CVS Lawsuit: Why the EEOC Is Taking Action Against The Company's Severance Agreements

The U.S. Equal Employment Opportunity Commission has just issued a press release about its recently filed lawsuit against CVS. Just what is at stake in the CVS lawsuit? The employer’s overly broad severance agreements that try to prevent employees talking amongst themselves about discrimination:

CVS, the nation's largest integrated provider of prescriptions and health-related services, unlawfully violated employees' right to communicate with the Equal Employment Opportunity Commission (EEOC) and file discrimination charges, the federal agency claimed in a lawsuit filed today.

According to the EEOC, CVS conditioned the receipt of severance benefits for certain employees on an overly broad severance agreement set forth in five pages of small print.  The agreement interfered with employees' right to file discrimination charges and/or communicate and cooperate with the EEOC, the agency said.

Interfering with these employee rights 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 EEOC said.  Section 707 permits the agency to seek immediate relief without the same pre-suit administrative process that is required under Section 706 of Title VII, and does not require that the agency's suit arise from a discrimination charge, and does not require that the agency's suit arise from a discrimination charge.

Specifically, the EEOC found that the severance agreements contained several provisions designed at chilling employees’ rights to discuss and cooperate in EEOC investigations about unlawful discrimination and retaliation, including:

• • A cooperation clause, which required the employees to notify CVS’s general counsel upon receipt of, among other things, an administrative complaint.
  • A non-disparagement clause, which prohibited the employees from making any statements that disparage or harm CVS’s reputation. (I told you I don’t like these provisions.)
  • A confidentiality clause, which prohibited the employee from disclosing any personnel information.
  • A general release, which included any claims of discrimination.
  • A covenant not to sue, which prohibited the employee from filing any complaints, actions, lawsuits, or proceedings against CVS, but which expressly carved out the employee’s right to participate in, or cooperate with, any state or federal discrimination proceeding or investigation.
  • An attorneys’ fees provision, which required the employee to reimburse CVS for its reasonable attorneys’ fees incurred as the result of a breach of the agreement by the employee.

The outcome of this lawsuit will be of great importance in setting limits on what an employer can and cannot attempt to force upon an employee in exchange for severance pay and benefits. Lebau & Neuworth will follow the CVS lawsuit closely.