Seventh Circuit Rules Against EEOC Regarding CVS Separation Agreements

Author: Marta Moakley, XpertHR Legal Editor

December 18, 2015

The Equal Employment Opportunity Commission (EEOC) may not broadly enforce separation agreements that may limit an employee's right to file a charge with the agency absent a conciliation attempt or an allegation that the employer engaged in discriminatory or retaliatory practices, the 7th Circuit Court of Appeals has ruled. This case considers the EEOC's conciliation practices prior to filing a federal claim, which were the subject of the Supreme Court's Mach Mining case last term.

The EEOC filed a claim alleging that CVS Pharmacy, Inc., was violating Title VII of the 1964 Civil Rights Act by offering a severance agreement that could deter terminated employees from filing charges with the EEOC or participating in EEOC proceedings. Specifically, the EEOC alleged that CVS's separation agreement constituted a pattern and practice of resistance to the full enjoyment of rights secured by Section 707(a) of Title VII. The EEOC did not attempt to conciliate with the employer prior to filing suit in federal court because, it argued, the conciliation requirements are contained in another provision (Section 706) of Title VII.

The lower court sided with CVS in its argument that Title VII requires the EEOC to conciliate prior to filing a claim. In addition, the lower court was skeptical that the EEOC could enforce separation agreements using a "pattern and practice" rationale absent a claim that the employer had engaged in discriminatory or retaliatory practices.

Although the EEOC argued that it had broad enforcement powers, the 7th Circuit sided with the lower court. In its decision, the appeals court concludes that "the EEOC is required to comply with all of the pre-suit procedures contained in Section 706 when it pursues 'pattern or practice' violations."

Barry Hartstein, Shareholder at Littler's Chicago office, explains that "this is a major setback to the EEOC" regarding their enforcement efforts. However, because other cases (such as EEOC v. Doherty Enterprises, Inc., a Florida federal district court case that dealt with arbitration agreements) have favored the EEOC's position, Hartstein cautions that "this issue will continue to be discussed."