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  3. Commission Opinion Letter: Older Worker Benefit Protection Act

Commission Opinion Letter: Older Worker Benefit Protection Act

January 14, 2021

OPINION LETTER

[redacted]

 

Dear [redacted]:

This letter responds to your request for a formal opinion letter concerning whether employees who are not U.S. citizens and work outside of the United States for American employers (or foreign firms controlled by American employers) are required to be included in disclosure requirements pursuant to provisions of the Older Workers Benefit Protection Act (OWBPA), which amended the Age Discrimination in Employment Act of 1967 (ADEA).  As a formal written interpretation or opinion of the U.S. Equal Employment Opportunity Commission (EEOC or Commission), approved by vote on January 13, 2021, and signed by the Legal Counsel, this opinion letter provides a defense when acting in good faith conformity to its terms, consistent with Section 7 of the ADEA and the Commission’s Regulations, including 29 C.F.R. § 1626.21. 

BACKGROUND AND GENERAL LEGAL PRINCIPLES

Under the ADEA, it is “unlawful for an employer ... [to] discriminate against any individual [at least 40 years of age] with respect to his [or her] compensation, terms, conditions, or privileges of employment, because of such individual’s age.” 29 U.S.C. §§ 623(a), 631(a).  In 1990, Congress enacted the OWBPA, which amended the ADEA to impose specific requirements for releases of ADEA claims.  See Oubre v. Entergy Operations, Inc., 522 U.S. 422, 426 (1998). 

The OWBPA provides that an employee may not waive any rights afforded under the ADEA unless the waiver is “knowing and voluntary.” 29 U.S.C. §626(f).  When an employer requests such a waiver in relation to an exit incentive or other termination program offered to a group of employees, Subparagraphs (i) and (ii) require that the employer must provide the employee the following information, in writing and in manner calculated to be understood by the average employee eligible to participate:

  1. (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
  2. (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.

Id. §§ 621(f)(1)(H)(i), (ii).  In its regulations implementing Paragraph H, the Commission described this “class, unit, or group” of individuals “eligible or selected for the program” as the “decisional unit,” which comprises the “portion of the employer’s organizational structure from which the employer chose the persons who would be offered consideration for signing the waiver.”  29 C.F.R. § 1625.22(f)(3)(i)(B). 

Your letter states that employers with operations (and employees) inside and outside the United States who offer an exit incentive or termination program to a group or class of employees, often must confront whether some or all of the latter group of employees must be included in the “decisional unit” for purposes of OWBPA’s disclosure requirements.  The question posed is not whether such international employees, those who perform their duties at a worksite outside the United States, have a claim under the ADEA, but rather whether the statute and the Commission’s regulations require the disclosure to the “decisional unit” of information related to non-U.S. citizen employees who perform work in other countries to comply with the statutory requirements.

Neither the OWBPA nor the Commission’s regulations provide a clear answer to this question.  On one hand, the statute requires American employers to include in a disclosure all employees in a decisional unit.  As a result, where a decisional unit includes some U.S. citizen employees who work inside or outside the United States and non-U.S. citizen employees who work outside the country, the statute would appear to require employers to include all such employees in OWBPA disclosures.  On the other hand, however, the ADEA does not cover employees working outside the United States who are not U.S. citizens.  Moreover, the inclusion of non-covered individuals in disclosures to covered employees may confuse or undermine an employee’s ability to evaluate an exit incentive or other termination program and any accompanying waiver by masking discriminatory practices or complicating an employee’s ability to identify them.

Your letter points to courts who have recognized the ambiguity in these provisions and the issues and, as a result, requests additional guidance from the Commission regarding these statutory and regulatory provisions.  Indeed, those courts that have examined the disclosure requirements under § 626(f)(1)(H) have described them as “so imprecise” that they “cannot possibly require strict application.” See Ribble v. Kimberly-Clark Corp., No. 09-C-643, 2012 WL 589252, at *5 (E.D. Wis. Feb. 22, 2012).  For instance, in Raczak v. Ameritech Corp., 103 F.3d 1257, 1259 (6th Cir.1997), the Sixth Circuit held that “the nomenclature of § 626(f)(1)(H) of Title 29 is ambiguous” and that “a rigid and mechanical interpretation of that provision is inappropriate.”  Courts have stressed that OWBPA’s informational requirements should not be broadly applied beyond the relevant decisional unit.  See, e.g., Burlison v. McDonald’s Corp., 455 F.3d 1242, 1247 (11th Cir. 2006) (concluding that OWBPA’s informational requirements are limited to the decisional unit that applies to the discharged employees and that the provision of information beyond the decisional unit frustrates the purposes of the OWBPA).  Your letter contends that requiring employers to include non-U.S. citizen employees who work outside the United States does not provide meaningful information and could potentially require employers to violate international data protection obligations.

OPINION

Like others who have confronted this issue, the Commission recognizes that the ADEA and its regulations may be ambiguous with respect to whether non-U.S. citizen employees of U.S. employers (or foreign firms controlled by American employers) who work outside the United States must be included in OWBPA disclosures.[1]  After careful consideration of the ADEA, the Commission concludes that employers subject to the requirements of the ADEA are not required to include in OWBPA disclosures employees working outside the United States who are not U.S. citizens because such individuals are not “employees” for purposes of the ADEA.  The statute requires that only covered employees within the applicable “decisional unit” must be included in an OWBPA disclosure.  See 29 U.S.C. § 626(f)(1)(H). 

Non-U.S. citizen employees of American employers working outside the United States are not required to be included as part of a decisional unit because they do not meet the definition of an “employee” under the ADEA.  Indeed, the ADEA generally protects workers in the United States regardless of citizenship status and U.S. citizens working outside the United States for American employers (or foreign firms controlled by American employers) only; it does not protect non-U.S. citizens working for such firms outside the United States.  29 U.S.C. § 630(f).  In pertinent part, 29 U.S.C. § 630(f) provides that “[t]he term ‘employee’ includes any individual who is a citizen of the United States employed by an employer in a workplace in a foreign country.” 29 U.S.C. § 630(f).  There is simply no support for the position that OWBPA and the ADEA contain a global mandate.  At least one federal court has suggested that even where there is an international decisional unit, only U.S. citizens working for an employer in a foreign workplace should be included on an age disclosure because they meet the ADEA definition of an “employee” while non-U.S. citizen employees working in a foreign workplace do not.  See Sowe v. Pall Corp., No. 317CV449FJSDEP, 2018 WL 3862680, at *7 n.4 (N.D.N.Y. Aug. 14, 2018), aff'd, 778 F. App’x 20 (2d Cir. 2019); see also E.E.O.C. v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991) (“We assume that Congress legislates against the backdrop of the presumption against extraterritoriality. Therefore, unless there is the affirmative intention of the Congress clearly expressed, we must presume it is primarily concerned with domestic conditions.”) (internal citations omitted).

The conclusion that employers are not required by the OWBPA to include employees working outside of the United States who are not U.S. citizens in a decisional unit finds further support in the broader purposes of the OWBPA and its regulations to ensure that covered employees are provided sufficient information to evaluate exit incentive or termination program before waiving their rights under the ADEA.  Employers must provide covered employees in a decisional unit with such information in a manner likely to be understood by them.  This objective may be frustrated if employers include in OWBPA disclosures non-covered employees.  By including non-covered employees in the disclosures, an employer might present a misleading picture of the broader exit incentive or termination program or, in fact, mask potentially unlawful discrimination.  Employers who voluntarily elect to include in their OWBPA disclosures information regarding non-covered employees must ensure that in doing so they do not mislead covered employees in violation of the ADEA and the Commission’s regulations.  See Sowe, 2018 WL 3862680, at *7-*8.

For two reasons, as a practical matter, a properly defined decisional unit and separation program are unlikely to encompass non-U.S. citizen employees working outside of the United States.  First, in order to comply with varying anti-discrimination and other legal requirements governing separations in respective countries, employers may apply different selection criteria when administering the domestic and international components of separation program.  The regulations provide that “[w]hen 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.”  See 29 C.F.R § 1625.22(f)(3)(i)(B) (emphasis added).  A “decisional unit” “reflect[s] the process by which an employer chose certain employees for a program and ruled out others from that program.”  Id. (emphasis added).  An employer’s decision-making process inherently includes which selection criteria or “eligibility factors” the employer applied to determine which employees were eligible or selected for the program.  And indeed, the ADEA and its regulations recognize that “any eligibility factors” for a separation program are one of the pieces of required information in OWBPA disclosures.  Id. § 1625.22(f)(1); see also EEOC Policy Guidance: Q&A-Understanding Waivers of Discrimination Claims in Employee Severance Agreements, EEOC-NVTA-2009-2, § IV, Question 12 and n.32 (acknowledging “eligibility factors” as required under OWBPA disclosures and noting that some courts “interpret the term “eligibility factors” to mean the criteria, such as job performance, experience, or seniority, an employer relied on in deciding who to terminate”).  As a result, the likely presence of differing eligibility or selection criteria for domestic and international employees may result in distinct decisional units for such respective groups of employees.  Second, the OWBPA regulations define a “program” to be a “standardized formula or package of benefits that is available to two or more employees” in exchange for their decision to sign a waiver. 29 C.F.R. § 1625.22(f)(1)(iii)(B).  For similar reasons as those resulting in differing program selection criteria between countries in which a component of an employer’s separation program is being administered, an employer may be required to offer different separation benefits to employees working in countries outside the United States in order to comply with the respective foreign country’s requirements governing separations.  Also, as a general rule, employees working in countries outside the United States are often not eligible for the same severance benefits as employees working in the United States.  See In re Reliance Standard Life Ins. Co., 386 F. Supp. 3d 505, 512 (E.D. Pa. 2019); Chong v. InFocus Corp., No. 08-500, 2008 WL 5205968 (D. Or. Oct. 24, 2008) (concluding that foreign national who worked outside of the United States does not has any claim to severance benefits because such a claim does not arise under ERISA).   Accordingly, employees working in another country who receive a different package of benefits are likely not properly encompassed in the same separation “program,” much less the same decisional unit,” as employees working in the United States who are subject to U.S.-specific benefit packages.

This letter was approved by vote of the Commission on January 13, 2021 as a written interpretation or opinion of the Commission.  This letter constitutes a formal opinion letter as defined in the Commission’s Regulations at 29 C.F.R. § 1626.20, which may be relied upon pursuant to ADEA section 7(e) (29 U.S.C. § 626(e)). 

We trust that this letter is responsive to your inquiry.

 

                                                                        On behalf of and as approved by the Commission,

                                                                            /s/

                                                                        Andrew F. Maunz
                                                                        Legal Counsel

 

[1] While the ADEA and regulations may be ambiguous as applied in this recurring context, they generally are not so.  As the Commission has long maintained, both citizens and aliens working in the United States are generally protected by the ADEA.  Similarly, U.S. citizens working for American or American-controlled firms outside the United States are also covered by the statute.  In contrast, U.S. citizens working outside the United States for foreign firms (that are not controlled by an American employer) are not protected by the ADEA, nor are non-U.S. citizens working outside the United States for foreign or American employers.  See EEOC Policy Guidance: Application of the Age Discrimination in Employment Act of 1967 (ADEA) and the Equal Pay Act (EPA) to American Firms overseas, their overseas subsidiaries, and foreign firms, EEOC-CVG-1989-14 (1989).