QUESTION: After more than 20 years as a manager, I lost my job in a mass layoff in December. The company offered me a severance package, provided I signed a release prohibiting me from working for the competition or suing my former employer. I am in my early 50s, and needing to provide for my family, I signed. A week later the company rehired a much younger manager who had been with the company for just a few years and had been earning considerably less than I was. He is also friends with one of the supervisors. Can an employer legally call back a much younger employee over a senior one? And how much legal weight do these severance agreements have? In other words, can I still sue even though I signed the severance agreement?
ANSWER: Rehiring your younger colleague, though unfair, could be legal.
In the absence of a union contract, "a company is generally free to rehire whomever it wants, at its discretion, so long as it is not discriminating against someone because of race, religion, age or another protected category," said attorney Louis Pechman, a partner at Berke-Weiss & Pechman in Manhattan.
"There might be an issue here of whether the failure to rehire you was age discrimination," Pechman said. "However, the fact that someone else is hired because they have a lower salary or is a friend of the boss might make the situation unfair but not necessarily unlawful."
On the validity of the signed release, it is important to note that employees over the age of 40 have some protections under the Older Workers Benefit Protection Act, Pechman said.
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That act states that severance packages that condition receiving benefits on signing an agreement not to sue must advise the workers of their right to have their attorney review the agreement and must be written in plain English, he said. And the agreement cannot waive employees' rights in matters that arise after the date on the signed document.
Also, in a group layoff situation like yours, Pechman said, the severance agreements must allow an employee 45 days to consider the documents; must provide a seven-day revocation period after the agreement is signed, and must also provide the ages and job titles of persons selected and not selected for the layoff.
As for the noncompete agreement, the enforceability depends on a variety of factors that may include the nature of your job; whether you perform unique or extraordinary services; whether you possess any trade secrets; the length of time and geographic scope of the restriction, and whether you are paid extra compensation in the agreement for not competing.
"In my experience," Pechman said, "enforceability of noncompetition agreements is sometimes difficult to predict as the courts weigh the legitimate business interests of the company and whether the restriction imposes an undue hardship on the employee."
And he added, "That, of course, is a very fact-specific inquiry."
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ON THE WEB:
U.S. Equal Employment Opportunity Commission facts on age discrimination: http://www.eeoc.gov/laws/types/age.cfm
