United States: EEOC’s Battle Against Employee Releases Heats Up

In February, we commented on the EEOC v. CVS Pharmacy, Inc. case, where the EEOC filed a "pattern or practice" lawsuit against CVS in Illinois federal court, claiming that CVS' employee releases discourage the filing of EEOC charges and cooperation with the EEOC in investigations.  As we previously noted, the EEOC is challenging several release provisions that routinely appear in employee releases, and choosing to pursue the lawsuit even though the CVS release at issue clearly states that the release is not intended to interfere with employees' rights to participate in agency proceedings or to cooperate with agencies during their investigations.

In what is heating up to be a major battle, CVS filed a motion to dismiss or for summary judgment, contending not only that CVS' release is valid and enforceable, but also that the EEOC failed to engage in any conciliation efforts.  CVS' pleadings, which were filed by a former EEOC General Counsel, state that "the EEOC flatly refused to engage in any conciliation," and deem erroneous the EEOC's position that it is not required to conciliate pattern or practice claims.  As those who have dealt with the EEOC in the past know, EEOC conciliation is the process through which the EEOC and employers attempt to resolve disputes prior to litigation.  CVS is arguing that the EEOC's failure to conciliate alone justifies granting summary judgment against the EEOC.

CVS' counter-attack on the EEOC is particularly timely, given that a recent U.S. House of Representatives Appropriations Committee report, while recommending a $364 million budget for the EEOC for the coming year, also stated that it was "concerned with the EEOC's pursuit of litigation absent good faith conciliation efforts."  The Committee therefore expressly directed the EEOC to engage in conciliation before undertaking litigation and to provide a report to the Committee "on how it ensures that conciliation efforts are pursued in good faith."  Because the report is tied to the appropriations process for the EEOC, these directives and statements have some teeth behind them—EEOC funding is essentially being made contingent upon addressing current deficiencies in the conciliation process.

The importance of CVS' arguments has not been lost on the presiding Judge hearing the CVS lawsuit, who on May 6th allowed the Retail Litigation Center, Inc., a public policy organization of retailers, to file an amicus curiae brief in support of CVS' position.  The Retail Litigation Center's brief argues that the EEOC is attacking "standard-form separation agreement[s]" and that the EEOC's position goes against prior court decisions, industry practice, and Title VII's goal of promoting voluntary, informal dispute resolution.  With the addition of the Retail Litigation Center to the fray, there are larger issues at stake for all employers—the permissibility and finality of employee release agreements.

The takeaway for employers is that the EEOC's battle over employee releases is far from over.  Last week the EEOC filed a lawsuit in Colorado challenging a CollegeAmerica employee release, which purported to prohibit a former employee from even contacting regulatory or governmental agencies to file any complaint or grievance.  Other CollegeAmerica releases ostensibly prohibited assisting others in pursuing claims.  CollegeAmerica is alleged to have sued one of its former employees for allegedly violating a non-disparagement clause and breaching her release agreement, by subsequently filing EEOC charges.  (See EEOC v. CollegeAmerica Denver, Inc. et al., Case No. 1:14-cv-01232, D. Colo).  The CollegeAmerica case provides an example of provisions that employers would be well advised not to incorporate into employee release agreements, including a complete ban on the filing of EEOC charges.

With these cases pending, and the current difficulties faced by employers attempting to challenge EEOC conciliation efforts, employers should review their employee releases to make sure they use clear and straightforward language, and include express statements that the releases do not prohibit an employee from filing EEOC charges or participating in EEOC investigations.  Employers may also want to re-consider the scope and breadth of any non-disparagement and confidentiality clauses.

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.

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