Thursday, February 13, 2014

EEOC vs. Separation Agreements

The EEOC filed a lawsuit last week that has been making some waves. Basically, the Complaint (available here) alleges that seemingly routine clauses in CVS's separation agreements (copy attached to Complaint) violate Title VII.

The challenged clauses include:
  • Cooperation - The Complaint highlights language requiring the employee to notify CVS general counsel if an investigator contacts the employee about an administrative investigation;
  • Non-Disparagement;
  • Non-Disclosure of Confidential Information - The clause covers personnel information, wages and benefits structures, and affirmative action plans;
  • General Release of Claims - Complaint emphasizes that it includes "any claim of unlawful discrimination of any kind."
  • No Pending Actions; Covenant Not to Sue - This clause prohibits the employee from initiating any action covered by the general release - plus, the employee agrees to cover the employer's legal fees for any breach.
The EEOC claims the separation agreements limit and interfere with an employee's right to file charges with the EEOC, and cooperate and participate in an investigation. 

The EEOC acknowledges that the covenant not to sue includes an exception for an employee cooperating with agency (like the EEOC) enforcement and investigation. The EEOC seems to take issue with this exception only applying to the covenant not to sue.

I bet Jon Hyman loves this case . . . oh wait, actually his exact words were "OH MY GOD, THIS CASE COULD BE RUINOUS!!!" He does, however, offer up a solution (spoiler alert: it's essentially a disclaimer like the exception in the Covenant Not to Sue, but applicable to the entire agreement). That sounds like a plan to me.

Dan Schwartz agrees with Jon that this case is a big deal. He offers up some additional solutions (spoiler alert: a severability clause, and a "blue pencil" clause).

Of course, the Court may just tell the EEOC to shove it and you won't need any of these clauses. I tend to include severability clauses in my agreements, and don't see any problem with the disclaimer Jon proposes. One thing I like about Jon's disclaimer (and it's something I usually include) is a clause that the employee will not accept any money/relief from an agency action.

Image: EEOC seal used in commentary on EEOC. Not official use.