Using a novel procedural mechanism, the Equal Employment Opportunity Commission’s Chicago District Office has begun to challenge often-used provisions of severance agreements that, according to the Commission, violate Title VII, but which employers view as important to protecting their business interests. Their regular inclusion constitute a pattern or practice of resistance to the full enjoyment of rights protected by the Civil Rights Act by deterring separated employees from filing charges with the EEOC and interfering with an individual’s ability to communicate voluntarily with the EEOC and state agencies, the federal agency maintains.

The Commission’s challenge stems from a regular employer practice whereby employees who are involuntarily terminated are paid money or other benefits to which they normally would not be enti- tled conditioned on executing a severance agreement releasing the employer from any liability that may have arisen from the employment relationship and termination. These agreements sometimes contain

a confidentiality clause, a covenant not to sue and a promise not to disparage the employer in the future (non-disparagement clauses).

The Older Workers Benefit Protection Act (“OWBPA”), EEOC guidance and courts have found that severance agreements/releases must not prohibit an employee from filing a charge or participating in an investigation with the EEOC or a state agency. Therefore, many severance agreements state the separated employee continues to have a right to participate in an administrative investigation, including an EEOC investigation. Some employees who sign releases later file a charge or otherwise consult with the EEOC. As part of its investigation, the EEOC may obtain a copy of the employer’s severance agreement.

Paradoxically, the EEOC claims these agreements deter former employees from contacting the Commission. Of particular concern to the EEOC are broadly worded confidentiality provisions, non- disparagement clauses and covenants not to sue. According to federal court filings, the EEOC believes that “right to participate in administrative investigation” language, in some cases, is not sufficient to overcome provisions that otherwise require an employee not discuss the employee’s separation, not take legal action against the employer and not criticize the employer.

This new aggressive strategy can be vexing. The EEOC does not allege the targeted severance agreements are discriminatory, retaliatory or fail to comply with OWBPA’s detailed requirements for releases obtained under the Age Discrimination in Employment Act. Instead, the EEOC claims the severance agreements violate Section 707(a) of Title VII, which provides:

Whenever the [EEOC] has reasonable cause to believe that any person or group of persons is engaging in a pattern or practice of resistance to the full enjoyment of any of the rights secured [by Title VII], and that pattern or practice is

of such a nature and is intended to deny the full exercise of the rights described herein, the [EEOC] may bring a civil action in the appropriate district court of the United States.

The Commission claims the “full exercise” of statutory rights is denied by a pattern or practice of using these agreements. Moreover, the EEOC takes the position that it need not send charges to employers, conduct an administrative investigation and, if reasonable cause is found, engage in concilia- tion under this new EEOC initiative, as is generally required under the statute.

The first employer to be sued by the EEOC under this new initiative settled the lawsuit with a consent decree entered in federal court. The employer agreed to utilize a new EEOC-drafted provision in its severance agreement and permit those who had executed severance agreements and could no longer file timely charges 180 days to do so.

Many attorneys will argue the EEOC’s theory is flawed because Title VII does not permit the Commission to challenge conduct unless that conduct is discriminatory or retaliatory. They will also argue Title VII requires the EEOC to follow its normal administrative procedures before filing such a lawsuit. Until a court ruling is made, employers who regularly utilize severance agreements are encouraged to review the contents of those agreements with their attorney.