The Older Worker Benefit Protection Act (OWBPA) requires that employees over the age of 40 be given at least twenty-one (21) days to decide whether or not to agree to a severance of employment and a seven (7) day revocation period after the agreement is signed. Employees may waive the twenty-one (21) day waiting period but may not waive the seven (7) day revocation period.
When Amazon decides to terminate employment based on performance issues, it issues a PIVOT Plan, which is a letter notifying the employee that performance standards have not been met (which Amazon refers to as “failing to meet the bar”) and that Amazon has decided to terminate employment. The PIVOT Plan offers the employee two options: (1) Accept a severance payment in an amount that Amazon has calculated and included in the letter, and which Amazon states is non-negotiable or (2) agree to a Performance Improvement Plan (PIP) that will last for a period of 30-60 days, for which the employee’s manager will determine if the employee passed or failed. The PIP, prepared by the employee’s manager, is included in the letter and sets forth 3 to 4 projects for which the employee is to be evaluated under the PIP. If the employee fails the PIP, his/her employment will be terminated and Amazon will pay the employee a lesser severance amount, which is also included in the letter. PIP success rates at Amazon are only about thirty (30) percent. In some letters, Amazon informs employees of the right to appeal a failed PIP. If the appeal does not result in a favorable outcome, employment is terminated, and Amazon pays the employee a severance payment amount less than the amounts indicated in options (1) and (2). However, some PIVOT Plan letters do not include the appeal language. The PIVOT Plan informs employees that any unvested stock grants will be lost, that health insurance will be terminated at the end of the month, and that the severance pay/PIP is not negotiable. Amazon requires the employee to pick either severance pay or the PIP within five (5) days and the employee’s “Career Ambassador” and/or Human Resources Business Partner (HRBP) pressures the employee if a decision is not made within the first three days. If the employee does not decide within five (5) days, Amazon unilaterally defaults the employee into the PIP.
Amazon’s PIVOT Plan does not usually inform the employee that in order to receive the severance payment, he/she must sign a severance agreement/release of claims, in which nearly all legal rights are releasing and/or waived. It also fails to inform employees over the age of 40 that they have the legal right to consider the severance offer for twenty-one (21) days under the OWBPA and requires them to decide before the expiration of the twenty-one (21) day waiting period.
If an employee chooses severance pay, it is only after the employee has already agreed to resign that Amazon sends the severance agreement/release of claims. Amazon then informs the employee that the agreement is non-negotiable. It is at this point that Amazon informs employees over the age of 40 that they have twenty-one (21) days to consider the severance agreement and seven (7) days after signing it to revoke it.
The problem with Amazon’s PIVOT Plan is that employees are required to decide between terminating employment and choosing to continue employment under an improvement plan without being fully informed of or given their legal rights or told what they will be releasing and/or waiving. Essentially, Amazon avoids the twenty-one (21) day waiting period by requiring employees to decide within five (5) days. By the time an employee over 40 is informed of his/her rights under the OWRPA, the employee has already agreed to terminate employment and accept severance pay and Amazon has already violated the law. The employee is therefore forced into a non-negotiable severance agreement. If the employee does not accept Amazon’s unilateral severance agreement, employment terminates, and he/she receives no severance payment. Therefore, the employee’s legal rights and the law are violated.
Amazon violates employees’ rights every day by issuing PIVOT Plans that do not comply with the law because they fail to inform and provide employees over 40 of/with their legal rights under the OWRPA. To comply with the law, Amazon’s PIVOT Plan should include a copy of the severance agreement/release of claims and Amazon should provide employees over the age of 40 twenty-one (21) days to decide whether to accept severance pay or choose a PIP. If you are over 40 and have been issued a PIVOT Plan and your legal rights have been violated, please call me so I can help you enforce them.