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EEOC Scrutiny of Separation Agreements Continues

Sally Griffith Cimini
Lauren N. Diulus
Ashley R. Hileman
Leech Tishman - Pittsburgh Office

March 19, 2014

Previously published on March 12, 2014

The Equal Employment Opportunity Commission (“EEOC”) recently commenced an action against CVS Pharmacy, Inc. (“CVS”) alleging that certain provisions within its Separation Agreement, including those that address “non-disparagement” and “non-disclosure of confidential information,” violate Title VII by interfering with an employee’s right to file a charge with the EEOC. This Complaint highlights the EEOC’s persistence in carefully examining Separation Agreements, as well as its commitment to prosecuting employers for agreements it considers unlawful.

According to the EEOC, CVS has engaged in a “pattern or practice of resistance to the full enjoyment of the rights secured by Title VII, in violation of Section 707[,]” by conditioning receipt of severance benefits on an employee’s agreement to a Separation Agreement that the EEOC claims deters the filing of charges and interferes with an employee’s ability to communicate voluntarily with the EEOC and Fair Employment Practice Agencies. Specifically, the EEOC argues that the “Non-Disparagement” clause may interfere with voluntary communication and deter filing charges as it prohibits an employee from making any statements that “disparage the business or reputation of the Corporation, and/or any officer, director, or employee of the Corporation.” The EEOC further claims that voluntary communication may also be impacted by the “Non-Disclosure of Confidential Information” clause as it forbids employees from disclosing to any third party “Confidential information” without CVS’s prior written consent. Finally, the EEOC claims that “No Pending Actions; Covenant Not to Sue” clause may deter filing charges as it requires the employee to agree not to initiate or file any action, lawsuit, complaint or proceeding asserting any of the Released Claims against any of the Released Parties. Although the EEOC’s complaint acknowledges that CVS’ Agreement contains a statement that “[n]othing in this paragraph is intended to or shall interfere with an Employee’s right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws[,]” the EEOC found this disclaimer ineffective, noting that it is a “single qualifying sentence that is not repeated anywhere else in the Agreement[.]”

While there has been no decision on the issues raised in the EEOC’s complaint, it serves as a reminder to employers that they need to be careful when drafting and presenting Separation Agreements to their employees.


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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