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EEOC Sues Another Employer Over Separation Agreement Language

    Client Alerts
  • May 09, 2014
Earlier this year, the Equal Employment Opportunity Commission filed suit against the CVS drugstore chain, alleging that a form settlement agreement used by the employer illegally deterred former employees from filing charges of discrimination with the agency. On Monday, the EEOC announced that it has filed a second lawsuit based on similar release language.
The EEOC filed suit against CollegeAmerica Denver, Inc. in federal court in Colorado, challenging a release provision that prohibits the signee from filing any complaint with a government agency or disparaging the former employer in any way. The first part of the release language clearly contradicted the EEOC’s position that attempting to prohibit employees from filing administrative charges is a form of retaliation under federal civil rights laws. The employer in this case sued a former employee who filed an EEOC charge for breach of the settlement agreement.
The second part of the lawsuit is more troubling for employers. Post-employment non-disparagement provisions are common in settlement agreements, but are rarely if ever interpreted or enforced to stop a former employee from filing a complaint with a government agency. If the EEOC asserts that such generic provisions constitute retaliation even in the absence of any claim or threatened claim, employers may be forced to add caveats that non-disparagement does not include complaining to a government agency.
Separation agreements with employees should limit their prohibitions against legal claims to actual lawsuits against the employer. As an alternative, the agreement can specifically state that it does not apply to filing of complaints with government agencies. Given the EEOC’s apparent focus on these agreements, employers should review their standard terms to assure that they cannot be deemed retaliatory.