eAlert - Separation Agreements Under Attack By The EEOC: Why Some Small Changes To Your Agreements Are Advisable


The U.S. Equal Employment Opportunity Commission (EEOC) is now targeting routine language commonly found in separation agreements across the country.  This is yet another in a series of aggressive tactics launched by the EEOC.  If you read our blog, you know that in the past year, the EEOC was sued for sending a mass e-mail titled "Federal Investigation" to all employees of a company that was the subject of a pending Charge of Discrimination and soliciting negative information in an effort to support a class action claim.  The EEOC got even more bad press earlier in the year when it sued two employers, taking the position that routine background checks discriminate against racial minorities.
The EEOC's challenge to separation agreements is perhaps its scariest move yet.  The EEOC just filed a class action lawsuit against CVS Pharmacy, Inc., claiming that run-of-the mill language contained in severance agreements unlawfully interfered with the rights of employees to file charges of discrimination or communicate with the EEOC.
Why is this such a frightening, aggressive tactic?  Take a look at the clauses the EEOC claims are legally objectionable:

• A confidentiality clause, which prohibits an employee from disclosing confidential information about co-workers.
• A non-disparagement clause, which prohibits an employee from making any statements that harm the "business or reputation" of the company.
• A cooperation clause, which merely requires an employee to notify the company's general counsel if he receives a subpoena or information request about an administrative investigation.
• A general release and a covenant not to sue, which release the company from any "charges" relating to "unlawful discrimination" and prohibits an employee from suing on such a claim.
• An attorneys' fee provision, which requires an employee to reimburse the company for fees incurred if such a claim is ever filed.

If that was not bad enough, CVS's covenant not to sue expressly allowed employees to participate with the EEOC in any of its investigations.
What should you do?

In fairness, this aggressive tactic is an experiment - one which we hope the courts will deem to be a failure.  Employers should ask themselves, however, whether they want to risk being the EEOC's next guinea pig and incurring the costs associated with that.  The EEOC, a federal agency with nationwide reach, is often undeterred by adverse rulings in one court.

To be sure, the EEOC is taking a very broad reading of the supposedly offending provisions  and, like the NLRB before it, is making a concerted effort not to read the language of CVS's agreement in the context of the words used.  Semantic or not, there are some modest changes in language that would likely satisfy the EEOC and deter it from future litigation of this kind.

To that end, employers should review their form separation agreements to determine whether any of the specific language targeted by the EEOC appears in their agreements.  With some modest tweaks, employers can significantly reduce the chance that they do not suffer the same expenses that CVS has had to incur.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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