Court Dismisses EEOC's Challenge To CVS' Severance Agreement; Holds That EEOC Failed To Conciliate With CVS

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The Equal Employment Opportunity Commission (the “EEOC”) made headlines earlier this year by filing a lawsuit attacking CVS Pharmacy, Inc.’s standard severance agreement, which the EEOC argued unlawfully restricts former employees’ rights to file charges with the EEOC and to participate in EEOC investigations. What made the case interesting was that while CVS’ severance agreement required an employee to release discrimination claims, it also expressly stated that the agreement “shall not interfere with [an] Employee’s right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws . . . [or] from cooperating with any such agency in its investigation.”  While courts have held that a severance agreement cannot expressly interfere with an employee’s right to file a charge or participate in an EEOC proceeding, no court has ever held that a severance agreement must expressly tell the employee of this right.  Even the EEOC’s own model severance agreement does not contain language to this effect.  The EEOC argued that CVS’ use of the word “participate” in the carve-out language was confusing and did not sufficiently notify the employee of the right to file a charge.  Last week, a federal court in Chicago granted CVS’ motion for summary judgment and dismissed the EEOC’s case.  While the Court rejected the EEOC’s argument that the carve-out language was unclear in a footnote, it did not analyze the EEOC’s argument attacking the severance agreement in much detail.  Instead, the Court held that the EEOC had failed to engage in the “conciliation” process with CVS (i.e., a settlement dialogue) before filing the lawsuit, as required by Title VII of the Civil Rights Act, and dismissed the lawsuit for this reason.

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