Category Archives: Settlement Agreements

The EEOC Strikes Again

lawsuit-letterIn a suit filed in February, the Chicago District Office of the Equal Employment Opportunity Commission (EEOC) argued that the separation and release agreements used by CVS Pharmacy were “overly broad, misleading, and unenforceable.” Specifically, the EEOC argued that provisions in CVS’ agreements infringed on employees’ rights to file discrimination charges and participate in EEOC investigations. See our February 2014 post, EEOC Files Suit Over Separation Agreement Language for more details on that case.

Now, a different district office of the EEOC has filed a similar suit against another employer. The Phoenix District Office sued CollegeAmerica Denver on April 30, 2014 alleging that CollegeAmerica violated federal age discrimination laws by including various provisions in its form separation and release agreements impeding employee rights. The EEOC objects to CollegeAmerica’s broad release language, provisions limiting an employee’s ability to assist others with claims, and provisions requiring the employee to represent that he or she has not filed administrative claims or lawsuits.

Separation and release agreement language clearly is a “hot button” issue for the EEOC. Employers should review their form release agreements to ensure that they specifically permit an employee to file charges and participate in investigations by governmental authorities and do not place other impermissible limits on employee rights.

A Big (Bad?) Week for Employers Under the FLSA

overtimeIt was a big week for the Fair Labor Standards Act.

On March 7th, the Supreme Court let stand a decision that the owner, president and CEO of a supermarket chain in New York is personally liable for his company’s failure to make required payments on a FLSA settlement agreement.  The owner argued that to be held personally liable he had to be responsible for the violations (rather than just have general control over corporate operations). However, the Supreme Court refused to hear his arguments against the court of appeals’ decision, which can be interpreted broadly to suggest that an individual may be held personally liable for FLSA violations by virtue of general control of over corporate affairs.

On March 10th, the Supreme Court declined to review an appeals court decision finding that undocumented workers can sue — and recover wages owed — under the FLSA.

Then, on March 13th, President Obama directed the Secretary of Labor to update the FLSA’s overtime exemptions to provide more employees with overtime pay.  Some have speculated that the change will be to significantly raise the minimum weekly salary for an employee to be considered exempt under most exemptions (currently $455/week), but changes could also include rewrites of the job duties tests for the frequently used “white collar exemptions” or other limitations on current exemptions.  It remains to be seen what changes will be proposed by the administration and whether they can be implemented before the end of the President’s term.  We will keep you posted as we learn more.

EEOC Files Suit Over Separation Agreement Language

The EEOC filed suit Friday in U.S. District Court for the Northern District of Illinois claiming that CVS Pharmacy violated Title VII by using separation agreements that allegedly limited the rights of employees to communicate with the agency, file charges, and participate in investigations (EEOC v. CVS Pharmacy Inc., Civil Action No. 1:14-CV-683).  EEOC ImageThe EEOC specifically took issue with provisions in the separation agreements requiring employees to notify CVS if they receive a subpoena, deposition notice, interview request, or other inquiry from any investigator, attorney, or other third party; prohibiting employees from disparaging the company; prohibiting employees from disclosing confidential information; releasing “charges” against the company relating to “unlawful discrimination;” and agreeing not to sue the company.  As one of the remedies requested, the EEOC wants the court to give employees who were subject to the agreements the opportunity to file a charge within three hundred days, basically restarting their limitations period.  If the case moves forward, it will be interesting to see whether the court agrees with the EEOC’s position.  After all, the employees who signed the agreements presumably did so precisely because they had no intention of taking any sort of legal action against CVS.  Unfortunately, these types of cases often get settled early, allowing the EEOC to declare victory, but leaving employers uncertain about the law governing their agreements.