Severance Agreements May Go Too Far

0
52

Beth SlagleBy Beth Slagle

Earlier this year, a former case manager at a Lehigh Valley hospital sued her employer for age discrimination, claiming her supervisor kept a list of employees over the age of 40 whom she wanted to fire.

A Michigan hospital recently had to pay a former employee $200,000 to settle a reverse-discrimination lawsuit in which the white employee alleged that his African-American boss made discriminatory racial remarks toward him.

And a former employee sued a Houston hospital in 2013, alleging that the hospital failed to take into account her disability of high blood pressure when asking her to complete tasks.

As discrimination claims from terminated employees continue to rise, many health care employers have responded by making their severance agreements increasingly restrictive. The agreements often prohibit employees from engaging in a long list of retaliatory behaviors as a condition for receiving severance pay.

But the Equal Employment Opportunity Commission (EEOC) is cracking down on overly restrictive severance agreements. In particular, the EEOC is examining the agreements for violations of Title VII of the Civil Rights Act of 1964, which prohibits all employers with 15 or more employees from discriminating on the basis of race, color, religion, sex or national origin.

The EEOC has sued a number of employers recently because of overreaching severance agreements, most notably CVS Pharmacy. According to the EEOC, CVS attempted to “buy employee silence” of possible discrimination by requiring them to sign the agreement in exchange for severance benefits.

The five-page agreement, set in small print, had extensive provisions dictating employees’ actions after they left the company.  Some of the sections of the agreement that the EEOC claims violated Title VII included:

  • A requirement that employees promptly notify CVS if they are contacted about legal proceedings or by an investigator.
  • A general release from claims, including “lawsuits, proceedings, complaints, charges, debt contracts, judgments, damages, claims and attorney fees,” including “any claim of unlawful discrimination of any kind.”
  • A non-disparagement clause prohibiting the employee from saying anything negative about CVS.
  • A clause that prohibits the employee from filing any lawsuit against CVS.
  • A provision stating that a violation of the severance agreement would entitle CVS to seek relief in court, including attorney fees.

CVS included a one-sentence disclaimer in the agreement that nothing in the agreement was intended to interfere with an employee’s right to participate in discrimination lawsuits.  But the EEOC argues that other provisions of the agreement would likely confuse employees since it contradicts many of the other provisions of the contract. Employees would likely fear that they would breach their severance agreement if they contacted the EEOC.

Health care employers should remember that Title VII of the Civil Rights Act prohibits any employer from retaliating against an employee, current or former, in any way for contacting the EEOC. The EEOC is watching employers closely for Title VII violations.
Employers should review their current severance agreements carefully to ensure that they do not discourage employees from exercising their rights under federal law.

Beth Slagle is an attorney at Pittsburgh-based law firm Meyer, Unkovic & Scott. She can be reached at bas@muslaw.com.