The Equal Employment Opportunity Commission (EEOC) has taken a bold step to challenge standard and accepted provisions in severance agreements in a recent suit, Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., CA no. 14-cv-863 (N.D. Ill., 2014). There are two particularly important elements in this suit. 
The first is that the EEOC filed this suit without any employee charge. The agency filed the case under Sec. 707 of Title VII of the Civil Rights Act of 1964 and asserted that Sec. 707 permits it to seek immediate relief and does not require that its lawsuit be based on a discrimination charge. This is an unprecedented expansion of EEOC authority and will be one of the main points of contention.
Second, the suit attacks provisions in severance agreements the EEOC had previously approved. The severance agreement included the standard nondisparagement clause and waivers, releases, and covenants not to sue. However, the EEOC maintained that the agreement was deemed illicit apparently because it didn’t make it sufficiently clear that those provisions didn’t apply to the employee’s right to file a charge with the EEOC or a state human rights commission―even though that clause was expressly included in the agreement.
The challenged agreement is five pages of single-spaced type and includes only a single sentence stating that nothing in the paragraph interferes with the employee’s right to participate in an appropriate government agency’s proceeding.
In 1990, the Older Workers Benefit Protection Act (OWBPA) changed the way severance agreements were written for employees over age 40. It did so by requiring that certain rights and protections for the “older” workers be in any agreement that sought to waive or release a claim of age discrimination. Among other things, the statute provided: “No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the Commission.” 29 U.S.C. § 626(f)(4).
Although Title VII doesn’t have similar language, the EEOC has previously stated that many of the same requirements for effective releases that are imposed by the OWBPA and the Age Discrimination in Employment Act (ADEA) are equally applicable to releases of Title VII claims.
This isn’t the EEOC’s first challenge to severance agreements. The agency has sued Allstate under a variety of claims arising from the company’s decision in 1999 to convert its employee agents to independent contractors. That lengthy litigation appears to have reached a conclusion, with the court rejecting the EEOC’s claims that the provision relating rehire and enhanced severance to a release of claims wasn’t “retaliatory.”
Romero v. Allstate Ins. Co., E.D. Pa., March 13, 2014.
Burton J. Fishman is of counsel to Washington, D.C.’s, Fortney & Scott, LLC, and is recognized as one of the nation’s leading authorities on workplace law. A former deputy solicitor of the U.S. Department of Labor, his experience extends to the full spectrum of employment and labor matters.