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JUDICIAL UPDATES IBM's Waiver of Rights or Claims Arising Under the ADEA Was Unenforceable Because It Was Not "Knowing and Voluntary" When IBM began a workforce reduction plan, it offered each employee selected for termination severance pay and certain benefits in exchange for signing a document entitled “Microelectronics Resource Action General Release and Covenant Not to Sue” (“MERA Agreement”). In Syverson v. IBM (Ninth Circuit Court of Appeals, Case No. CV-03-04529-RMW), the plaintiffs were former IBM employees who signed the MERA Agreement. They filed a lawsuit alleging age discrimination. IBM filed a motion to dismiss, arguing that the MERA Agreement prohibited the action. The issue on appeal was whether the MERA Agreement was enforceable under the Older Workers Benefit Protection Act, which states that employees may not waive rights or claims arising under the ADEA unless the waiver is “knowing and voluntary.” To qualify as “knowing and voluntary,” a waiver included in an agreement between an employer and its employees must, among other things, be “written in a manner calculated to be understood” by the average employee eligible to participate in the agreement. The court held that IBM’s MERA Agreement was unenforceable because the words “release” and “covenant not to sue” were not explained in the Agreement, and caused confusion among employees over whether ADEA claims were in fact covered by the release or excepted from it. There is a legal distinction between these terms that the average lay employee would not understand. It was not sufficient that the document recommended the employees seek advice from counsel. The Court held that there is an independent statutory requirement that waivers of ADEA rights and claims be written in a manner calculated to be understood by the average affected employee, and the MERA Agreement failed to meet that standard.
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