By Jeffrey Ross & Condon McGlothlen

We’ve raised concerns for a long time that there are a lot of employment separation agreements floating around that do not necessarily reflect best practices.  So the EEOC’s recent lawsuit challenging CVS’s separation agreement is not all that surprising.

The EEOC complaint alleges that the CVS form “constitutes resistance to the full enjoyment of rights secured by Title VII because the Separation Agreement interferes with an employee’s right to file a [discrimination] charge… and to participate and cooperate with [a discrimination agency investigation]”.

We are regularly fascinated by the EEOC’s opinion of its own authority and the applicable law.  So we thought it was worth taking a closer look at the agreement at issue.

We did, and here’s what appears to irk the EEOC:

  1. The agreement states that “Employee …  releases … CVS… from any … charges …” and that “Employee … has not [and will not] file … any… claim … against [CVS] in any…agency.”  The agreement does say that the Employee does have the right to “participate in” and “cooperat[e] with” a discrimination agency investigation.  But it does not explicitly state that an employee has the right to file a discrimination charge.
  2. The agreement bars disclosure of “information concerning [CVS] personnel… without the prior written authorization of CVS … .”
  3. The agreement requires a signing employee who gets an “interview request or any other inquiry” from “any investigator” in an “administrative investigation” to notify the CVS “General Counsel by telephone and in writing”.
  4. The covenant not to sue paragraph contains an exclusion for “this paragraph” concerning discrimination charge filing and participating/cooperating with a discrimination agency investigation. But none of the agreement paragraphs concerning the release, cooperation, confidential information, nondisclosure, and non-disparagement contain such an exclusion

Whatever an employer thinks of the EEOC claims, there is a relatively easy way to keep the agency from having another reason to sue.  All an employer need do is have a discrimination charge/agency carve-out which applies agreement wide or is repeated in the types of provisions the EEOC is challenging.

Of course, this simple suggestion only will work if the employer has a best practices separation agreement that is not otherwise suspect, voidable or unlawful. In our experience, that is often a big “if”.

Without reference to the specific CVS separation agreement, we keep a running list of employee release agreement provisions most likely to be challenged, and it’s not getting any shorter. Suffice it to say that, aside from the EEOC’s interference concerns, there are a lot of issues which may affect enforceability, particularly under common law and the OWBPA [click for EEOC Guidance].

So employers should use this opportunity to take a serious look at their separation agreement forms (and settlement agreements as well).  Just because the form hasn’t been challenged and “worked before” doesn’t mean it won’t be challenged and will withstand scrutiny today.