EEOC Gets Schooled: Court Expels Challenge to College’s Separation Agreements

For the second time in less than two months, a federal district court judge has dismissed a U.S. Equal Employment Opportunity Commission (EEOC) challenge to an employer’s separation agreement due to the agency’s failure to conciliate.  On December 2, a federal district court judge in Colorado dismissed the portion of a lawsuit against CollegeAmerica alleging that the college’s separation and release agreements interfered with employees’ rights under the Age Discrimination in Employment Act (ADEA). In dismissing the claim, the judge held that the EEOC failed to give notice to the college or engage in conciliation efforts regarding the separation agreements being challenged in the lawsuit. This decision comes on the heels of a dismissal of a similar suit brought by the EEOC against CVS Pharmacy, which we wrote about in an earlier blog post.

The CollegeAmerica case was filed after the EEOC investigated a charge filed by Debbi Potts, a former campus director, alleging that the college interfered with her ADEA rights by placing conditions in her severance agreement, like: “[Employee] agrees to . . . refrain from personally (or through [sic] the use of any third party) contacting any governmental or regulatory agency with the purpose of filing any complaint or grievance that shall bring harm to CollegeAmerica.” After investigating Ms. Potts’ discrimination charge, the EEOC advised CollegeAmerica in a Letter of Determination (Letter) that the separation agreement interfered with her ADEA rights. The EEOC then demanded that CollegeAmerica enter into a consent decree agreeing, among other things, to toll the charge-filing period for employees who signed the same or similar agreements and to revise its form separation agreements to clearly inform employees that they retained the right to file charges and cooperate with the EEOC.  The parties’ efforts to conciliate the matter were not successful.

The EEOC then filed suit against CollegeAmerica claiming that the college’s separation agreements interfered with the ADEA rights of Ms. Potts and other employees.  In support of its motion to dismiss, CollegeAmerica presented evidence that Ms. Potts’ separation agreement was not the one typically used by the employer and further, at the time EEOC issued its Letter, the agency was unaware of any other separation agreements used by CollegeAmerica.  Based on these facts, the court ruled that the Letter could not serve as notice to the college that other separation agreements violated the ADEA.  Further, the conciliation between the EEOC and CollegeAmerica did not give the college notice that its separation agreements were “on the table” as the conciliation meeting was focused solely on Ms. Potts’ individual circumstances and the EEOC failed to conciliate any broader challenge to CollegeAmerica’s separation agreements.

The court also dismissed the EEOC’s challenges to the separation agreement executed by Ms. Potts.  CollegeAmerica’s general counsel provided an affidavit that the severance agreement provided to Ms. Potts did not contemplate waiver of the employee’s ADEA rights to file a charge or cooperate in an EEOC proceeding and had not been applied to her in that manner.  The court took these assurances as conclusive proof of mootness and dismissed the claim.

While the dismissal of claims against CollegeAmerica and CVS is yet another setback for the EEOC’s litigation agenda, employers can continue to expect close scrutiny by the EEOC of separation agreements given the EEOC’s renewed interest in this area.

The case is EEOC v. CollegeAmerica Denver Inc., 1:14-cv-01232, in the U.S. District Court for the District of Colorado.