Hunton Employment & Labor Perspectives

On December 7, 2015, the United States District Court for the Western District of Pennsylvania permitted a plaintiff to pursue discrimination claims alleging that she had been forced to retire as a result of her age and disability status—despite the fact that she had voluntarily agreed to retire as part of a union grievance settlement. This case, Melan v. Belle Vernon Area School District, serves as a warning to employers settling grievances under a collective bargaining agreement that implicate employees’ federally protected rights.

While Andrea Melan was employed as an elementary school teacher in the Belle Vernon Area School District, she received an “unsatisfactory” performance rating and was placed on an improvement plan. Melan sought assistance from her union, which filed a grievance with the District with respect to the unsatisfactory rating and improvement plan. Following the filing of Melan’s grievance, the District and Melan entered into a Settlement Agreement. As part of this Agreement, Melan agreed to submit an irrevocable letter of retirement to the District, to take effect at the end of the school year. Pursuant to the Agreement, Melan “acknowledge[d] that [she] underst[ood] this Agreement and enter[ed] into it voluntarily.” The Agreement, however, did not include a waiver or release provision.

Despite the existence of this Agreement, approximately eight months after her resignation, Melan filed a complaint alleging that the District had violated the Age Discrimination in Employment Act (“ADEA”), the Americans with Disabilities Act, and the Pennsylvania Human Relations Act by discriminatorily forcing her to retire as a result of her age and/or disability status. In its Motion for Summary Judgment, the District argued it was “entitled to judgment as a matter of law [because Melan] executed a Settlement and Release Agreement…which describes the circumstances surrounding [her] election to retire from the District as ‘knowing and voluntary.’” The court, however, did not agree, and in denying the District’s motion for summary judgment has allowed Melan to bring her discrimination claims despite the existence of the Agreement.

In its decision, the court reiterated the stringent requirements of an effective waiver of rights under the ADEA. Pursuant to the Older Workers Benefit Protection Act of 1990 (“OWBPA”), plaintiffs may only waive their rights under the ADEA if such waiver is knowing and voluntary. In order to constitute a “knowing and voluntary” waiver, an agreement must satisfy seven specific requirements:
• The waiver must be written in a manner that can be easily understood;
• The waiver must specifically refer to rights or claims arising under the ADEA;
• The waiver must advise the employee in writing to consult an attorney before accepting the agreement;
• The waiver must provide the employee with at least 21 days to consider the offer;
• The waiver must give an employee seven days to revoke her signature;
• The waiver must not include rights and claims that may arise after the date on which the waiver is executed; and
• The waiver must be supported by consideration in addition to that which the employee is already entitled.

Because the Agreement between Melan and the District did not satisfy these seven requirements, the court held that the Agreement did not preclude Melan’s age discrimination claim.

Moreover, given that the Agreement did not contain any general release provision, the court also concluded that the Agreement did not necessarily preclude Melan’s other discrimination claims—even though it was entered into voluntarily. In other words, the fact that a plaintiff retired via a “voluntary” agreement does not necessarily mean that she cannot establish a prima facie case of discrimination, and, according to the court, such an argument is premature at the summary judgment stage.

This case demonstrates the importance of carefully drafting grievance settlement agreements that implicate an employee’s federally protected rights. A standard settlement agreement may not include the explicit language necessary to constitute a valid waiver of an employee’s rights under the ADEA and other employment statutes. As a result, when drafting a grievance settlement agreement that may implicate such employment statutes, employers should consult with legal counsel to ensure that the agreement includes adequate waiver and release provisions. By ensuring that all grievance settlement agreements met the strict requirements required under the OWBPA and other statutes, employers reduce the risk that an employee will later be able to bring legal claims related to the agreement’s subject matter.