Does Your Company’s Severance Agreement Discriminate Against Employees?

On February 7, 2014, the EEOC filed a lawsuit against CVS alleging that CVS’s severance agreement violated the employees’ right to file charges with the EEOC and FEPA (“Fair Employment Practices Agencies”).  In light of this case, all employers should review (and, as recommended below, potentially revise) their form employment severance agreements.

The EEOC alleges in its lawsuit that CVS conditioned the receipt of severance benefits “on an overly broad severance agreement.”  And, that “[t]he agreement interfered with the employees’ right to file discrimination charges and/or communicate with the EEOC.”

Federal law provides that an employer may not interfere with the protected right of an employee to file a charge, testify, assist, or participate in any manner in an investigation, hearing, or proceeding under Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. § 2000e et seq., the Americans with Disabilities Act (ADA), 42 U.S.C. § 12101 et seq., the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq., or the Equal Pay Act EPA), 29 U.S.C. § 206(d).  These employee rights are non-waivable under the federal civil rights laws.

Within the CVS Complaint, the EEOC highlighted six (6) relatively common separation agreement provisions as grounds for the agreement violating the rights of employees:

1. Cooperation:  an employee was required to notify CVS general counsel upon receipt of, among other things, an administrative compliant;
2. Non-Disparagement:  an employee was prohibited from making statements that disparage CVS or its officers, directors or employees;
3. Non-Disclosure of Confidential Information:  an employee was prohibited from disclosing personnel information;
4. General Release of Claims:  employee agreed to broad release, including discrimination claims.
5. No Pending Claims; Covenant Not to Sue:  employee was prohibited from filing action against CVS, but explicitly carved out the employee’s right to participate in, or cooperate with, state or federal discrimination proceeding or investigation.
6. Attorney’s Fees Provisions:  employee agreed to reimburse CVS for attorney’s fees included by employee’s breach of agreement.

As most employers will agree, the above provisions are not unique.  They are commonly used provisions in most (if not all) severance agreements.  So, what should employees do?

Practical Counsel:

1. Review Severance Agreements to ensure that the agreements do not act to prohibit or actively discourage an employee from pursuing federally protected rights to file a charge or participate in any manner with EEOC; and
2. Include a provision within severance agreements that specifically states that nothing within the severance agreement interferences with these non-waivable rights of employees and outline the rights to employees to take action with EEOC.

For additional information or to have your business’s severance agreement reviewed (or revised) (or drafted), please do not hesitate to contact Merritt Green (mgreen@gcpc.com), Chair of General Counsel, P.C. Employment Group at 703-556-0411.