EEOC Files Claim Against CVS Over Separation Agreements
Author: Beth P. Zoller, XpertHR Legal Editor
February 20, 2014
The EEOC alleges in a recently-filed lawsuit (EEOC v. CVS Pharmacy, Inc., Civil Action No. 14 C 0863 (N.D. Ill.)) that CVS unlawfully violated employees' rights by conditioning the receipt of severance benefits on an "overly broad, misleading and unenforceable" separation agreement that could deter employees from filing discrimination charges or voluntarily communicating with the EEOC. Employers should continue to follow the development of this case as it will likely have an impact on employer separation agreements.
The EEOC claims that, if overly broad, contractual provisions such as a nondisparagement clause, a confidentiality clause, a general release and a covenant not to sue interfere with employee rights to file discrimination charges and to communicate with government agencies. Despite the fact that the CVS agreement contained an explicit clause stating that nothing in the agreement was intended to prevent the employee from participating in any proceeding with any federal, state or local fair employment agency, the EEOC contends in the complaint that this disclaimer is a "single qualifying line" in a five-page, single-spaced separation agreement. In addition, the EEOC argues that the disclaimer only applies to the covenant not to sue section of the agreement. The EEOC further alleges that the disclaimer does not overcome the impact of other clauses found in the agreement that may deter employees from filing discrimination charges or communicating with the EEOC.
In connection with this lawsuit, the EEOC is:
- Seeking to prevent CVS from interfering with an employee's right to file discrimination charges and to participate and cooperate with federal and state fair practice employment agencies;
- Seeking to bar CVS from using the separation agreement at issue and ordering CVS to reform the separation agreement and any future agreements; and
- Requesting that the court provide any former employee subject to the separation agreement a 300-day window to file a discrimination charge with the EEOC or state fair employment practice agency.
In bringing this lawsuit, the EEOC has stated that it is adhering to one of its six strategic enforcement priorities (i.e., to fulfill its commitment to preserve access to the legal system and to target workplace policies and practices that prevent individuals from exercising their rights under employment discrimination statutes or that prevent the EEOC from investigating and enforcing antidiscrimination laws). EEOC District Director Jack Rowe stated in a press release that:
The importance of employees' ability to participate in the agency's process, free from fear of adverse consequences, cannot be overstated. It is always difficult for an employee to report employer discrimination to federal law enforcement officials. Anything that makes that communication harder increases the risk that discrimination will go unremedied.
Further, Regional Attorney John C. Hendrickson acknowledged that:
Charges and communication with employees play a critical role in the EEOC's enforcement process because they inform the agency of employer practices that might violate the law...For this reason, the right to communicate with the EEOC is a right that is protected by federal law. When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law. Put simply, that is a deal that employers cannot lawfully make.
Based on this case, employers may wish to reevaluate their separation and settlement agreements and ensure that strong disclaimer language applies to all clauses in the agreement and assures employees of their rights to file discrimination charges and to communicate with the EEOC.