Severance and separation agreements between employers and departing employees are a standard device in labor and employment law, providing companies with some certainty against future legal claims and former employees with extra salary or benefits or both. But over the last few years, the Equal Employment Opportunity Commission has taken aggressive action against severance agreements that may restrict the rights of former employees to file charges of discrimination with the agency.
On Feb. 7, perhaps demonstrating an escalation of an already-aggressive posture, the EEOC filed suit against CVS Pharmacy over its standard severance agreement used with its nonexempt employees, in EEOC v. CVS Pharmacy, Civ. No. 1:14-cv-00863, in the U.S. District Court for the Northern District of Illinois. Given that the CVS agreement does not seem to contain any extreme or extraordinary clauses, this EEOC action should be a warning to both employers and counsel alike to review their severance agreements more closely or to prepare for an increasing risk that the EEOC might find their agreements actionable.
