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Are your separation agreements vulnerable to EEOC attack?

Organizations that pay employees severance that is not otherwise owed under policy or prior agreement, often require employees to sign a separation agreement releasing all claims against the employer in exchange for the severance. Because of prior challenges to such agreements by the EEOC, those separation agreements now include a specific provision protecting employees' right to file EEOC charges and participate in EEOC investigations. While the EEOC has blessed (or arguably required) such provisions in the past, a recent wave of lawsuits filed by the EEOC signal that it now wants more.

Over the last year, the EEOC has filed three lawsuits against companies challenging the validity of their separation agreements. In these cases, the EEOC has challenged a:

  • Non-disparagement clause that prohibits employees from making disparaging remarks about the employer, its officers, directors and employees or remarks that could damage the reputation and goodwill or reflect negatively on the employer
  • Cooperation clause that requires employees to promptly notify the company's general counsel of contacts related to an “administrative investigation”
  • Confidentiality clause that prohibits employees from disclosing confidential employee or other information without prior written permission

 The EEOC claims these provisions interfere with employees' rights to cooperate with the EEOC and other administrative agencies in investigating charges of discrimination.

 As part of the settlement for one of the suits involving the non-disparagement clause, the company agreed to include the following language in future separation agreements:

Employees retain the right to communicate with the EEOC and comparable state or local agencies and such communication can be initiated by the employee or in response to the government and is not limited by any non-disparagement obligation under the agreement.

While it is unclear whether the courts will find that the EEOC has gone too far, and whether the EEOC, or a plaintiff, would be successful in having a release agreement set aside without such limiting language, there are some steps you can take in the interim to reduce the likelihood of unwanted attention from the EEOC to your separation agreements and to bolster any defense of such an attack until there is some clear guidance from the courts.

First, you should confirm that your release contains a specific provision expressly allowing employees to file EEOC charges and participate in EEOC investigations. Next, you should review the agreement for any language that may be reasonably read as limiting employees' participation in a federal, state, or local investigation or proceeding (e.g., non-disparagement, cooperation, and confidentiality clauses). While it is not suggested that these provisions be deleted, you should consider adding language explicitly stating these provisions do not limit an employee's right to participate in an administrative investigation or proceeding conducted by the EEOC or other federal, state, or local agency.

While a major overhaul is probably unnecessary for agreements that have been legally reviewed in the recent past, a few minor adjustments may be appropriate to better insulate your agreements from challenge. If you would like an attorney to review your separation agreements or if you have related questions, please contact your Elarbee Thompson attorney, or respond to this email.

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