BASF has agreed to pay $500,000 to settle claims that workers were forced to sign illegal last chance agreements (LCAs). The multinational chemical corporation settled a lawsuit brought by the Equal Employment Opportunity Commission (EEOC) against its subsidiary, Cognis Corp., alleging that six employees had to sign LCAs that forced them to give up their legal rights or else face termination. See EEOC v. Cognis Corp., +2012 US Dist. LEXIS 71870 (C.D.Ill. 2012).
As the name implies, employers use "last chance agreements" (also referred to as "firm choice agreements") as the last step before terminating an employee. In this case, the broad LCA required that an employee refrain from filing any charge or complaint for a period of two years under a number of employment laws, including Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), the National Labor Relations Act (NLRA) and the Family and Medical Leave Act (FMLA). If they refused to sign, they were terminated.
BASF was motivated to enter into a settlement after a district court judge determined that it was liable for including a threat of retaliation within its LCA. The judge's ruling is notable because claimants rarely make such a motion before trial in retaliation cases, and even more rarely is such a motion granted. This is because employees seldom have direct proof of a retaliation threat, e.g., a signed LCA.
Employers should ensure that their disciplinary policies and LCAs comply with any applicable federal and state retaliation protections. In addition, LCAs should be narrow in scope so as to avoid possible regulatory investigations or federal lawsuits due to overly broad restrictions.
Additional Resources
Handling Employee Misconduct - Supervisor Briefing
Managing Poor Performance - Supervisor Briefing
