Employers Should Review Employee Separation Agreements in Light of Recent EEOC Actions - A Creative Services, Inc. Compliance Corner Article

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Employers Should Review Employee Separation Agreements in Light of Recent EEOC Actions

05.19.14

On April 30, 2014, the U.S. Equal Employment Opportunity Commission (EEOC) filed a suit in Colorado federal court against private college, CollegeAmerica, alleging that the school’s separation agreements improperly prevented employees from filing age discrimination complaints, which is in violation of the Age Discrimination in Employment Act (ADEA).

Specifically, the EEOC claims that CollegeAmerica placed conditions on severance pay and other separation benefits offered to one of its former Wyoming-based directors, Debbi D. Potts, which interfered with her right to file charges of discrimination and participate in EEOC investigations. The EEOC alleges that CollegeAmerica further violated the ADEA by retaliating against Potts for filing a discrimination claim with the EEOC by suing her in Colorado state court, alleging she breached her separation agreement. The EEOC is asking for a court order to require CollegeAmerica to reform its separation agreements and revise related policies.

In February 2014, the EEOC filed a similar suit against CVS in Illinois federal court, alleging that the retail pharmacy improperly conditioned certain employees' severance pay on an “overly broad, misleading and unenforceable” separation agreement.

Recommendations for Employers

These two recent cases serve as a warning for employers that the EEOC may scrutinize standard clauses in separation agreements -- even if those contracts include a disclaimer that employees are allowed to bring claims of discrimination to the government. Employers should review their agreements to ensure existing provisions adequately preserve the employee’s right to file administrative charges and participate in agency investigations.  Employers may also want to include greater specificity in these provisions, and ensure that rights are clearly stated and apply to any government agency charged with enforcement of any law.

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