EEOC Challenges Standard Separation Agreement Terms as Unlawful

Published by Meg Vergeront on | Permalink

Think your standard employee separation agreement complies with the law?  According to the Equal Opportunities Commission (EEOC), it may not.  The EEOC recently filed a lawsuit in federal court challenging terms of a CVS employment separation agreement.  Specifically, the EEOC is alleging that several terms of the agreement unlawfully restrict the rights of employees who sign the agreements to file discrimination charges or communicate and cooperate with the EEOC.  Such restrictions violate federal law.

The allegedly offending clauses include:

*A cooperation clause requiring employees to notify CVS's in-house counsel if the employee receives an administrative complaint relating to the employee's former employment.

*A confidentiality clause prohibiting employees from discussing personnel information.

*A non-disparagement clause prohibiting employees from making statements disparaging or harming CVS's reputation.

*An attorneys' fees clause requiring a terminated employee to pay CVS's reasonable attorneys' fees if CVS has to sue because the employee breaches the separation agreement.

*A covenant not to sue, prohibiting employees from suing CVS, even though the clause carved out the right to participate in or cooperate with state and federal discrimination investigations and proceedings (such as EEOC investigations/proceedings).

*A general release, including a release of all claims of discrimination.

If the EEOC is successful in this lawsuit, employers will have to virtually start from scratch in an attempt to craft a separation agreement that protects their interests in buying a release of claims from former or departing employees without violating EEOC's dictates. 

Employers need to watch this case closely.