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Avoiding Three Common Mistakes Made By Employers When Terminating Employees (Part 1 of 3)

This post (the first of three) discusses common errors made by employers when terminating employees, all of which can be easily avoided.

Mistake No. 1: Offering an Older Employee a “Retirement” Package

Well intentioned employers sometimes are tempted to characterize a performance-based, involuntary termination of an older employee as a “retirement.” However, the mere mention of the word “retirement” in connection with a termination decision, even when offering an enhanced severance package, can lead to liability under the Age Discrimination in Employment Act (the “ADEA”).

Interestingly, the original version of the ADEA excluded from coverage employees who were 70 years old or older, as well as employees who were under the age of 40. Accordingly, employers could force employees to retire at age 70 under the original version of the ADEA without facing liability. However, the ADEA was amended in 1986 to remove the exclusion for employees who were 70 years old or older. Thus, with the exception of employees in safety-sensitive positions (e.g., pilots, firefighters, and police officers), employers generally may not force an employee to retire due to age.

Despite this well-settled law, some employers mistakenly believe that they can force an older employee. Perhaps this confusion stems from the original version of the ADEA, or may it is because the prohibition against age discrimination is not intuitive. Indeed, unlike other protected traits that have no bearing on one’s ability to perform the job in question (e.g., race, sex, and national origin), there sometimes is a correlation between

Reducing Exposure to Attorneys’ Fees Awards Through Use of Rule 68 Offers of Judgment (Part 1 of 2)

April 12, 2017

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Sooner or later, a defense attorney will find himself or herself defending an employment lawsuit involving a clear statutory violation or a very bad fact pattern that almost surely will result in a jury verdict in favor of the plaintiff-employee. In these situations, the obvious strategy is to resolve the lawsuit through a settlement. This is because the value of the claim and the defendant-employer’s corresponding exposure continue to increase throughout the course of litigation in the form of back pay accrual and both parties’ attorneys’ fees, since the vast majority of federal and state employment laws contain an attorney fee-shifting provision requiring the defendant to pay a successful plaintiff’s attorneys’ fees (in addition, of course, to the defendant-employer’s contractual obligation to pay its own attorneys’ fees). And although a prevailing plaintiff is entitled to his/her costs and attorneys’ fees under these statutes, a successful defendant is entitled only to its costs (e.g., filing fees, court reporter fees, etc.) and not an award of attorneys’ fees.

These one-sided fee-shifting provisions dramatically alter the settlement posture of employment cases. Unlike litigation in other contexts in which the litigation process reduces the value of the plaintiff’s claim through the accrual of attorneys’ fees that cannot be recouped even if the plaintiff prevails, a plaintiff in an employment case has every incentive to litigate a strong claim through trial because the plaintiff has a statutory entitlement to an award of reasonable attorneys’ fees if a plaintiff’s verdict is obtained.

The following hypothetical illustrates

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