The details are still yet to be known, but word out of
Chicago is that the EEOC has suffered a big defeat in their
controversial lawsuit against CVS Pharmacy, over the drug store chain’s use of
separation agreements. Employers
commonly use separation or severance agreements when the employment
relationship ends. In exchange for some type of payment, the employee agrees to
a general release of any potential claims he or she might have against the
employer, and possibly other provisions, such as confidentiality and
non-disparagement clauses.
As reported in my August 8, 2014 post
“Mad Men: The EEOC Advertises its Aggressive Agenda”, earlier this year, the EEOC
filed a lawsuit against CVS, claiming the drug store chain’s use of its
standard separation agreement demonstrated a pattern and practice of CVS
interfering with employees' Title VII in a way that “deters the filing of
charges and interferes with employees' ability to communicate voluntarily with
the EEOC.”
The EEOC’s lawsuit was troubling for many
in the business community, because employers nationwide commonly use the
language being attacked in the CVS agreements. In the event the EEOC were to
prevail, it could have result in chaos for many businesses, casting into doubt
the validity of such standard severance agreements, and potentially allowing
former employees to revive previously barred claims.
On September 18, 2014, U.S. District
Court Judge John Darrah verbally granted CVS’s motion to dismiss based on the
EEOC’s failure to state a claim, and an opinion is expected shortly that will
give the Court’s basis for dismissing the EEOC’s lawsuit. CVS has announced it is pleased with the
decision and the EEOC is withholding comment until it sees the Judge’s written
opinion.
It is not surprising that the EEOC filed
the lawsuit. In its Strategic
Enforcement Plan for 2013-2016, the EEOC had announced its intent to target
employer policies it claimed discouraged or prohibited individuals from
exercising their legal rights, including overly broad waivers or settlement
provisions that prohibited filing EEOC charges or providing information in EEOC
or other legal proceedings.
In its rush to file a “test” case, the
EEOC might have made the error of simply picking the wrong defendant to go
after, or not bothering to actually read the agreements in question. When it filed its motion to dismiss, CVS
noted that its separation agreements expressly allowed for employees to
participate with and cooperate in any investigation by a government agency,
including the EEOC. Specifically, CVS’s agreements expressly note that none
of the provisions are:
“[I]ntended to
or shall interfere with employee’s right to participate in a proceeding with
any appropriate
federal, state or local government agency enforcing discrimination laws, nor
shall this Agreement prohibit employee from cooperating with any such agency in
its investigation,” provided of course that the employee waives her entitlement
to monetary and other relief.
The decision in the CVS
case may not bode well for a similar lawsuit filed by the EEOC in the United
States District Court of Colorado. Some
legal commentators have suggested that the EEOC may be trying to use this type
litigation to impose new guidelines for such agreements, or perhaps as a
prelude to more formalized regulation
Mark Fijman is a labor and employment attorney with Phelps Dunbar, LLC, which has offices in Louisiana, Mississippi, Florida, Texas, Alabama, North Carolina and London. To view his firm bio, click here. He can be reached at (601) 360-9716 and by e-mail at fijmanm@phelps.com
