U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of Federal Operations P.O. Box 77960 Washington, DC 20013 Woodrow F.,1 Complainant, v. Mary Jo White, Chair, Securities and Exchange Commission, Agency. Appeal No. 0120162241 Agency No. 00008-2016 DECISION On June 27, 2016, Complainant filed a timely appeal with the Equal Employment Opportunity Commission (EEOC or Commission) from a final Agency determination (FAD) dated June 10, 2016, finding that it was in compliance with the terms of the settlement agreement into which the parties entered and that the settlement agreement was valid. See 29 C.F.R. § 1614.402; 29 C.F.R. § 1614.504(b); and 29 C.F.R. § 1614.405. BACKGROUND At the time of events giving rise to this case, Complainant worked as the Associate Regional Director (Enforcement) at an Agency Regional Office. Complainant was a managing attorney supervising 52 staff members, including 45 attorneys. Complainant contacted an Agency EEO Counselor to enter the EEO process alleging race, sex, and age discrimination, and his case was assigned an informal complaint number. The Settlement Agreement On January 12, 2016, Complainant and the Agency entered into a settlement agreement to resolve the above matter. The settlement agreement provided, in pertinent part, that: 2. [Complainant]... a. Agrees that, on or before March 31, 2016, he will either elect to: (1) voluntarily retire or resign, with an effective date on or before September 30, 2016; or (2) accept a change in position effective September 30, 2016, from a... Senior Officer to either a... SK-0905-16 Attorney-Advisor or a... SK-0905-16 Trial Attorney2 as described below in paragraphs 2(c)(ii) and 3(c)(ii).... [P]rior to September 30, 2016, he may advance the date of his retirement/resignation or change in position to a date before September 30, 2016.... c. Agrees that if he chooses option two in paragraph 2(a)... (i.e., agrees to voluntarily change positions)... ii. ...he will serve as either the Regional Counsel (SK-0905-16 Attorney Advisor) reporting directly to the Regional Director..., or as a Senior Trial Counsel (SK-0905-16 Trial Attorney) reporting directly to the Regional Trial Counsel [both in the Regional Office where Complainant works]. Should the Employee be selected for a vacancy in another office, he may transfer to that office.... e. Agrees that he will receive a 3.5 rating on his fiscal year 2015 performance appraisal... and will receive a bonus and merit increase commensurate with that rating.... 3. [The Agency]... a. Agrees, in lieu of pursuing any action under 5 C.F.R. part 432 based on the Employee's performance to date [to give Complainant the options in paragraph 2(a)].... b. If the Employee choses option one in paragraph 2(a)...(i.e., decides to retire or resign...), the Employer agrees: ii. ... To pay the Employee a lump sum of $100,000 no earlier than January 1, 2017, and no later than January 31, 2017.... c. If the Employee chooses option two in paragraph 2(a)...(i.e., agrees to voluntarily change [positions]..., the Employer agrees: iii. That no earlier than May 31, 2016, the Regional Director will issue an announcement to the... Regional Office regarding the Employee's change in position.... The Regional Director... and Senior Headquarters Enforcement leadership will not indicate to SEC staff who have no need to know the information that the Employee's new position was the result of any performance issues and will not disclose the Employee's change in position to SEC staff who have no need to know the information prior to the announcement.... 5. Statement of Understanding. The Parties acknowledge that they have read this entire Agreement, that they fully understand this Agreement, and that they voluntarily enter into this Agreement of their own free will, without duress or coercion, and after the opportunity to consult with counsel.... 14. ADEA Waiver. [Set forth statutory requirements under the Older Workers Benefit Protection Act (OWBPA) to waive an employment claim under the Age Discrimination in Employment Act of 1967 (ADEA), as amended, 29 U.S.C. § 621 et seq., including]:... d. Acknowledges that he is fully aware of his right to discuss any and all aspects of this matter with an attorney of his own choosing; e. Is being given 21 calendar days to consider this Agreement. In the event the Employee executes and returns this Agreement within 21 days after the date of delivery to the Employee, the Employee acknowledges that the decision to do so was voluntary and that the Employee had the opportunity to consider this Agreement for the entire 21-day period; and f. May revoke this Agreement within 7 calendar days after it is executed.... On March 31, 2016, Complainant chose the option of working as Senior Trial Counsel, reporting to the Regional Trial Counsel, effective September 30, 2016. Settlement Process The Regional Director stated the following. He became Regional Director in February 2015, and starting around the summer of 2015, began discussing with Complainant significant deficiencies in his performance, which he specified, and his deficiencies continued throughout 2015. He advised Complainant that his performance was unacceptable, he should be put on a Performance Improvement Plan (PIP), and that the matter could be settled by him accepting a demotion to an SK-16 position. Thereafter, on October 24, 2015, the Regional Director made a written settlement offer to Complainant. It contained OWBPA waiver language. Shortly thereafter, Complainant initiated EEO counseling, and with some help by a mediator the parties engaged in active settlement negotiations. On December 22, 2015, the Agency made a new settlement offer, which contained significant changes in terms and also had OWBPA waiver language. Complainant did not accept the offer, and negotiations continued, resulting in the Agency making at least four more settlement offers to Complainant - on January 7 (two offers), 11 and 12, 2016. When the mediator forwarded the Agency's first January 7, offer to Complainant, she wrote to him "...please remember that you must decide whether or not to sign by Tuesday, Jan. 12. That is the 21st day after you received the Agreement." This was counting from December 22, 2015. When the mediator forwarded the Agency's January 11 offer to Complainant, she wrote to him, as she had been advised by Agency counsel "[a]s you know, Tuesday is the last day to sign." Complainant replied to the mediator the same day that "[m]y read of the law is that the 21 days is a minimum period for me to review it for it to be legally valid. It isn't a maximum time for us to reach an agreement. Are they telling you something different?..." The mediator responded on January 12, 2016, that "[t]he way they understand it is that there are 21 days for you to consider signing. After that the offer is over. Normally people only have a limited time to consider these agreements, but under the ADEA you have 21 days...." Complainant signed the last offer on January 12, 2016, reaching a settlement. Various changes in settlement terms were made after the December 22, 2015, offer, most or all at Complainant's behest. They included: * Adding the option of a demotion to a second position - to Senior Trial Counsel (Trial Attorney) reporting directly to the Regional Trial Counsel; * Adding that Complainant would receive a bonus and merit increase commensurate with his rating of 3.5 for fiscal year 2015; * Moving the formal announcement about Complainant stepping down from April 2016 to May 31, 2016, and expanding the people prohibited from making a disclosure about Complainant's change in status to Senior Headquarters Enforcement leadership; * Moving the payment of $100,000, if Complainant chose the option to retire, to within 60 days of the effective date of his retirement (by November 29, 2015) to no earlier than January 1, 2017, and no later than January 31, 2017. * Various provisions clarifying Complainant's entitlements and rights. Notices of Breach In May 2016, Complainant notified the Agency that it breached term 3(c)(iii) when around March 2016, the Regional Director allegedly prematurely disclosed to Complainant's peer, the Associate Regional Director (Examinations), that Complainant would be stepping down and replaced by his own subordinate Assistant Director. At some point Complainant also alleged that the Regional Counsel prematurely advised this subordinate that Complainant would be stepping down.3 Complainant also contended that he signed the settlement agreement under duress, and the Agency violated the OWBPA. The FAD In determining there was no breach, the Agency found that the evidence did not show that the premature disclosures occurred, and that even if one was made to Complainant's above peer, he had reason to know. The Agency found that even if it did not comply with the non-disclosure provision, this would not be a substantial breach. The Agency found that it did not use duress to obtain Complainant's signature on the settlement agreement. It reasoned that the potential PIP was the result of alleged performance deficiencies, not a means to obtain his signature. It also found that it did not violate the OWBPA. Appeal Arguments In addition to reiterating his prior contentions, Complainant, through counsel, argues that the Agency misrepresented or misinterpreted when to start counting the 21 day consideration period, making the contract void since when coercion, misrepresentation, misinterpretation, or mistake occurs during the formation of the contract, assent to the agreement is impossible. Complainant submitted two more briefs, the first which he characterized as supplemental, the second a reply. He makes arguments about the applicability of OWBPA regulations 29 C.F.R. § 1625.22(e)(4) & (6), and argues that because the Agency violated the OWBPA, it is required to reinstate his entire EEO claim, even though age was not the only bases. In opposition to Complainant's appeal the Agency supports the findings in its FAD, and argues that a finding of failure to comply with the OWBPA would only void the settlement agreement with regard to his ADEA claims. It argues that after filing his appeal brief within the extended time granted by this office, Complainant then filed his supplemental brief which should not be considered because it is untimely. The Agency asks that Complainant's reply brief be stricken, which Complainant opposes. ANALYSIS As an initial matter, we exercise our discretion to consider Complainant's supplemental brief. It was filed about nine days after his initial brief, and the Agency fully responded thereto. We need not decide whether to consider the reply brief since no new cogent arguments were made therein. Breach Claim EEOC Regulation 29 C.F.R. § 1614.504(a) provides that any settlement agreement knowingly and voluntarily agreed to by the parties, reached at any stage of the complaint process, shall be binding on both parties. The Commission has held that a settlement agreement constitutes a contract between the employee and the Agency, to which ordinary rules of contract construction apply. See Herrington v. Dep't of Def., EEOC Request No. 05960032 (December 9, 1996). The Commission has further held that it is the intent of the parties as expressed in the contract, not some unexpressed intention, that controls the contract's construction. Eggleston v. Dep't of Veterans Affairs, EEOC Request No. 05900795 (August 23, 1990). In ascertaining the intent of the parties with regard to the terms of a settlement agreement, the Commission has generally relied on the plain meaning rule. See Hyon O v. U.S. Postal Serv., EEOC Request No. 05910787 (December 2, 1991). This rule states that if the writing appears to be plain and unambiguous on its face, its meaning must be determined from the four corners of the instrument without resort to extrinsic evidence of any nature. See Montgomery Elevator Co. v. Building Eng'g Servs. Co., 730 F.2d 377 (5th Cir. 1984). Complainant has not shown that the Agency breached the settlement agreement. The Regional Director, Associate Regional Director (Examinations), and Complainant's former subordinate all explicitly denied that the alleged premature disclosures of Complainant's upcoming demotion and change in position occurred. While Complainant also argues that in their denial statements his former subordinate and the Associate Regional Director implicitly acknowledged that the Regional Director made premature disclosures to them, we disagree. Validity of Waiver of non-ADEA Claims Because the Commission favors the voluntary resolution of discrimination complaints, settlement agreements are not lightly set aside. This Commission examines coercion claims with much scrutiny. The party raising the defense of coercion must show that there was an improper threat of sufficient gravity to induce assent to the agreement and that the assent was in fact induced by the threat. Such a threat may be expressed, implied or inferred from words or conduct, and must convey an intention to cause harm or loss. Cannella v. Department of Veterans Affairs, EEOC Appeal No. 01995444 (Dec. 5, 2000). Here, the Agency was planning on placing Complainant on a PIP before the settlement negotiations started. Given this, the specter of a PIP overhanging the negotiations was not an improper threat. If coercion, misrepresentation, misinterpretation, or mistake occur during the formation of the contract, assent to the agreement is impossible, and the Commission will find the contract void. Id. This rule on assent goes to the character or essential terms of a proposed contract. Shuman v. Department of the Navy, EEOC Request No. 05900744 (July 20, 1990). We disagree that the parties differing interpretations of when the clock starts or restarts on the 21 consideration days shows there was no mutual assent when the contract was formed. The 21 day provision does not go the character of the settlement agreement and is not an essential term thereof. Rather it goes to whether, under the strict requirements of the OWBPA, Complainant had a reasonable amount of time to consider entering into the settlement agreement before waiving his ADEA rights. We note that the above findings also apply to Complainant's age claims. Validity of Waiver of Age Claims under the OWBPA In opposition to the appeal, the Agency argues that the applicable OWBPA language requires a "reasonable" amount of time to consider a settlement offer, not 21 days, and accordingly, the 21 day period does not apply in this case. The applicable portion of the OWBPA, 29 U.S.C. § 626(f)(2) [Section 7(f)(2)] provides in part that a waiver of age discrimination claims under the ADEA is not considered knowing and voluntary unless, at a minimum the Complainant is given a "reasonable" period of time in which to consider the agreement. Sheehy v. National Security Agency, EEOC Request No. 0520100403 (Feb. 2, 2012). This provision does not set out a specific time limit on what is reasonable. However, Commission regulations provide that while the time periods under Section 7(f)(1) of the ADEA (such as the 21 day consideration and 7 day revocation periods) do not apply to subsection Section 7(f)(2), a waiver agreement under Section 7(f)(2) that provides the time periods specified in Section 7(f)(1) will be considered "reasonable" for purposes of section 7(f)(2)(B) of the ADEA. 29 C.F.R. § 1625.22(g)(3) & (5). Smith v. Department of Veterans Affairs, EEOC Appeal No. 0120130700 (May 9, 2013). Accordingly, the 21 day period applies. EEOC Regulation 29 C.F.R. § 1625.22(e)(4) provides as follows. The 21 day period runs from the date of the employer's final offer. Material changes to the final offer restart the running of the 21 day period; changes made to the final offer that are not material do not restart the running of the 21 day period. The parties may agree that changes, whether material or immaterial, do not restart the running of the 21 day period. In its FAD, the Agency started the 21 day clock with its December 22, 2015, offer to Complainant. It found that this offer included all the "essential terms" of the later settlement agreement, and changes after December 22, 2015, appeared to be made largely at Complainant's behest, and given this, Complainant had 21 days to consider the essential terms of the settlement agreement prior to signing it on January 12, 2016. We agree with Complainant that material changes were made after the December 22, 2015 offer. At a minimum, these included adding the option of serving as the Senior Trial Counsel reporting directly to the Regional Trial Counsel and giving him a bonus commensurate this a 3.5 rating for fiscal year 2015 (January 7, offers), and giving him a merit increase commensurate with the 3.5 rating (January 11, offer). We note that a number of changes called for protections and actions which would be required regardless of the settlement agreement, and hence were not material changes. An example is agreeing not to retaliate for Complainant utilizing the EEO process. Since we have already identified some material changes, we need not analyze if other changes were material. Pointing to the last sentence in 29 C.F.R. § 1625.22(e)(4) in its FAD, the Agency noted that parties may agree that changes, whether material or immaterial, do not restart the 21 day period. It found that this occurred in settlement term 14(e) - which reads that if Complainant executes and returns the Agreement within 21 days after the date of delivery to him, he acknowledges that the decision to do so was voluntary and he had the opportunity to consider this Agreement for the entire 21-day period. We find it unlikely that this term waived the regulatory restart language, but we need not decide that here. As argued by Complainant in his supplemental brief, 29 C.F.R. § 1625.22(e)(6) provides that while an employee may sign a settlement prior to the end of the end of the 21 day period, this is permissible so long as the employee's decision is not induced by a threat to withdraw the offer prior to the expiration of the 21 day time period. Given the material changes made after the December 22, 2015 offer, the 21 day clock restarted on January 7, 2016, and again on at least January 11, 2016. The mediator, reciting the Agency's position, repeatedly warned Complainant from January 7, 2016 through January 12, 2016, that the last day to sign the settlement offer was January 12, 2016. Complainant's January 11, 2016, protestation on this was rebuffed. Following 29 C.F.R. § 1625.22(g)(3) & (5) and 29 C.F.R. § 1625.22(e)(4) & (6), we find that the Agency did not comply with the requirement that Complainant be given 21 days to consider the last settlement offer with a material change. We find that the prophylactic language in settlement term 14(e) that if Complainant executes and returns the Agreement within 21 days after it is delivered to him, he acknowledges that he had the opportunity to consider this Agreement for the entire 21-day period does not override the strong uncontroverted evidence to the contrary. Accordingly, we find that the Agency did not comply with the OWBPA.4 Settlement Agreement Invalidated only with Regard to ADEA Claims Failure to comply with OWBPA's stringent waiver safeguards will void the settlement agreement only with regard to the ADEA claims. Oubre v. Entergy Operations, Inc., 522 U.S. 422, 428 (1998); Sheehy v. National Security Agency, EEOC Request No. 0520100403 (Feb. 27, 2012). CONCLUSION In summary, we find that Complainant did not waive his age discrimination claims via his settlement agreement because the Agency did not comply with the requirements of the OWBPA. Therefore, we REVERSE the Agency's FAD with regard to his age waiver, and remand his age claims to the Agency for further processing. We AFFIRM the Agency's finding that it did not breach the settlement agreement and that the settlement agreement is valid with regard to Complainant's non-ADEA EEO claims. ORDER (E1016) The Agency is ordered to process the remanded age claims from the point processing ceased in accordance with 29 C.F.R. Part 1614. The Agency shall acknowledge to the Complainant that it has received the remanded claims within thirty (30) calendar days of the date this decision was issued. A copy of the Agency's letter of acknowledgment to Complainant must be sent to the Compliance Officer as referenced below. IMPLEMENTATION OF THE COMMISSION'S DECISION (K0610) Compliance with the Commission's corrective action is mandatory. The Agency shall submit its compliance report within thirty (30) calendar days of the completion of all ordered corrective action. The report shall be submitted to the Compliance Officer, Office of Federal Operations, Equal Employment Opportunity Commission, P.O. Box 77960, Washington, DC 20013. The Agency's report must contain supporting documentation, and the Agency must send a copy of all submissions to the Complainant. If the Agency does not comply with the Commission's order, the Complainant may petition the Commission for enforcement of the order. 29 C.F.R. § 1614.503(a). The Complainant also has the right to file a civil action to enforce compliance with the Commission's order prior to or following an administrative petition for enforcement. See 29 C.F.R. §§ 1614.407, 1614.408, and 29 C.F.R. § 1614.503(g). Alternatively, the Complainant has the right to file a civil action on the underlying complaint in accordance with the paragraph below entitled "Right to File a Civil Action." 29 C.F.R. §§ 1614.407 and 1614.408. A civil action for enforcement or a civil action on the underlying complaint is subject to the deadline stated in 42 U.S.C. 2000e-16(c) (1994 & Supp. IV 1999). If the Complainant files a civil action, the administrative processing of the complaint, including any petition for enforcement, will be terminated. See 29 C.F.R. § 1614.409. STATEMENT OF RIGHTS - ON APPEAL RECONSIDERATION (M0416) The Commission may, in its discretion, reconsider the decision in this case if the Complainant or the Agency submits a written request containing arguments or evidence which tend to establish that: 1. The appellate decision involved a clearly erroneous interpretation of material fact or law; or 2. The appellate decision will have a substantial impact on the policies, practices, or operations of the Agency. Requests to reconsider, with supporting statement or brief, must be filed with the Office of Federal Operations (OFO) within thirty (30) calendar days of receipt of this decision or within twenty (20) calendar days of receipt of another party's timely request for reconsideration. See 29 C.F.R. § 1614.405; Equal Employment Opportunity Management Directive for 29 C.F.R. Part 1614 (EEO MD-110), at Chap. 9 § VII.B (Aug. 5, 2015). All requests and arguments must be submitted to the Director, Office of Federal Operations, Equal Employment Opportunity Commission. The requests may be submitted via regular mail to P.O. Box 77960, Washington, DC 20013, or by certified mail to 131 M Street, NE, Washington, DC 20507. In the absence of a legible postmark, the request to reconsider shall be deemed timely filed if it is received by mail within five days of the expiration of the applicable filing period. See 29 C.F.R. § 1614.604. The request or opposition must also include proof of service on the other party. Failure to file within the time period will result in dismissal of your request for reconsideration as untimely, unless extenuating circumstances prevented the timely filing of the request. Any supporting documentation must be submitted with your request for reconsideration. The Commission will consider requests for reconsideration filed after the deadline only in very limited circumstances. See 29 C.F.R. § 1614.604(c). COMPLAINANT'S RIGHT TO FILE A CIVIL ACTION (T0610) This decision affirms the Agency's final decision/action in part, but it also requires the Agency to continue its administrative processing of a portion of your complaint. You have the right to file a civil action in an appropriate United States District Court within ninety (90) calendar days from the date that you receive this decision on both that portion of your complaint which the Commission has affirmed and that portion of the complaint which has been remanded for continued administrative processing. In the alternative, you may file a civil action after one hundred and eighty (180) calendar days of the date you filed your complaint with the Agency, or your appeal with the Commission, until such time as the Agency issues its final decision on your complaint. If you file a civil action, you must name as the defendant in the complaint the person who is the official Agency head or department head, identifying that person by his or her full name and official title. Failure to do so may result in the dismissal of your case in court. "Agency" or "department" means the national organization, and not the local office, facility or department in which you work. If you file a request to reconsider and also file a civil action, filing a civil action will terminate the administrative processing of your complaint. RIGHT TO REQUEST COUNSEL (Z0815) If you want to file a civil action but cannot pay the fees, costs, or security to do so, you may request permission from the court to proceed with the civil action without paying these fees or costs. Similarly, if you cannot afford an attorney to represent you in the civil action, you may request the court to appoint an attorney for you. You must submit the requests for waiver of court costs or appointment of an attorney directly to the court, not the Commission. The court has the sole discretion to grant or deny these types of requests. Such requests do not alter the time limits for filing a civil action (please read the paragraph titled Complainant's Right to File a Civil Action for the specific time limits). FOR THE COMMISSION: ______________________________ Carlton M. Hadden's signature Carlton M. Hadden, Director Office of Federal Operations December 14, 2016 __________________ Date 1 This case has been randomly assigned a pseudonym which will replace Complainant's name when the decision is published to non-parties and the Commission's website. 2 These positions would be a demotion. 3 Complainant also alleged at some point that the Regional Director may have prematurely disclosed his expected change in status to the Headquarters Deputy Director of the Office of Compliance Inspections and Examinations (OCIE). Both did not recall this and added that since OCIE and Enforcement collaborate on cases, the Deputy Director would have reason to know. On appeal Complainant does not raise this. Accordingly, we will not further address this matter. 4 Given this finding, we need not rule on Complainant's argument that the settlement agreement language that Complainant is "fully aware of his right to discuss... this matter with an attorney" does not meet OWBPA requirement to advise the employee to consult with an attorney. --------------- ------------------------------------------------------------ --------------- ------------------------------------------------------------ 2 0120162241 2 0120162241