The Equal Employment Opportunity Commission filed a complaint against CVS Pharmacy last week. The Illinois federal court suit claims the national chain violated Title VII by using overly broad severance agreements with employees. Specific provisions targeted by the agency include a nondisparagement clause, a cooperation clause requiring the employee to promptly notify CVS of any contact regarding a legal matter, and a covenant not to sue covering “any complaint, claim, action or lawsuit of any kind.” According to the EEOC, the agreement illegally interfered with the ability of employees to file discrimination charges or communicate with the agency. The EEOC also took issue with the “five pages of small print” that included only “a single qualifying sentence” that the agreement was not intended to interfere with employees’ rights to participate in a proceeding with state or federal agency actions or investigations. Characterizing the suit as an effort to “preserve employee access to the legal system,” the EEOC’s action puts employers on notice that a review of their severance agreements might be a good idea, particularly as many of the provisions cited by the agency in the CVS complaint are commonly included in such agreements. A more reader-friendly agreement with prominent disclosures should be considered to avoid agency action in an area included as one of the EEOC’s six strategic enforcement priorities in its recent plan.
The EEOC filed its complaint on February 7 against the national pharmacy chain, seeking “to correct a pattern or practice of resistance to the full enjoyment of the rights secured by Title VII in violation of Section 707(a) of Title VII.”
Specifically, the agency claimed that CVS conditioned the receipt of severance pay on an “overly broad, misleading and unenforceable Separation Agreement that interferes with its employees’ right to file charges with the [EEOC] and Fair Employment Practices Agencies [FEPAs] and communicate voluntarily with and participate in the proceedings conducted by the EEOC and FEPAs.”
The suit cited five provisions from the five-page, single-spaced agreement that was used by CVS since August 2011.
First, the section on cooperation, which required the employee to “promptly notify the company’s general counsel by telephone and in writing” of any “subpoena, deposition notice, interview request, or another inquiry, process or order relating to any civil, criminal or administrative investigation, suit, proceeding or other legal matter relating to the corporation from any investigator, attorney, or any other third party.” The EEOC took particular offense at language requiring notice of an administrative investigation or contact by any investigator.
A nondisparagement clause also caught the attention of the agency, as did a nondisclosure provision. Also troubling: a “General Release of Claims,” which stated, “The Released Claims include . . . any claim of unlawful discrimination of any kind.”
Finally, the EEOC zeroed in on a covenant not to sue section with language that the employee “agrees not to initiate or file, or cause to be initiated or filed, any action, lawsuit, complaint or proceeding asserting any of the Released Claims against any of the Released Parties. . . . Employee agrees to promptly reimburse the Company for any legal fees that the Company incurs as a result of any breach of this paragraph by Employee.”
The covenant not to sue included a qualifying sentence that “[n]othing in this paragraph is intended to or shall interfere with Employee’s right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws, nor shall this Agreement prohibit Employee from cooperating with any such agency in its investigation.”
Despite this language, the EEOC claimed the agreement “constitutes resistance to the full enjoyment of rights secured by Title VII because [it] interferes with an employee’s right to file a charge with the EEOC or FEPAs, and to participate and cooperate with an investigation conducted by the EEOC or FEPAs.”
The complaint seeks a permanent injunction from CVS’s use of the current agreement and an order that the defendant reform the existing agreement, as well as issue a corrective communication to its workforce. CVS should also be required to provide 300-day periods for all former employees that signed the allegedly illegal release to file a charge of discrimination with the EEOC or an FEPA.
To read the complaint in EEOC v. CVS Pharmacy, click here.