Show Me the Money: The Applicability of Contract Law's Ratification and Tender-Back Doctrines to Title VII Releases

Abstract

If an employee releases her claims under Title VII of the Civil Rights Act of 1964 (Title VII), but her assent to the release is not “voluntary and knowing,” the release is voidable at her option. But under common law, the power of a party to void a release, or any other contract, could be lost if the party ratifies the release or fails to tender back the consideration received. This raises the issue of whether these common law contract doctrines apply to releases that are voidable under Title VII. Although the United States Supreme Court in Oubre v. Entergy Operations, Inc. held that the Older Workers Benefit Protection Act of 1990 (OWBPA) generally precludes the application of the ratification and tender-back doctrines to a voidable release of claims under the Age Discrimination in Employment Act of 1967 (ADEA), the decision in Oubre does not resolve whether ratification and tender back apply to a Title VII release. The Court's rationale in Oubre relied primarily (though not exclusively) on the specific language in the OWBPA for an effective waiver of ADEA claims, and the OWBPA does not apply to Title VII. Lacking binding precedent on the issue from the Supreme Court, lower courts have reached different conclusions. The uncertain state of the law regarding the application of ratification and tender back to Title VII releases adds further unpredictability to the already confusing law regarding the release of Title VII claims. The U.S. courts of appeals are divided on the proper test to apply to determine if a Title VII release was entered into knowingly and voluntarily, and the majority rule — the totality-of-the-circumstances test — is itself confusing and unpredictable. Thus, not only is it often unclear if a Title VII release is voidable, it is often unclear if an employee has lost the power to void the release because of the doctrines of ratification and tender back. This Article seeks to remove this confusion and set forth the proper role (if any) for the common law contract doctrines of ratification and tender back with respect to a release of Title VII claims. It concludes that ratification should apply to Title VII releases, but that the tender-back doctrine should be applied flexibly on a case-by-case basis.

Keywords: Contract Law, Contract Ratification, Tender-Back Doctrines, Title VII

JEL Classification: K12, K40