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Seventh Circuit Tosses EEOC Lawsuit Challenging CVS Severance Agreements Due to Failure to Conciliate

    Client Alerts
  • January 04, 2016
Last month, the Seventh Circuit again rejected the Equal Employment Opportunity Commission’s attempt to declare an employer’s standard severance agreement illegal under Title VII. The EEOC and CVS Pharmacy have clashed over the agency’s contention that asking employees separated from employment for economic reasons to sign a release of claims in return for severance benefits, unlawfully interferes with their right to bring claims of discrimination. The EEOC has persisted in prosecuting this claim despite the fact that the CVS release explicitly states that the agreement in no way prevents employees from filing EEOC charges.

The Seventh Circuit never reached the substantive issues involved in the case, dismissing it for a second time based on procedural problems. The court concluded that the EEOC could not pursue the lawsuit because it had failed to engage in pre-suit conciliation of the claim. The EEOC contended that under Title VII, it is not required to conciliate claims brought under a part of the statute that prohibits a pattern and practice of resistance to discrimination claims. The Seventh Circuit found this part of the law to be indistinguishable from Title VII’s requirement for conciliation of pattern and practice discrimination claims. The Supreme Court’s recent Mach Mining decision did not affect this conclusion.

The Seventh Circuit is the fourth federal appellate court to reject the agency’s reasoning on this point. The court stated that adopting the EEOC’s position would allow the agency to avoid conciliation in all cases simply by characterizing them as resistance instead of discrimination claims. This decision should not prevent the EEOC from refiling the case or pursuing other employers with similar severance agreements. The agency’s continuing refusal to engage in pre-suit conciliation, especially in a case involving a novel and aggressive interpretation of Title VII should concern employers that rely on standard and widely-used employment releases.