The boilerplate severance agreements used by many employers may now be subject to challenges by the U.S. Equal Employment Opportunity Commission. On February 7, the EEOC filed a “pattern or practice” lawsuit in Illinois federal court against CVS Pharmacy Inc., attacking language commonly used in separation and release agreements by employers across the country and seeking to invalidate the company’s standard severance agreement.
The EEOC alleges that CVS’ separation agreement violates Title VII of the Civil Rights Act of 1964 by unlawfully interfering with employees’ right to file discrimination charges or even communicate with the EEOC and could thus be interpreted as deterring an employee from filing a charge or participating in an EEOC investigation. Specifically, the EEOC has taken issue with the language (1) provisions requiring employees to inform the company if they are contacted in relation to a legal matter or administrative investigation, (2) a non-disparagement clause, (3) a clause barring the disclosure of confidential company information, (4) a general release of claims stating the employee gives up “any claims of unlawful discrimination of any kind,” and (4) a covenant not to sue stating the employee represents that they have not filed “any complaint” with “any…agency” and will not file such complaint. Particularly worrisome is the fact that the challenged clauses appear to be fairly standard and likely to be found in separation and release agreements of employers across the county.
Even more alarming to employers is the EEOC’s apparent indifference towards the agreement’s express language that it is not “intended to or shall [not] interfere with Employee’s right to participate in a proceeding with” any agency, nor to “prohibit Employee from cooperating with any such agency in its investigation.” The EEOC contends the “qualifying sentence” is insufficient, as it is only provided in one paragraph of the agreement.
The EEOC is seeking a permanent injunction preventing CVS from using the current version of the separation agreement and discontinue any practices impeding an employee’s right to file a charge. The agency also wants the court to provide all former employees who were subject to the separation agreement 300 days to file a discrimination charge.
While we await its final outcome, this suit should serve as a warning to employers of increased EEOC scrutiny over commonly used terms in severance agreements that could remotely be interpreted as limiting employees’ ability to interact with the EEOC. Employers should take this opportunity to review their standard separation and release agreements. We can help you evaluate your standard agreements and ensure terms are not so overly broad so as to attract the attention of the EEOC.