|February 17, 2014|
Previously published on February 13, 2014
A recent case filed by the U.S. Equal Employment Opportunity Commission (EEOC) may warrant employers’ attention to the language of their separation agreements. The EEOC just filed an action against a national retailer, claiming that the drug store chain engaged in a pattern or practice of discrimination by using a severance agreement that allegedly interfered with employee rights. According to the EEOC’s complaint, the agreement at issue improperly prevents employees from communicating with the EEOC and state anti-discrimination agencies or from filing a charge of discrimination. The EEOC filed suit despite the employer’s use of commonplace language, which is found in standard separation agreements, expressly stating that the agreement is not intended to interfere with employees’ rights to participate in any legal proceeding or cooperate in an agency investigation. The EEOC concedes that the agreement at issue specifically provided,
[n]othing in this paragraph is intended to or shall interfere with Employee’s right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws, nor shall this Agreement prohibit Employee from cooperating with any such agency in its investigation.
The EEOC’s apparent concern is that this “single qualifying line” is “not repeated elsewhere” in a “five-page single spaced Separation Agreement,” which the agency contends limited employee actions in other sections.
Based on these facts, the EEOC asserts that the employer’s use of this separation agreement language “constitutes resistance to the full enjoyment of rights secured by Title VII” because the agreement allegedly interferes with an employee’s right to file a charge or cooperate in an investigation. Consequently, the EEOC seeks wide-ranging relief, including injunctive relief (i) precluding continued use of the agreement, (ii) ordering reformation of the employer’s agreement to comply with the EEOC’s view of the law, (iii) ordering the employer to issue corrective communications to its entire workforce reminding them of their right to file charges of discrimination or cooperate in EEOC or state agency investigations, and (iv) ordering an extension of the statute of limitations for all employees subject to the separation agreement.
The use of this type of language by employers is very common, and the agreement at issue explicitly makes clear that employees retain the right to file a charge or cooperate in an agency investigation. As such, the EEOC’s filing of litigation is remarkably aggressive. Furthermore, while the EEOC has maintained that waiver agreements that expressly preclude the filing of a charge or cooperating with an investigation are invalid, it has never issued any policy pronouncements explicitly warning that separation agreements with a disclaimer like the one employed in this case interfere with employee rights under Title VII of the Civil Rights Act, making the EEOC’s stance even more surprising. It remains to be seen whether the court will agree with the EEOC’s position. Nevertheless, this is a significant development for employers to watch and it may prompt employers to review their standard separation agreements for sufficient disclaimers and qualifying language.
The case is EEOC v. CVS Pharmacy, Inc., No. 1:14-CV-863 (N.D. Ill.).