United States: They Really Mean It: The EEOC Sues Another Employer For Allegedly Overbroad Releases

Last Updated: May 14 2014
Article by Kerry E. Notestine, Terri M. Solomon and Daniel L. Thieme

Recently, the Chicago District Office of the Equal Employment Opportunity Commission (EEOC) sued CVS Pharmacy, Inc. because CVS required employees to sign a release that the EEOC claims was "overly broad, misleading, and unenforceable" due to provisions in the release which allegedly infringed on the employees' rights to file charges of discrimination and participate in EEOC investigations.1  On April 30, 2014, the Phoenix District Office of the EEOC sued CollegeAmerica Denver, Inc. in the United States District Court for the District of Colorado, making similar allegations.2  All employers should carefully review their form release agreements in light of these actions by the EEOC, which we expect will continue.

Complaint Allegations

The complaint alleges that CollegeAmerica employed a campus director of its Cheyenne, Wyoming location until she resigned.  CollegeAmerica and the former employee signed an agreement on September 1, 2012 in which CollegeAmerica agreed to pay her $7,000 and support her claim for unemployment compensation in exchange for her agreement not to contact any government agency to file a complaint, to forward complaints from disgruntled employees or students to CollegeAmerica, and not to disparage the company.  The former employee later exchanged emails with another former CollegeAmerica employee in which the former employee allegedly disparaged the company.  The company claimed a violation of the agreement and demanded the return of the $7,000 consideration.  The former employee then filed an EEOC charge and the company received notice of this charge on March 18, 2013.  The company sued the former employee in state district court on March 25, 2013, alleging breach of the September 1, 2012 agreement.  She subsequently filed two other EEOC charges alleging retaliation.  During the EEOC's investigation into the charges, CollegeAmerica produced four form agreements that the company apparently used for separation agreements with individual employees and for reductions in force (RIF) involving terminations of multiple employees.3  The EEOC attached the agreement signed by the former employee and the four form releases to its complaint.

As in the CVS case, the EEOC asserts in the CollegeAmerica matter that provisions of the agreements requiring release of claims, cooperation with the company, and non-disparagement violate the Age Discrimination in Employment Act (ADEA) because those provisions allegedly chill the rights of individuals to file charges of discrimination and participate in EEOC and state agency investigations.  The EEOC also challenges additional provisions in the CollegeAmerica agreements not present in the CVS release, e.g., clauses specifically prohibiting contact with government agencies and/or cooperation with  others who filed complaints against the company, a clause representing that the individual has filed no claims to date, and a clause certifying that the former employee disclosed all non-compliance with regulatory requirements (including providing a sheet to list any instances of non-compliance of which the employee was aware).  The EEOC further referenced that the form agreement included a severability clause and alleged that CollegeAmerica retaliated against the former employee by filing and pursuing the lawsuit after she filed EEOC charges.

Analysis

Littler's March 4, 2014 ASAP provides important background on this issue.  All employers should be aware that the EEOC has taken a consistent position since its 1997 Enforcement Guidance: that agreements prohibiting the filing of charges or participating in investigations violate the ADEA and Title VII, as well as all other statutes enforced by the EEOC.  See Enforcement Guidance on non-waiveable rights under Equal Employment Opportunity Commission (EEOC) enforced statutes, EEOC Notice No. 915.002 (4/10/97).  Thus, provisions such as that included in the agreement signed by the former employee prohibiting her from filing complaints or grievances with government agencies should be avoided.  Note that a waiver of the right to recovery generally remains permissible, and we recommend including such a provision in releases along with a statement that nothing in the agreement prevents the individual from filing a charge or participating in a government investigation. 

We noted in our prior ASAP on the CVS litigation that 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.  Because of these concerns, we also recommended in our prior ASAP that employers consider including a specific reference to the right to file charges and participate in investigations with the NLRB as well as the EEOC, and the additional statement that nothing in the release affects an individual's right to engage in concerted activity protected by Section 7 of the NLRA.

Because courts have not rendered final decisions in the CVS and CollegeAmerica cases, it is less clear how employers should address claims that the other provisions of the agreements "chilled" individuals' rights to file charges or participate in investigations.  Certainly, employers have legitimate interests in continued cooperation with former employees, non-disparagement, and confidentiality.  In order to avoid claims of chilling employee rights, we recommend that releases and separation agreements clearly state that the former employee's continued right to file charges and participate in investigations is not restricted by any provision of the agreement, including   release of claims, confidentiality, non-disparagement, covenants-not-to-sue, cooperation, and representations about prior claims and compliance issues. 

The EEOC does not specifically indicate in the CollegeAmerica complaint why the severability clause in the agreements is problematic.  A severability clause provides that an invalid provision should be separated from the rest of the agreement, and the rest of the agreement will be enforceable.  The EEOC indicates that this CollegeAmerica agreement did not include a severability clause, while the form agreements attached to the complaint did include such a clause.  Perhaps the EEOC may take the position that this CollegeAmerica agreement is invalid in its entirety because it did not include a severability clause, while certain provisions of the form agreements might be enforceable because such agreements did include a severability clause.  Littler will monitor developments in this litigation and provide updates as warranted.

Of course, employers also should be careful to avoid adverse actions in close proximity to protected acts like filing of EEOC charges.  According to the EEOC's allegations in the complaint, the employer filed the lawsuit and took certain actions in the litigation immediately after the former employee filed charges of discrimination.  Even if the filing of the charges was not the reason for the company's actions, the timing of the litigation likely raises a possible inference of retaliation which CollegeAmerica may find difficult to rebut.

Recommendations

The recommendations from our prior ASAP on the EEOC v. CVS litigation apply to this new EEOC lawsuit.  Here are those recommendations with additional commentary:

  • 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 necessary in the past.  We recommend that these rights be specifically stated, and also refer to Section 7 rights under the NLRA as appropriate.  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 and CollegeAmerica complaints, 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 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, to avoid any 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 file charges and participate in investigations]," 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 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.  The EEOC did not make similar allegations relating to CollegeAmerica's separation agreements and RIF releases even though those documents also were five to six pages single spaced.  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 complexity and language contained in template release agreements.

Footnotes

1 See Kerry Notestine, Terri Solomon, and Daniel Thieme, Recommendations in Response to the EEOC's New Lawsuit on Severance Agreements, Littler ASAP (Mar. 4, 2014).

2 See EEOC v. CollegeAmerica Denver, Inc., n/k/a Center for Excellence in Higher Education, Inc., d/b/a CollegeAmerica, civil action no. 14-cv-01232-LTB (D. Colo., Apr. 30, 2014).

3 The agreements are referenced as: (i) separation – non-ADEA under 40, (ii) separation – ADEA age 40 and over, (iii) RIF –non-ADEA under 40, and (iv) RIF – ADEA age 40 and over.  

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.

Authors
Kerry E. Notestine
Terri M. Solomon
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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.

Disclaimer

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.

Registration

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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Emails

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 .

Security

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.