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Statement of Need: The Equal Employment Opportunity Commission (EEOC or Commission) is proposing to adopt legislative regulations addressing issues relating to the "tender back of consideration" in connection with waivers of rights and claims under the Age Discrimination in Employment Act of 1967 (ADEA). This issue was addressed by the United States Supreme Court in Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998). In that decision, the Supreme Court held that an individual was not required to return (tender back) consideration (such as improved severance benefits, extra money, or early retirement) for a waiver in order to allege a violation of the ADEA. Prior to the Supreme Court's decision in Oubre, the Federal courts of appeals were split on the issue of whether an individual who signed a waiver agreement was required to tender back any consideration paid by the employer in order to bring a claim under the ADEA. The Commission's proposed legislative rule would provide detailed regulatory guidance to the public on the tender back issue addressed by the Supreme Court's Oubre decision. The ADEA was amended by title II of the Older Worker Benefits Protection Act of 1990 (OWBPA) to regulate the use of waivers for employees 40 years of age or older. Title II of OWBPA sets forth the statutory requirements for a valid waiver of rights under the ADEA. The Commission conducted a negotiated rulemaking in 1995 and 1996 on ADEA waivers under OWBPA. The Rulemaking Committee considered, but agreed not to resolve, the tender back issue, and it was not included in the regulatory language recommended by the Committee to the Commission. EEOC promulgated a final regulation on ADEA waivers at 29 CFR 1625.22 on June 5, 1998, 63 FR 30624. The preamble to the final regulation confirmed that the issues raised in the Supreme Court's Oubre decision would not be addressed in that regulation, but that the tender back issue would be covered in other EEOC guidance. Since the enactment of OWBPA, employer and employee representatives have expressed continuing interest in receiving guidance on the issue of waiver agreements. The use of waiver agreements in the workplace is an increasingly common practice, particularly in connection with layoffs and reductions-in-force. The Supreme Court recognized in Oubre that requiring tender back of consideration, as a condition of bringing an ADEA suit, could frustrate the purposes of the statute and lead to evasion of OWBPA's waiver requirements. Because of the importance of the tender back issue to both employers and employees, the Commission believes that the public would benefit from regulatory guidance in this area.

Summary of the Legal Basis: Section 9 of ADEA authorizes the Commission to issue such rules and regulations as it may consider necessary or appropriate for carrying out the Act. This regulatory proposal is not required by statute or court order.

Alternatives: The Commission considers all alternatives offered by public commenters.

Anticipated Costs and Benefits: Providing a clear outline of what is and is not permissible concerning issues raised by the Supreme Court's Oubre decision will reduce employment disputes and save both employers and employees time and unnecessary costs. In addition, regulatory guidance on the issue of waiver agreements should result in increased voluntary resolution of potential employment disputes, and thereby reduce the likelihood of protracted and costly litigation. Finally, when necessary, regulatory guidance on tender back of consideration paid under waiver agreements will ensure that employees are able to challenge the validity of such agreements. It is not anticipated that any costs will arise from issuing the proposed regulatory guidance.

Risks: Regulatory guidance on tender back issues will lessen the risk that employees will be forestalled from challenging the validity of waivers under the laws enforced by EEOC in the event that they are unable to tender back consideration. The Commission has a substantial interest in addressing this risk. The right of individual employees to challenge waiver agreements is essential to implement the strong public interest in eradicating discrimination in the workplace and is also a vital part of the statutory enforcement scheme of the ADEA, as well as the other laws enforced by the Commission. The proposed regulation does not address risks to public health, safety, or the environment.