Terminating the Employment Relationship

over the age of 65 were not eligible for any retirement incentive. The court held that the cessation or denial of benefit s under the district’s plan was based solely on age and thus, inconsistent with the purposes of the ADEA. Solon v. Gary Community School Corp. 303 A school offered early retirement incentives to teachers aged 58 to 61. Eligible teachers who elected to retire early received monthly payments until they turned 62. Teachers who retired on their 58th birthday received the maximum 48 months of benefits available under the plan. Teachers who retired later received the same monthly payments but fewer of them, as the payments gradually terminated at age 62. The court held that this type of plan was discriminatory in violation of the ADEA.

c. The Retirement Incentive Must Be Truly Voluntary If an early retirement incentive is not “voluntary,” it does not fall unde r the safe harbor provision of the ADEA. Courts apply a “totality of the circumstances” test, considering factors such as the length of time the employee has to consider the early retirement incentive. For example, giving employees one day to accept or reject an early retirement incentive may deem the incentive not voluntary. In contrast, incentives that are offered during a window period of 45 days are generally deemed voluntary. As is discussed below, the length of time is also important as to whether a valid ADEA waiver and release is made by the employee accepting the retirement incentive. Other factors to consider include whether management pressured or coerced employees into accepting the incentive. For example, employees were told if they do not accept the incentive they will be terminated. It is acceptable for employers to advise employees that, based on the number of persons accepting the early retirement incentive, there may be layoffs. However, employers should refrain from telling employees that failure to accept the incentive will result in their termination.

Morgan v. A.G. Edwards & Sons, Inc. 304 A company decided to implement a reduction-in-force (RIF) plan with the first phase being a voluntary severance incentive plan (VSIP). The VSIP was offered to select non-branch employees, including plaintiff, who were age 50 or older and had at least 15 years of service. The VSIP gave employees the opportunity to resign in exchange for one year’s salary, a lump sum bonus payment, health and group life insurance for one year, and the right to continue to vest in an unvested portion of deferred compensation. Employees were given a 45-day period to accept the VSIP and an additional seven days to revoke the acceptance. A memo was sent to all empl oyees stating, in part, that “We anticipate…initiatives, including involuntary reductions in employment. The decisions concerning involuntary reduction have not yet been made and could be affected by the number of employees who participate in the [VSIP]. Employees eligible for, but who choose not to participate in, the [VSIP] along with other employees may be considered for any involuntary reductions.” 80 employees accepted the VSIP. The plaintiff did not accept it. Thereafter,

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