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On February 7, 2014, the Chicago Office of the Equal Employment Opportunity Commission (EEOC) filed a lawsuit against CVS Pharmacy, Inc. alleging its separation agreements violate Section 707 of the Civil Rights Act of 1964.  The Chicago office is widely recognized as the most aggressive of the EEOC’s offices.  The EEOC takes issue with the following garden variety clauses:

  1. Cooperation clause providing that the employee will contact the company if they receive a subpoena or other inquiry relating to a legal matter;
  1. Nondisparagement clause;
  1. Clause barring the disclosure of confidential company information;
  1. General release of claims; and,
  1. Covenant not to sue.

EEOC's Issue with CVS' Severance Agreement

The EEOC has taken issue with such standard provisions in the past, causing employers to include carve-outs in their agreements providing that employees are still able to file charges with the EEOC.  CVS had such a carve-out in their severance agreements. Despite this carve-out, the EEOC alleges the clause containing the covenant not to sue “contains a single qualifying sentence that is not repeated anywhere else in the five page agreement”.  CVS’ carve-out provides:

“Nothing in this paragraph is intended to or shall interfere with employee’s right to participate in a proceeding with any appropriate federal, state or local governmental agency enforcing discrimination laws, nor shall this agreement prohibit employee from cooperating with any such agency in its investigation.”

Missing Information in CVS' Carve-Out

Recently, at an employment law conference, John Hendrickson, Regional Attorney for the EEOC’s Chicago office stated that one of the problems with CVS’ carve-out is it only states the employee can participate in a proceeding and cooperate. It doesn’t provide that the employee can file a charge or complaint. Further, the carve-out doesn’t name the EEOC but rather refers only to any appropriate agency. Mr. Hendrickson wouldn’t state on the record what the EEOC would find to be appropriate carve-out language but did state the carve-out should be conspicuous and should state that the employee has the right to file a charge or complaint with the EEOC and neither this agreement nor any other action can negate that right.

A Recommended Carve-Out

A recommended carve-out should be in larger font than the rest of the agreement and in bold print.  It is recommended that the carve-out be in a separate paragraph placed immediately above the employee’s signature.  A suggested carve-out is as follows:

“The employee has the right under federal law to file a charge or complaint with the Equal Employment Opportunity Commission (EEOC) as well as any appropriate State or local agency enforcing discrimination laws.  Nothing in this agreement is intended to or shall interfere with the employee’s right to file such a charge or complaint with the EEOC as well as any appropriate State or local agency enforcing discrimination laws,  or the employee’s right to participate in a proceeding with the EEOC as well as any appropriate State or local governmental agency enforcing discrimination laws, nor shall this agreement prohibit the employee from cooperating with the EEOC or any such State or local agency in an investigation.”

It should be noted that CVS filed a motion to dismiss the EEOC’s complaint. The motion is fully briefed and awaiting ruling.

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