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Court Reverses Finding of Discrimination in Severance Packages

July 1, 1995

In the April, 1994 issue of this Newsletter, we reported with skepticism on a novel decision of a federal court in Pennsylvania, in which an employer was found to have violated the Age Discrimination in Employment Act (the "ADEA") by offering to all employees laid off in a reduction in force, regardless of age, the identical severance package in exchange for a general release. DiBiase v. SmithKline Beecham Corp., 847 F. Supp. 341 (E.D. Pa. 1994). The court reasoned that because the employees who were at least 40 years old were relinquishing potential age discrimination claims which younger employees could not possess, the older employees were discriminated against by being asked to give up more in exchange for the release. As we expected, a federal appeals court has reversed that decision, finding that the severance plan at issue did not treat older workers disparately, but rather was "an archetypal example of a facially non-discriminatory policy." DiBiase v. SmithKline Beecham Corp., 48 F.3d 719 (3d Cir. 1995). Put another way, the Court properly recognized that nothing in the ADEA requires employers to treat older employees better than younger workers in formulating severance packages or in any other aspect of their employment.