Equal Employment Opportunity Commission v. CVS Pharmacy Inc.

Decision: The Equal Employment Opportunity Commission (EEOC) filed a Title VII pattern and practice lawsuit against CVS Pharmacy in Illinois federal court alleging that the company’s separation agreement interfered with the right of CVS employees to file discrimination charges or to voluntarily communicate with the EEOC. The language at issue in the agreement required the employee to promptly notify the company if the employee received any inquiry or order relating to, among other things, an administrative investigation. The agreement also contained a disclaimer in its covenant not to sue, specifying that nothing in the paragraph was intended to interfere with employees’ right to participate in a proceeding with a federal, state or local government agency enforcing discrimination laws or prohibit employees from cooperating with any such agency in its investigation. However, the EEOC claimed that “[this] single qualifying sentence that is not repeated anywhere else in the agreement”, was insufficient to cure the covenant’s overbroad nature.

Impact: This suit serves as a warning to employers that the EEOC will closely scrutinize commonly used severance agreement terms. It also suggests that a disclaimer informing workers that they are still able to bring claims to the EEOC may be insufficient to ameliorate a broad general release of claims and covenant not to sue. The EEOC has not clearly articulated under what circumstances such a disclaimer would be sufficient to protect workers’ rights. Until the agency clarifies its position, it will be important for employers to monitor this area of the law and consult with counsel to ensure that its separation agreements are best positioned to withstand scrutiny from the EEOC.