It is common for employers to assume that frequently used agreements contain legal boilerplate that needs no review or revision. They are wrong. In yet another case challenging the legality of a separation agreement, the EEOC recently filed suit in federal court in Chicago against national retailer CVS Caremark, alleging that CVS violated Title VII by including in its separation agreement terms that many employers take for granted. The EEOC alleges that the release, cooperation, confidential information and non- disparagement provisions in the company’s widely used separation agreement unlawfully interfere with an individual’s rights under Title VII. The EEOC has brought the case as a systemic action, seeking to reopen hundreds of agreements that have been signed.
This is one more in a series of cases brought by the EEOC or private plaintiffs challenging the enforceability of separation agreements. Prior cases typically have challenged separation agreements as noncompliant with the vague and complex requirements under the Older Workers Benefit Protection Act. This recent case significantly expands employer exposure by applying the nonretaliation provisions of Title VII to provisions frequently found in separation agreements. This is not to say that all such provisions are subject to challenge. Many can be drafted in a way that would not be vulnerable to EEOC challenge. The irony in the case against CVS is that an agreement designed to eliminate liability from individual claims has itself spawned a broader and costlier litigation. Employers should take this lesson to heart by subjecting their employment-related agreements to careful and professional review on an ongoing basis.