Displaying 1 category results for February 2014.x

EEOC files suit challenging employer's standard settlement terms

By Stacey Mark
February 19, 2014

The EEOC has filed suit in Chicago against pharmacy giant CVS to stop it from using certain terms in its settlement agreements with employees.  The EEOC claims that the company unlawfully violated employees' rights to communicate with the EEOC and to file discrimination charges, in violation of Section 707 of the Civil Rights Act of 1964.

According to the EEOC, CVS conditioned the receipt of severance benefits for certain employees on an overly broad severance agreement set forth in five pages of small print.  The agreement purportedly interferes with employees' right to file discrimination charges and/or communicate and cooperate with the EEOC.  The terms objectionable to the EEOC include the following:

    1.     A cooperation clause that requires employees to notify CVS' general counsel upon receipt of a subpoena, deposition notice, or inquiry in connection with a suit or proceeding, including an administrative investigation;

    2.    A non-disparagement clause prohibiting employees from making statements that disparage the business or reputation of the company, its directors, officers, or employees; 

    3.    A confidentiality clause prohibiting the disclosure of Confidential Information, including personnel data revealing the skills, abilities or duties of employees, wage and benefits structures, succession plans, and information pertaining to affirmative action plans and planning;  

    4.    A general release of claims; and

    5.    A covenant not to sue that encompasses any claims, actions or proceedings and requires the employees to reimburse the company for any attorney fees incurred as the result of a breach of the agreement.  The covenant not to sue contains a qualification explaining that it is not intended to interfere with an employee's right to cooperate with or participate in a state or federal agency proceeding to enforce discrimination laws.

CVS reportedly used the foregoing terms in more than 650 agreements in 2012 alone.  All of the foregoing types of clauses are common in employment-related separation agreements, and often provide much of the incentive for employers to enter into such agreements.  Consequently, the EEOC's case against CVS is one that employers will want to monitor closely.  

 A copy of the EEOC complaint is available here.