Time for employers to update their severance agreements

Employers need to update their standard severance agreements even if they have dutifully included a clause specifying that former employees can participate in EEOC proceedings.  Last month the EEOC sued CVS over its severance agreement, despite CVS stating that employees can participate in EEOC proceedings without violating the severance agreement.  The problem is that CVS also includes language that the EEOC argues may confuse an employee into believing that s/he cannot cooperate with an EEOC investigation.  Remember that an employer cannot through a severance agreement keep an employee from participating in EEOC proceedings–even when the employee receives a significant settlement–because it would undermine the EEOC’s mission.

The Chicago Tribune does a great job covering the lawsuit and explaining the possible ramifications for employers here.

The gist is that employers should not include any clauses that contradict an employee’s right to participate in EEOC proceedings.  The EEOC also took issue with CVS burying a single qualifying sentence in the five-page contract. Considering this, here is what I would suggest.  It is a bit annoying and cumbersome, but so is being sued by the EEOC:

Include a big bold disclaimer at the beginning of the severance agreement that states that nothing in the agreement can keep an employee from participating in EEOC proceedings.

• Every time a clause in the contract could implicate an employee’s ability to participate in EEOC proceedings, include a disclaimer.  For instance, if the contract has a non-disparagement clause, retain it but specify that the clause cannot keep an employee from participating in EEOC proceedings.
• Do not include anything similar to CVS’ cooperation agreement, which bars employees from cooperating with an attorney or investigator unless the employee notifies the company.  CVS’ agreement actually requires employees to notify CVS’ general counsel promptly by telephone and in writing if they receive an inquiry from an investigator.  While I would imagine any general counsel would love to be notified promptly when their company is being investigated, including such a provision is not worth the risk.
• If you need help formulating specific provisions, feel free to contact me at michelle@sparksmacleod.com.