A court recently dismissed the Equal Employment Opportunity Commission’s lawsuit against CVS Pharmacy concerning allegedly overbroad settlement agreements, but not for the reason you might think.

The EEOC filed its lawsuit against CVS last spring.  The case was alarming to employers because it challenged a number of provisions that are fairly routine in employee settlement agreements (e.g., confidentiality, non-disparagement, etc…).  Many were awaiting a court decision addressing the merits of the EEOC’s arguments to see what implications it might have for employment settlement agreements.

Unfortunately, the court dismissed the case on a technicality, without addressing the merits of the EEOC’s claims.  Specifically, the court dismissed the case on the grounds that the EEOC failed to attempt to conciliate the matter with CVS before bringing its lawsuit, as required by 42 U.S.C. § 2000e-5(b).  Because it was undisputed that the EEOC did not first attempt to conciliate the matter, the court held that the EEOC was not authorized to bring the lawsuit and dismissed the case.

Takeaway:  Because the CVS case was dismissed on a technicality, employers will need to wait longer to find out whether courts will find any merit in the EEOC’s aggressive new approach to settlement agreements.