United States: The EEOC's Use Of "Pattern Or Practice Of Resistance" Enforcement Mechanism Hits A Temporary Snag

The Equal Employment Opportunity Commission has recently advanced a long-standing but seldom used enforcement approach found under Section 707(a) of the Civil Rights Act. Section 707(a) allows the Agency to bring actions challenging a "pattern or practice of resistance" to the full enjoyment of Title VII rights, rather than an actual "pattern or practice of discrimination." This mechanism has the potential to serve as a new EEOC litigation tool as the EEOC can bolster its enforcement strategy with alleged employer resistance to rights under Title VII, in addition to actual acts of employment discrimination. The EEOC has recently advanced such arguments in cases where employers have required their employees to agree to submit any employment-related claims to binding arbitration (see EEOC v. Doherty Enterprises, Inc., 2015 WL 5118067 (S.D. Fla. Sept. 1, 2015)), and in cases where employers use standard covenant not to sue language in separation agreements (see EEOC v. CVS Pharmacy, Inc., 70 F. Supp. 3d 937 (N.D. Ill. 2014)).

In the case of attacks on separation agreements, the EEOC claims that the customary language employers use in covenant not to sue clauses (requiring employees' agreement to not sue in addition to releasing all claims) may "chill" employees from participating in EEOC proceedings. The "chilling effect" allegedly caused by separation agreements, the Agency claims, constitutes a "pattern or practice of resistance" to the full enjoyment of Title VII rights and a violation of Section 707(a). The EEOC's attack on employee separation agreements encountered a recent stumbling block, however, as the Seventh Circuit ruled on December 18 that the Agency's case against CVS Pharmacy, Inc. must be dismissed on procedural grounds.

In EEOC v. CVS Pharmacy, Inc., CVS terminated a store manager and offered her a severance agreement, which she accepted and signed. The Agreement included a release of waivable claims related to her employment, including claims under Title VII. The Agreement also included a covenant not to sue CVS, but specifically carved out language identifying the employee's right to "participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws." Soon after executing the Agreement, the employee filed a Charge of Discrimination with the EEOC. In its investigation, the EEOC concluded that, despite the specific language in the Agreement identifying the employee's right to participate in anti-discrimination proceedings, CVS's use of the Agreement nonetheless interfered with employees' rights to participate in EEOC investigations, and, therefore, constituted a "pattern or practice of resistance to Title VII rights."

In response to the EEOC's finding, CVS requested that the EEOC comply with Title VII's pre-suit conciliation procedures before filing a lawsuit. The EEOC refused to do so, however, and eventually filed suit in the Northern District of Illinois. In the suit, the EEOC echoed its investigation finding and argued that CVS's use of a severance agreement that could "chill" employees from filing charges or participating in EEOC proceedings constituted a "pattern or practice of resistance to the enjoyment of Title VII rights." The EEOC further argued that since it advanced a theory that CVS engaged in a pattern or practice of resistance to Title VII rights, rather than a pattern or practice of discrimination, it was not required to comply with Title VII's pre-suit procedures.

The district court agreed with CVS's assertion that Title VII requires the EEOC to engage in conciliation, and dismissed the EEOC's case. On appeal, the Seventh Circuit affirmed the district court's decision, finding in part that, since there is no difference between a suit challenging a pattern or practice of resistance and a suit challenging a pattern or practice of discrimination, the EEOC was required to comply with Title VII's informal methods of dispute resolution prior to litigation.

Although the court ruled in favor of CVS, employers should remain cognizant that the court's decision was not based on the merits of the EEOC's position regarding CVS's alleged pattern or practice of resistance to Title VII rights. Instead, the court affirmed the district court's decision because the EEOC failed to follow Title VII's pre-suit conciliation requirements. Thus, in the future the EEOC will likely elect to conciliate a case with similar facts before filing a lawsuit, which would compel the court to decide whether the language employers have long considered customary in employee separation agreements actually complies with Title VII and other anti-discrimination laws. With that said, employers should take note of the EEOC's enforcement position and conduct a proactive review of their separation agreements. In doing so, employers should consider taking the following actions:

• Keep it simple. The EEOC specifically highlighted the CVS Agreement's length, small font, and "legalese." To the extent possible, employers should keep separation agreements short, and draft the agreements in plain English.
• Provide sufficient detail in the employee's rights provision. Employers should ensure that the carve-out language explaining the employee's rights is unambiguous, and specifically states that the employee may file discrimination charges with government agencies and participate in anti-discrimination proceedings, including the EEOC specifically.
• MAKE THE CARVE-OUT LANGUAGE CONSPICUOUS. In order to avoid claims that an employee was unaware that he or she could participate in anti-discrimination proceedings because the language explaining such was hidden in the middle of a long, single spaced paragraph, employers should draft the carve-out language at the very least in a standalone paragraph covering exclusions from the release.

Finally, employers should keep a close watch on the EEOC's progress in advancing its theory that certain employee agreements or policies may "chill" employees from filing charges or participating in EEOC proceedings, and, therefore, the agreements constitute resistance to the enjoyment of Title VII rights. This theory is especially intriguing because it is similar to the National Labor Relations Board's successfully deployed arguments that policies and agreements (e.g., code of conduct and social media policies among others) "chill" employees' rights to engage in concerted activity under Section 7 of the National Labor Relations Act. If the EEOC successfully advances a similar argument, it could breathe fresh life into the EEOC as it has done for the NLRB and start a new wave of enforcement activity.

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