United States: Recommendations In Response To The EEOC’s New Lawsuit On Severance Agreements

Last Updated: March 5 2014
Article by Kerry E. Notestine, Terri M. Solomon and Daniel L. Thieme

On February 7, 2014, the Chicago District Office of the Equal Employment Opportunity Commission brought suit in the U.S. District Court for the Northern District of Illinois against CVS Pharmacy, Inc., claiming that a severance agreement used by the company violates Title VII of the Civil Rights Act of 1964 because it is "overly broad, misleading and unenforceable...."  Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., civil action no. 14-cv-863 (N.D. Ill., February 7, 2014). This ASAP will address the background to this lawsuit, describe the EEOC's new and aggressive position toward severance agreements, and provide recommendations for employers. 


In 2006, the EEOC entered into a consent decree (the Kodak Consent Decree) with Eastman Kodak Company (Kodak), which it had sued one week earlier, alleging that Kodak's template release agreement violated Title VII of the Civil Rights Act of 1964 (Title VII) and the Age Discrimination in Employment Act of 1967 (ADEA) by, inter alia, containing language that explicitly prevented employees from assisting other employees with their claims of discrimination.  See EEOC v. Eastman Kodak Co., no. 06-cv-6489 (W.D.N.Y. 2006). The Kodak Consent Decree contained express language that Kodak was required to use in any future release agreement, to wit:

Except as described below, you agree and covenant not to file any suit, charge or complaint against Releasees in any court or administrative agency, with regard to any claim, demand, liability or obligation arising out of your employment with Kodak or separation therefrom.  You further represent that no claims, complaints, charges, or other proceedings are pending in any court, administrative agency, commission or other forum relating directly or indirectly to your employment by Kodak.

Nothing in this Agreement shall be construed to prohibit you from filing a charge with or participating in any investigation or proceeding conducted by the EEOC or a comparable state or local agency.  Notwithstanding the foregoing, you agree to waive your right to recover monetary damages in any charge, complaint, or lawsuit filed by you or by anyone else on your behalf.

Given that the EEOC had blessed the above-quoted language as the gold standard for release agreements, many employers have since that time included such language in their release agreements. Notwithstanding that thousands of such release agreements subsequently have passed muster when reviewed by the EEOC in connection with settlements of discrimination charges and lawsuits alleging violations of Title VII and/or the ADEA, the EEOC recently stated, in its Strategic Enforcement Plan for FY 2013-2016, that it intends to "target policies and practices that discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or which impede the EEOC's investigative or enforcement efforts. These policies or practices include retaliatory actions, overly broad waivers, settlement provisions that prohibit filing charges with the EEOC or providing information to assist in the investigation or prosecution of claims of unlawful discrimination, and failure to retain records required by EEOC regulations." See EEOC Strategic Enforcement Plan FY 2013-2016 at p. 10 (December 17, 2012). 

In May 2013, the Chicago District Office of the EEOC, which has developed a reputation for taking particularly aggressive positions on issues that the EEOC generally, and the Chicago office specifically, deem significant, sued Baker & Taylor, Inc. in the U.S. District Court for the Northern District of Illinois, alleging that the company's severance agreements interfered with employees' rights to file charges with the EEOC and other fair employment practices agencies (FEPAs). Equal Employment Opportunity Commission v. Baker & Taylor, Inc., civil action no. 13-cv-03729 (N.D. Ill., May 20, 2013).  In a sweeping consent decree entered in July 2013, Baker & Taylor agreed to include the following language in any future release agreement. See Equal Employment Opportunity Commission v. Baker & Taylor, Inc., documents #1 and 14 (N.D. Ill. July 10, 2013):

Nothing in this Agreement is intended to limit in any way an Employee's right or ability to file a charge or claim of discrimination with the U.S. Equal Employment Opportunity Commission ("EEOC") or comparable state or local agencies.  These agencies have the authority to carry out their statutory duties by investigating the charge, issuing a determination, filing a lawsuit in Federal or state court in their own name, or taking any other action authorized under these statutes.  Employees retain the right to participate in such any [sic] action and to recover any appropriate relief.  Employees retain the right to communicate with the EEOC and comparable state or local agencies and such communication can be initiated by the employee or in response to the government and is not limited by any non-disparagement obligation under this agreement [sic]. 

(Emphasis added).  Clearly, such language in the Baker & Taylor Consent Decree was a departure from the language that the EEOC had determined—in the Kodak Consent Decree—to be in full compliance with Title VII and the ADEA, notwithstanding that neither statute had been amended since 2006.  Particularly questionable is the language stating that employees retain the right "to recover any appropriate relief" in an EEOC action, since the EEOC expressly agreed in the Kodak Consent Decree that an employee can be required to waive in a release agreement any right to recover monetary damages in any post-settlement EEOC action. 

EEOC v. CVS Pharmacy, Inc.

As mentioned above, the same district office of the EEOC brought suit on February 7 of this year in the same court against CVS Pharmacy, Inc. (the Company), claiming that the Company's severance agreement (the Agreement)—which contained language modeled after that which was approved by the EEOC in the Kodak Consent Decree—violates Title VII because it is "overly broad, misleading and unenforceable...."  The EEOC asserts in the lawsuit that the Agreement violates Title VII because it interferes with employees' rights to file charges, communicate voluntarily and participate in investigations with the EEOC and other FEPAs.

In a February 7, 2014 press release (available on the EEOC's website), EEOC regional attorney John C. Hendrickson proclaimed:

Charges and communication with employees play a critical role in the EEOC's enforcement process because they inform the agency of employer practices that might violate the law. For this reason, the right to communicate with the EEOC is a right that is protected by federal law. When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law. Put simply, that is a deal that employers cannot lawfully make.  

The lawsuit alleges that the Company required exempt, non-store employees to sign "the five-page single spaced separation agreement" (emphasis in original) upon termination in order to receive severance pay.  The EEOC identified the following sections of the Agreement in asserting violations of Title VII:

  • A cooperation clause requiring the employee to "promptly notify the Company's General Counsel by telephone and in writing" of contacts relating to legal proceedings including an "administrative investigation" by "any investigator, attorney or any other third party...." (Emphasis in lawsuit but not Agreement).
  • A non-disparagement clause prohibiting the employee from making any disparaging statements about the Company and its officers, directors and employees.
  • A non-disclosure of confidential information provision prohibiting disclosure to any third party of confidential employee and other information without prior written permission of the Company's chief human resources officer.
  • A general release of claims that included a release of all "causes of action, lawsuits, proceedings, complaints, charges, debts contracts, judgments, damages, claims, and attorney fees," including "any claim of unlawful discrimination of any kind...." (Emphasis in lawsuit but not Agreement).
  • A no pending actions; covenant not to sue clause where the employee represents the employee has no pending "complaint, claim, action or lawsuit" of any kind "in any deferral, state, or local court, or agency".  The clause prohibits filing of "any action, lawsuit, complaint or proceeding" asserting the released claims, and requires the employee to promptly reimburse "any legal fees that the Company incurs" for breach of the covenant not to sue.  (Emphasis in lawsuit but not Agreement). 
  • A breach by employee clause, stating that in the event of the employee's material breach of the Employee Covenants section of the agreement, the Company would be entitled to obtain injunctive and other relief, including attorney fees.

The EEOC alleges in the lawsuit that the above-identified restrictions are limited only by a "single qualifying sentence" in the covenant not to sue and "not repeated anywhere else in the Agreement."  However, that very sentence clearly stated—in language strikingly similar to that blessed by the EEOC in the Kodak Consent Decree—that nothing in the covenant not to sue was "intended 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."  Despite that provision, the EEOC claims that the terms of the Company's standard Agreement, which was given to over 650 employees, constituted a pattern and practice of denying employees full exercise of their Title VII rights, including limiting their rights to file charges and cooperate with the EEOC and FEPAs in investigating charges of discrimination.  The EEOC seeks in the lawsuit:

  • a permanent injunction enjoining the Company from restricting the right to file charges or participate in agency proceedings;
  • reformation of the Company's standard Agreement;
  • corrective communications, not only to those who signed the Agreement but to the Company's entire workforce "informing all employees that they retain the right to file a charge of discrimination and to initiate and respond to communication with the EEOC and state FEPAs and are not required to keep certain information confidential in those communications" or to notify the Company about such communications, as well as training for human resources and management personnel who negotiate separation agreements; and
  • three hundred additional days for any former employee who signed the Agreement to file administrative charges.


While the court may ultimately decline to grant the EEOC any or all of the relief it seeks, employers—most of whom, like CVS, have likely relied upon the Kodak Consent Decree language previously approved by the EEOC—should take note of the EEOC's new position toward release agreements, review their standard separation agreements, and consider taking prophylactic steps to guard against similar claims. 

Most employers are aware of requirements under the Older Workers Benefit Protection Act (OWBPA), which in 1990 amended the ADEA by enumerating certain minimum requirements that a release agreement must satisfy in order for releases of claims of age discrimination under federal law to be effective.  In addition, the OWBPA expressly states that "No waiver agreement may affect the Commission's rights and responsibilities to enforce this Act. No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the Commission." 29 U.S.C. § 626(f)(4). Thus, the OWBPA and associated regulations prohibit any provision in a release of claims which would prevent an employee from filing a charge with the EEOC or from participating in an investigation by the EEOC.  See 29 U.S.C. § 626(f)(4); 29 C.F.R. §1625.22(i). In addition, the regulations issued after the passage of the OWBPA limit covenants not to sue, attorneys' fee reimbursements and similar provisions that employers often include in separation agreements.  29 C.F.R. §1625.23.

Significantly, the EEOC did not bring the CVS Pharmacy, Inc. lawsuit under the OWBPA/ADEA, but rather under Title VII. While the ADEA as amended by the OWBPA has express language (quoted above) protecting an individual's right to file a charge with, and to participate in an investigation conducted by, the EEOC, Title VII does not contain such express language.  Nevertheless, the EEOC previously has indicated in two major policy statements that many of the same requirements for effective releases that are imposed by the OWBPA/ADEA are equally applicable to releases of Title VII claims: Understanding Waivers of Discrimination Claims in Employee Severance Agreements (July 15, 2009) and Enforcement Guidance on Non-Waivable Employee Rights under Equal Employment Opportunity Commission Enforced Statutes, EEOC notice 915.002 (April 10, 1997).1  These policy documents, which provide the EEOC's official position on these same issues, apply restrictions similar to some of those in the OWBPA to other statutes enforced by the EEOC, including Title VII and the Americans with Disabilities Act of 1990. 

The courts have consistently denied enforcement of releases that preclude an employee from filing a charge of discrimination with a government agency.  See EEOC v. Lockheed Martin, 444 F.Supp.2d 414 (D. Md. 2006); Ribble v. Kimberly-Clark Corporation, 2012 U.S. Dist. Lexis 21822 (W.D. Wis. 2012).  The theory behind these rulings is that the EEOC and other government agencies have statutory mandates to enforce particular employment statutes, and as a matter of public policy private parties cannot agree between themselves to prevent the government from executing such statutory mandates.  See Enforcement Guidance on Non-Waivable Employee Rights under Equal Employment Opportunity Commission Enforced Statutes, EEOC notice 915.002 at §III(a).  In the CVS Pharmacy, Inc. lawsuit, however, the EEOC goes beyond this concept and seeks to invalidate a separation agreement that expressly permits an individual to file charges and participate in a governmental investigation.

Employers also should note that this concept of government mandates to enforce statutes likely applies to government agencies other than the EEOC and to statutes other than the ADEA and Title VII.  The National Labor Relations Board (NLRB) has taken similar, and perhaps even more aggressive, positions attacking various kinds of employee agreements on the basis that they improperly attempt to limit employees' exercise of the right to engage in concerted activity with co-workers granted by Section 7 of the National Labor Relations Act (NLRA), 29 U.S.C. § 157.  The NLRB specifically identifies restrictions on social media activities and communications in other forums for discussing terms and conditions of employment as examples of overbroad restrictions on Section 7 rights.  The NLRB would likely seek to apply these same principles to the kinds of clauses identified by the EEOC in the CVS Pharmacy, Inc. lawsuit (i.e., cooperation, disparagement, confidentiality, release of claims, and covenant not to sue).  See NLRB Fact Sheet on the NRLB and Social Media, available on the NLRB website.


In other contexts, courts have denied or limited relief sought by the Chicago District Office of the EEOC, which has the reputation of being highly aggressive. Therefore, it seems unlikely that all—or perhaps any—of the positions taken by the EEOC in the CVS Pharmacy, Inc. lawsuit will become binding on employers. Nevertheless, employers should take note of the EEOC's recent pronouncements in the Baker & Taylor, Inc. and CVS Pharmacy, Inc. lawsuits, and in the EEOC's highly publicized Strategic Enforcement Plan, and consider taking the following prophylactic actions:

  • Review every separation agreement form to consider whether to strengthen existing provisions preserving the employee's right to file administrative charges and participate in agency investigations.  To avoid potential claims, employers may wish to include greater specificity in these provisions than had been thought to be adequate in the past.  We recommend that these rights be specifically stated, and also refer to Section 7 rights under the NLRA.  Also, prophylactically, we recommend that these rights apply to any government agency charged with enforcement of any law (not just the EEOC and NLRB, and not just employment laws).
  • Despite the EEOC's allegations in the CVS Pharmacy, Inc. complaint, it is far from clear that an employer must repeat these rights in every paragraph of a separation agreement that could potentially be determined to limit an employee's right to engage in legally-protected conduct.  That would seem to make a separation agreement cumbersome and redundant, and may open the employer to challenges if the limitations are included in some but not all paragraphs.  In light of the EEOC's now more aggressive posture on these issues, however, we now recommend that the employer set off a statement of the protected rights in a separate paragraph of a separation agreement, perhaps in bold.  In addition, for the avoidance of doubt, the employer could specifically refer to each paragraph containing restrictions on an employee's rights (such as confidentiality and non-disparagement provisions) in the set-off paragraph, or begin each such section with language stating "Except as otherwise provided in paragraph [refer to paragraph protecting employee's right to engage in protected activity]," thus reinforcing that nothing in any section of the agreement limits those rights.
  • Employers should continue to provide in their separation agreements that, despite the employee's retention of the right to file a discrimination charge, the employee is waiving the right to recover monetary damages or other individual relief in connection with any such charge.
  • Employers should freshly review any separation agreement provisions mandating cooperation with the employer in connection with litigation and proceedings in light of the EEOC's now more aggressive posture on these issues.  Employers may wish to consider modifying terms that might spark concern from the EEOC.

Employers should consider the length and complexity of their separation agreements.  The EEOC specifically noted that the Agreement in the CVS Pharmacy, Inc. lawsuit was five single-spaced pages.  Even though the employees asked to sign these Agreements were exempt, non-store personnel who likely are relatively better educated and sophisticated than many non-exempt employees, the EEOC felt it important to highlight the length of the form separation agreement.  Because releases and separation agreements often are much longer than five single-spaced pages, and since one of the OWBPA mandates for enforceable releases is that they be "written in a manner calculated to be understood by such individual, or by the average individual eligible to participate," employers are advised to revisit the language contained in template release agreements. 


1. These policy documents are available on the EEOC's website. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Kerry E. Notestine
Terri M. Solomon
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.