On October 7th, a federal district judge granted summary judgment against the U.S. Equal Employment Opportunity Commission (EEOC) in its lawsuit against CVS. The EEOC had challenged the nation’s largest integrated provider of prescriptions and health-related services for its employee separation agreement. The EEOC’s Chicago office had filed the suit in February, alleging the company’s separation agreement violated its employees’ Title VII rights to communicate with the EEOC and file discrimination charges.
Specifically, the EEOC argued that CVS conditioned employee severance pay on an “overly broad, misleading and unenforceable” separation agreement. Among other provisions, CVS’s separation agreement required certain employees to: (1) notify the company of any involvement in an administrative investigation; (2) refrain from disparaging corporate officers; (3) release pending claims against the company; and (4) covenant not to sue the company. CVS countered that its separation agreement included a one-sentence disclaimer clarifying that the agreement did not interfere with an employee’s right to participate in EEOC investigations or file charges. Ironically, this language mirrored previous EEOC guidance on non-waivable employee rights, but the agency maintained that the provision was insufficient nevertheless.
Ultimately, though, the court granted CVS’s motion for summary judgment because the EEOC failed to engage in conciliation efforts with the company. The EEOC argued that prior congressional amendments to the EEOC’s powers authorized the agency to bring certain charges without preliminary negotiations, but the district court held that these amendments did not affect the EEOC’s conciliation duty. Furthermore, the EEOC’s own regulations require it to use informal methods to eliminate unlawful practices before bringing suit. As a result, the EEOC was not authorized to file its suit against CVS.
The case highlights the EEOC’s recent concern that employment practices which hinder communication with the agency increase the risk that workplace discrimination will go unremedied. Moreover, it would impair the EEOC’s primary function of enforcing federal anti-discrimination statutes because the ability of workers to communicate and cooperate with the EEOC is often the agency’s only way to expose unfair labor practices. This view was also outlined in the agency’s most recent Strategic Enforcement Plan, which listed “preserving access to the legal system” as one of its six strategic enforcement priorities. John C. Hendrickson, the EEOC regional attorney who took the lead on the case, explained: “Charges and communication with employees play a critical role in the EEOC’s enforcement process because they inform the agency of employer practices that might violate the law. . . . When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law.”
The case is EEOC v. CVS Pharmacy, Inc., 1:14-cv-00863 in the U.S. District Court for the Northern District of Illinois Eastern Division. Despite the EEOC’s loss, the case offers a clear indication of the EEOC’s renewed interest in aggressively policing private separation agreements. The case also highlights the trend that courts have rejected the EEOC’s aggressive litigation strategy. For other recent examples where the EEOC was scolded for shortcutting statutory requirements, see our previous blog posts here and here.