning of this 
Notice.

[[Page 10790]]

    EEOC will consider comments by the public on this proposed 
regulation to:
    <bullet> Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of EEOC, 
including whether the information shall have practical utility;
    <bullet> Evaluate the accuracy of EEOC's estimate of the burden of 
the proposed collection of information;
    <bullet> Enhance the quality, utility, and clarity of the 
information to be collected; and
    <bullet> Minimize the burden of collection of information on those 
who are to respond, including through the use of automated collection 
techniques or other forms of information technology.
    EEOC certifies under 5 U.S.C. 605(b), enacted by the Regulatory 
Flexibility Act (Pub. L. 96-354), that this regulation will not result 
in a significant economic impact on a substantial number of small 
entities. For this reason, a regulatory flexibility analysis is not 
required. A copy of this proposed rule was furnished to the Small 
Business Administration.
    In addition, in accordance with Executive Order 12067, EEOC has 
solicited the views of affected Federal agencies.

List of Subjects in 29 CFR Part 1625

    Advertising, Age, Employee benefit plans, Equal employment 
opportunity, Retirement.

    Signed at Washington, DC this 4th day of March, 1997.
Gilbert F. Casellas,
Chairman.
    It is proposed to amend chapter XIV of title 29 of the Code of 
Federal Regulations as follows:

PART 1625--AGE DISCRIMINATION IN EMPLOYMENT ACT

    1. The authority citation for part 1625 continues to read as 
follows:

    Authority: 81 Stat. 602; 29 U.S.C. 621, 5 U.S.C. 301, 
Secretary's Order No. 10-68; Secretary's Order No. 11-68; sec. 12, 
29 U.S.C. 631, Pub. L. 99-592, 100 Stat. 3342; sec. 2, Reorg. Plan 
No. 1 of 1978, 43 FR 19807.

    2. In part 1625, Sec. 1625.22 would be added to Subpart B--
Substantive Regulations to read as follows:


Sec. 1625.22  Waivers of rights and claims under the ADEA.

    (a) Introduction. (1) Congress amended the ADEA in 1990 to clarify 
the prohibitions against discrimination on the basis of age. In Title 
II of OWBPA, Congress addressed waivers of rights and claims under the 
ADEA, amending section 7 of the ADEA by adding a new subsection (f).
    (2) Section 7(f)(1) of the ADEA expressly provides that waivers may 
be valid and enforceable under the ADEA only if the waiver is ``knowing 
and voluntary''. Sections 7(f) (1) and 7(f) (2) of the ADEA set out the 
minimum requirements for determining whether a waiver is knowing and 
voluntary.
    (3) Other facts and circumstances may bear on the question of 
whether the waiver is knowing and voluntary, as, for example, if there 
is a material mistake, omission, or misstatement in the information 
furnished by the employer to an employee in connection with the waiver.
    (b) Wording of waiver agreements. (1) Section 7(f)(1)(A) of the 
ADEA provides, as part of the minimum requirements for a knowing and 
voluntary waiver, that:

    The waiver is part of an agreement between the individual and 
the employer that is written in a manner calculated to be understood 
by such individual, or by the average individual eligible to 
participate.

    (2) The entire waiver agreement must be in writing.
    (3) Waiver agreements must be drafted in plain language geared to 
the level of understanding of the individual party to the agreement or 
individuals eligible to participate. Employers should take into account 
such factors as the level of comprehension and education of typical 
participants. Consideration of these factors usually will require the 
limitation or elimination of technical jargon and of long, complex 
sentences.
    (4) The waiver agreement must not have the effect of misleading, 
misinforming, or failing to inform participants and affected 
individuals. Any advantages or disadvantages described shall be 
presented without either exaggerating the benefits or minimizing the 
limitations.
    (5) Section 7(f)(1)(H) of the ADEA, relating to exit incentive or 
other employment termination programs offered to a group or class of 
employees, also contains a requirement that information be conveyed 
``in writing in a manner calculated to be understood by the average 
plan participant.'' The same standards applicable to the similar 
language in section 7(f)(1)(A) of the ADEA apply here as well.
    (6) Section 7(f)(1)(B) of the ADEA provides, as part of the minimum 
requirements for a knowing and voluntary waiver, that ``the waiver 
specifically refers to rights or claims under this Act.'' Pursuant to 
this subsection, the waiver agreement must refer to the Age 
Discrimination in Employment Act (ADEA) by name in connection with the 
waiver.
    (7) Section 7(f)(1)(E) of the ADEA requires that an individual must 
be ``advised in writing to consult with an attorney prior to executing 
the agreement.''
    (c) Waiver of future rights. (1) Section 7(f)(1)(C) of the ADEA 
provides that:

    A waiver may not be considered knowing and voluntary unless at a 
minimum * * * the individual does not waive rights or claims that 
may arise after the date the waiver is executed.

    (2) The waiver of rights or claims that arise following the 
execution of a waiver is prohibited. However, section 7(f)(1)(C) of the 
ADEA does not bar, in a waiver that otherwise is consistent with 
statutory requirements, the enforcement of agreements to perform future 
employment-related actions such as the employee's agreement to retire 
or otherwise terminate employment at a future date.
    (d) Consideration. (1) Section 7(f)(1)(D) of the ADEA states that:

    A waiver may not be considered knowing and voluntary unless at a 
minimum * * * the individual waives rights or claims only in 
exchange for consideration in addition to anything of value to which 
the individual already is entitled.

    (2) ``Consideration in addition'' means anything of value in 
addition to that to which the individual is already entitled in the 
absence of a waiver.
    (3) If a benefit or other thing of value was eliminated in 
contravention of law or contract, express or implied, the subsequent 
offer of such benefit or thing of value in connection with a waiver 
will not constitute ``consideration'' for purposes of section 7(f)(1) 
of the ADEA. Whether such elimination as to one employee or group of 
employees is in contravention of law or contract as to other employees, 
or to that individual employee at some later time, may vary depending 
on the facts and circumstances of each case.
    (4) An employer is not required to give a person age 40 or older a 
greater amount of consideration than is given to a person under the age 
of 40, solely because of that person's membership in the protected 
class under the ADEA.
    (e) Time periods. (1) Section 7(f)(1)(F) of the ADEA states that:

    A waiver may not be considered knowing and voluntary unless at a 
minimum * * *
    (i) The individual is given a period of at least 21 days within 
which to consider the agreement; or
    (ii) If a waiver is requested in connection with an exit 
incentive or other employment termination program offered to a group 
or class of employees, the individual is given a period of at least 
45 days within which to consider the agreement.


[[Page 10791]]


    (2) Section 7(f)(1)(G) of the ADEA states:

    A waiver may not be considered knowing and voluntary unless at a 
minimum * * * the agreement provides that for a period of at least 7 
days following the execution of such agreement, the individual may 
revoke the agreement, and the agreement shall not become effective 
or enforceable until the revocation period has expired.

    (3) The term ``exit incentive or other employment termination 
program'' includes both voluntary and involuntary programs.
    (4) The 21 or 45 day period runs from the date of the employer's 
final offer. Material changes to the final offer restart the running of 
the 21 or 45 day period; changes made to the final offer that are not 
material do not restart the running of the 21 or 45 day period. The 
parties may agree that changes, whether material or immaterial, do not 
restart the running of the 21 or 45 day period.
    (5) The 7 day revocation period cannot be shortened by the parties, 
by agreement or otherwise.
    (6) An employee may sign a release prior to the end of the 21 or 45 
day time period, thereby commencing the mandatory 7 day revocation 
period. This is permissible as long as the employee's decision to 
accept such shortening of time is knowing and voluntary and is not 
induced by the employer through fraud, misrepresentation, a threat to 
withdraw or alter the offer prior to the expiration of the 21 or 45 day 
time period, or by providing different terms to employees who sign the 
release prior to the expiration of such time period. However, if an 
employee signs a release before the expiration of the 21 or 45 day time 
period, the employer may expedite the processing of the consideration 
provided in exchange for the waiver.
    (f) Informational requirements.
    (1) Introduction. (i) Section 7(f)(1)(H) of the ADEA provides that:

    A waiver may not be considered knowing and voluntary unless at a 
minimum * * * if a waiver is requested in connection with an exit 
incentive or other employment termination program offered to a group 
or class of employees, the employer (at the commencement of the 
period specified in subparagraph (F)) [which provides time periods 
for employees to consider the waiver] informs the individual in 
writing in a manner calculated to be understood by the average 
individual eligible to participate, as to--
    (i) Any class, unit, or group of individuals covered by such 
program, any eligibility factors for such program, and any time 
limits applicable to such program; and
    (ii) The job titles and ages of all individuals eligible or 
selected for the program, and the ages of all individuals in the 
same job classification or organizational unit who are not eligible 
or selected for the program.

    (ii) Section 7(f)(1)(H) of the ADEA addresses two principal issues: 
to whom must information be provided, and what information must be 
disclosed to such individuals.
    (iii)(A) Section 7(f)(1)(H) of the ADEA references two types of 
``programs'' under which employers seeking waivers must make written 
disclosures: ``exit incentive programs'' and ``other employment 
termination programs.'' Usually an ``exit incentive program'' is a 
voluntary program offered to a group or class of employees where such 
employees are offered consideration in addition to anything of value to 
which the individuals are already entitled (hereinafter in this 
section, ``additional consideration'') in exchange for their decision 
to resign voluntarily and sign a waiver. Usually ``other employment 
termination program'' refers to a group or class of employees who were 
involuntarily terminated and who are offered additional consideration 
in return for their decision to sign a waiver.
    (B) The question of the existence of a ``program'' will be decided 
based upon the facts and circumstances of each case. A ``program'' 
exists when an employer offers additional consideration for the signing 
of a waiver pursuant to an exit incentive or other employment 
termination (e.g., a reduction in force) to two or more employees. 
Typically, an involuntary termination program is a standardized formula 
or package of benefits that is available to two or more employees, 
while an exit incentive program typically is a standardized formula or 
package of benefits designed to induce employees to sever their 
employment voluntarily. In both cases, the terms of the programs 
generally are not subject to negotiation between the parties.
    (C) Regardless of the type of program, the scope of the terms 
``class,'' ``unit,'' ``group,'' ``job classification,'' and 
``organizational unit'' is determined by examining the ``decisional 
unit'' at issue. (See paragraph (f)(3) of this section, ``The 
Decisional Unit,'' below).
    (D) A ``program'' for purposes of the ADEA need not constitute an 
``employee benefit plan'' for purposes of the Employee Retirement 
Income Security Act of 1974 (ERISA). An employer may or may not have an 
ERISA severance plan in connection with its OWBPA program.
    (iv) The purpose of the informational requirements is to provide an 
employee with enough information regarding the program to allow the 
employee to make an informed choice whether or not to sign a waiver 
agreement.
    (2) To whom must the information be given. The required information 
must be given to each person in the decisional unit who is asked to 
sign a waiver agreement.
    (3) The decisional unit. (i)(A) The terms ``class,'' ``unit,'' or 
``group'' in section 7(f)(1)(H)(i) of the ADEA and ``job classification 
or organizational unit'' in section 7(f)(1)(H)(ii) of the ADEA refer to 
examples of categories or groupings of employees affected by a program 
within an employer's particular organizational structure. The terms are 
not meant to be an exclusive list of characterizations of an employer's 
organization.
    (B) When identifying the scope of the ``class, unit, or group,'' 
and ``job classification or organizational unit,'' an employer should 
consider its organizational structure and decision-making process. A 
``decisional unit'' is that portion of the employer's organizational 
structure from which the employer chose the persons who would be 
offered consideration for the signing of a waiver and those who would 
not be offered consideration for the signing of a waiver. The term 
``decisional unit'' has been developed to reflect the process by which 
an employer chose certain employees for a program and ruled out others 
from that program.
    (ii)(A) The variety of terms used in section 7(f)(1)(H) of the ADEA 
demonstrates that employers often use differing terminology to describe 
their organizational structures. When identifying the population of the 
decisional unit, the employer acts on a case-by-case basis, and thus 
the determination of the appropriate class, unit, or group, and job 
classification or organizational unit for purposes of section 
7(f)(1)(H) of the ADEA also must be made on a case-by-case basis.
    (B) The examples in paragraph (f)(3)(iii) of this section 
demonstrate that in appropriate cases some subgroup of a facility's 
work force may be the decisional unit. In other situations, it may be 
appropriate for the decisional unit to comprise several facilities. 
However, as the decisional unit is typically no broader than the 
facility, in general the disclosure need be no broader than the 
facility. ``Facility'' as it is used throughout this section generally 
refers to place or location. However, in some circumstances terms such 
as ``school,'' ``plant,'' or ``complex'' may be more appropriate.
    (C) Often, when utilizing a program an employer is attempting to 
reduce its workforce at a particular facility in an effort to eliminate 
what it deems to be excessive overhead, expenses, or costs from its 
organization at that facility. If

[[Page 10792]]

the employer's goal is the reduction of its workforce at a particular 
facility and that employer undertakes a decision-making process by 
which certain employees of the facility are selected for a program, and 
others are not selected for a program, then that facility generally 
will be the decisional unit for purposes of section 7(f)(1)(H) of the 
ADEA.
    (D) However, if an employer seeks to terminate employees by 
exclusively considering a particular portion or subgroup of its 
operations at a specific facility, then that subgroup or portion of the 
workforce at that facility will be considered the decisional unit.
    (E) Likewise, if the employer analyzes its operations at several 
facilities, specifically considers and compares ages, seniority 
rosters, or similar factors at differing facilities, and determines to 
focus its workforce reduction at a particular facility, then by the 
nature of that employer's decision-making process the decisional unit 
would include all considered facilities and not just the facility 
selected for the reductions.
    (iii) The following examples are not all-inclusive and are meant 
only to assist employers and employees in determining the appropriate 
decisional unit. Involuntary reductions in force typically are 
structured along one or more of the following lines:
    (A) Facility-wide: Ten percent of the employees in the Springfield 
facility will be terminated within the next ten days;
    (B) Division-wide: Fifteen of the employees in the Computer 
Division will be terminated in December;
    (C) Department-wide: One-half of the workers in the Keyboard 
Department of the Computer Division will be terminated in December;
    (D) Reporting: Ten percent of the employees who report to the Vice 
President for Sales, wherever the employees are located, will be 
terminated immediately;
    (E) Job Category: Ten percent of all accountants, wherever the 
employees are located, will be terminated next week.
    (iv) In the examples in paragraph (f)(3)(iii) of this section, the 
decisional units are, respectively: (A) the Springfield facility; (B) 
the Computer Division; (C) the Keyboard Department; (D) all employees 
reporting to the Vice President for Sales; and (E) all accountants.
    (v) While the particular circumstances of each termination program 
will determine the decisional unit, the following examples also may 
assist in determining when the decisional unit is other than the entire 
facility:
    (A) A number of small facilities with interrelated functions and 
employees in a specific geographic area may comprise a single 
decisional unit;
    (B) If a company utilizes personnel for a common function at more 
than one facility, the decisional unit for that function (i.e., 
accounting) may be broader than the one facility;
    (C) A large facility with several distinct functions may comprise a 
number of decisional units; for example, if a single facility has 
distinct internal functions with no employee overlap (i.e., 
manufacturing, accounting, human resources), and the program is 
confined to a distinct function, a smaller decisional unit may be 
appropriate.
    (vi)(A) For purposes of this section, higher level review of 
termination decisions generally will not change the size of the 
decisional unit unless the reviewing process alters its scope. For 
example, review by the Human Resources Department to monitor compliance 
with discrimination laws does not affect the decisional unit. 
Similarly, when a regional manager in charge of more than one facility 
reviews the termination decisions regarding one of those facilities, 
the review does not alter the decisional unit, which remains the one 
facility under consideration.
    (B) However, if the regional manager in the course of review 
determines that persons in other facilities should also be considered 
for termination, the decisional unit becomes the population of all 
facilities considered. Further, if, for example, the regional manager 
and his three immediate subordinates jointly review the termination 
decisions, taking into account more than one facility, the decisional 
unit becomes the populations of all facilities considered.
    (vii) This regulatory section is limited to the requirements of 
section 7(f)(1)(H) and is not intended to affect the scope of discovery 
or of substantive proceedings in the processing of charges of violation 
of the ADEA or in litigation involving such charges.
    (4) Presentation of information. (i) The information provided must 
be in writing and must be written in a manner calculated to be 
understood by the average individual eligible to participate.
    (ii) Information regarding ages should be broken down according to 
the age of each person eligible or selected for the program and each 
person not eligible or selected for the program. The use of age bands 
broader than one year (such as ``age 20-30'') does not satisfy this 
requirement.
    (iii) In a termination of persons in several established grade 
levels and/or other established subcategories within a job category or 
job title, the information shall be broken down by grade level or other 
subcategory.
    (iv) If an employer in its disclosure combines information 
concerning both voluntary and involuntary terminations, the employer 
shall present the information in a manner that distinguishes between 
voluntary and involuntary terminations.
    (v) If the terminees are selected from a subset of a decisional 
unit, the employer must still disclose information for the entire 
population of the decisional unit. For example, if the employer decides 
that a 10% RIF in the Accounting Department will come from the 
accountants whose performance is in the bottom one-third of the 
Division, the employer still must disclose information for all 
employees in the Accounting Department, even those who are the highest 
rated.
    (vi) An involuntary termination program in a decisional unit may 
take place in successive increments over a period of time. Special 
rules apply to this situation. Specifically, information supplied with 
regard to the involuntary termination program should be cumulative, so 
that later terminees are provided ages and job titles or job 
categories, as appropriate, for all persons in the decisional unit at 
the beginning of the program and all persons terminated to date. There 
is no duty to supplement the information given to earlier terminees so 
long as the disclosure, at the time it is given, conforms to the 
requirements of this section.
    (vii) The following example demonstrates one way in which the 
required information could be presented to the employees. (This example 
is not presented as a prototype notification agreement that 
automatically will comply with the ADEA. Each information disclosure 
must be structured based upon the individual case, taking into account 
the corporate structure, the population of the decisional unit, and the 
requirements of section 7(f)(1)(H)) of the ADEA: Example: Y Corporation 
lost a major construction contract and determined that it must 
terminate 10% of the employees in the Construction Division. Y decided 
to offer all terminees $20,000 in severance pay in exchange for a 
waiver of all rights. The waiver provides the section 7(f)(1)(H) of the 
ADEA information as follows:
    (A) The decisional unit is the Construction Division.

[[Page 10793]]

    (B) All persons in the Construction Division are eligible for the 
program. All persons who are being terminated in our November RIF are 
selected for the program.
    (C) All persons who are being offered consideration under a waiver 
agreement must sign the agreement and return it to the Personnel Office 
within 45 days after receiving the waiver. Once the signed waiver is 
returned to the Personnel Office, the employee has 7 days to revoke the 
waiver agreement.
    (D) The following is a listing of the ages and job titles of 
persons in the Construction Division who were and were not selected for 
termination and the offer of consideration for signing a waiver:

------------------------------------------------------------------------
                                                   Number     Number not
            Job title                  Age        selected     selected 
------------------------------------------------------------------------
(1) Mechanical Engineers, I......           25           21           48
                                            26           11           73
                                                                        
*                  *                  *                  *              
                  *                  *                  *               
                                            63            4           18
                                            64            3           11
(2) Mechanical Engineers, II.....           28            3           10
                                            29           11           17
                                           (<SUP>1)                          
(3) Structural Engineers, I......           21            5            8
                                           (<SUP>1)                          
(4) Structural Engineers, II.....           23            2            4
                                           (<SUP>1)                          
(5) Purchasing Agents............           26           10           11
                                           (<SUP>1)                          
------------------------------------------------------------------------
\1\ etc., for all ages.                                                 

    (g) Waivers settling charges and lawsuits. (1) Section 7(f)(2) of 
the ADEA provides that:

    A waiver in settlement of a charge filed with the Equal 
Employment Opportunity Commission, or an action filed in court by 
the individual or the individual's representative, alleging age 
discrimination of a kind prohibited under section 4 or 15 may not be 
considered knowing and voluntary unless at a minimum--
    (A) Subparagraphs (A) through (E) of paragraph (1) have been 
met; and
    (B) The individual is given a reasonable period of time within 
which to consider the settlement agreement.

    (2) The language in section 7(f)(2) of the ADEA, 
``discrimination of a kind prohibited under section 4 or 15'' refers 
to allegations of age discrimination of the type prohibited by the 
ADEA.
    (3) The standards set out in section (f) of these regulations 
for complying with the provisions of section 7(f)(1)(A)-(E) of the 
ADEA also will apply for purposes of complying with the provisions 
of section 7(f)(2)(A) of the ADEA.
    (4) The term ``reasonable time within which to consider the 
settlement agreement'' means reasonable under all the circumstances, 
including whether the individual is represented by counsel or has 
the assistance of counsel.
    (5) However, while the time periods under section 7(f)(1) of the 
ADEA do not apply to subsection 7(f)(2) of the ADEA, a waiver 
agreement under this subsection that provides an employee the time 
periods specified in section 7(f)(1) of the ADEA will be considered 
``reasonable'' for purposes of section 7(f)(2)(B) of the ADEA.
    (6) A waiver agreement in compliance with this section that is 
in settlement of an EEOC charge does not require the participation 
or supervision of EEOC.
    (h) Burden of proof. In any dispute that may arise over whether any 
of the requirements, conditions, and circumstances set forth in section 
7(f) of the ADEA, subparagraph (A), (B), (C), (D), (E), (F), (G), or 
(H) of paragraph (1), or subparagraph (A) or (B) of paragraph (2), have 
been met, the party asserting the validity of a waiver shall have the 
burden of proving in a court of competent jurisdiction that a waiver 
was knowing and voluntary pursuant to paragraph (1) or (2) of section 
7(f) of the ADEA.
    (i) EEOC's enforcement powers. (1) Section 7(f)(4) of the ADEA 
states:

    No waiver agreement may affect the Commission's rights and 
responsibilities to enforce [the ADEA]. No waiver may be used to 
justify interfering with the protected right of an employee to file 
a charge or participate in an investigation or proceeding conducted 
by the Commission.

    (2) No waiver agreement may include any provision prohibiting any 
individual from:
    (i) Filing a charge or complaint, including a challenge to the 
validity of the waiver agreement, with EEOC, or
    (ii) Participating in any investigation or proceeding conducted by 
EEOC.
    (3) No waiver agreement may include any provision imposing any 
condition precedent, any penalty, or any other limitation adversely 
affecting any individual's right to:
    (i) File a charge or complaint, including a challenge to the 
validity of the waiver agreement, with EEOC, or
    (ii) Participate in any investigation or proceeding conducted by 
EEOC.
    (j) Effective date of this section. (1) This section is effective 
[30 days after publication of the final rule in the Federal Register.]
    (2) This section applies to waivers offered by employers on or 
after the effective date specified in paragraph (j)(1) of this section.
    (3) No inference is to be drawn from this section regarding the 
validity of waivers offered prior to the effective date.
    (k) Statutory authority. The regulations in this section are 
legislative regulations issued pursuant to section 9 of the ADEA and 
Title II of OWBPA.
[FR Doc. 97-5745 Filed 3-7-97; 8:45 am]
BILLING CODE 6570-01-P