EEOC Challenges CVS's Severance Agreement

On February 7, 2014, the United States Equal Employment Opportunity Commission filed a lawsuit against CVS Pharmacy, Inc. in the United States District Court for the Northern District of Illinois in Chicago (EEOC v. CVS Pharmacy, Inc., No. 14 C 0863).  The EEOC alleges that CVS's severance agreement is unenforceable because it unlawfully interferes with the right of employees to file discrimination charges and communicate/cooperate with the EEOC.  The EEOC contends that this violates Section 707 of Title VII of the Civil Rights Act of 1964, which prohibits employer conduct that constitutes a pattern or practice of resistance to the rights protected by Title VII.  The suit, which has been assigned to U.S. District Judge John W. Darrah, may significantly impact employers and employees as well as employment law practitioners. 

The suit challenges the terms and conditions of CVS's severance agreement, which the EEOC describes as an overly broad agreement in five pages of small print.  The challenged provisions include: (1) a general release of all claims; (2) an acknowledgement that there are no pending claims and covenant to not file any claims; (3) a cooperation clause requiring notification of CVS's counsel of any subpoena or notice received in connection with an administrative investigation; (4) a non-disparagement clause prohibiting disparaging statements about CVS; (5) a confidentiality clause prohibiting disclosure of confidential company and personnel information; and (6) attorneys' fees clauses requiring payment of CVS's fees incurred as a result of breach.  These severance provisions are common and, therefore, a judicial determination as to their enforceability may have sweeping consequences for employment law attorneys and their clients.

In our upcoming series of blogs, we will discuss the present and potential ramifications of EEOC v. CVS Pharmacy, Inc. for employers, employees, and employment law practitioners.