Age Discrimination:

Use of Waivers by Large Companies Offering Exit Incentives to Employees

HRD-89-87: Published: Apr 18, 1989. Publicly Released: Apr 18, 1989.

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Pursuant to a congressional request, GAO reviewed major companies' waiver requirements for participation in short-term exit incentive programs intended to encourage employees' early departure through financial incentives.

GAO found that such waivers: (1) required participants to relinquish their rights to file an age discrimination suit against the company; (2) were private agreements between the employer and employee; (3) were not valid unless employees signed them voluntarily and with the knowledge that they were forfeiting their right to file an age discrimination claim; (4) were not supervised or monitored by the government or the courts; and (5) raised congressional concerns regarding the possibility of workers being coerced to sign the waivers, workers not being informed of their age discrimination rights, and the legality of requiring workers to forfeit those rights to receive enhanced benefits. GAO also found that: (1) 80 percent of the companies sponsored an exit incentive program between 1979 and 1988; (2) 36 percent of programs offered only enhanced early retirement benefits, 35 percent offered early retirement benefits in combination with other nonpension benefits, and 29 percent offered only nonpension benefits; (3) 28 percent of companies offering plans required employees to sign waivers; (4) waiver forms generally informed employees that they were releasing the company from age discrimination claims; and (5) companies requiring waivers cited avoidance of employee claims and lawsuits, while those not requiring waivers believed that the voluntary nature of their program precluded such claims.

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