A pattern or practice lawsuit has been filed by the Equal Employment Opportunity Commission ("EEOC") against CVS Pharmacy contending that what most consider to be standard severance provisions in a release agreement are actually violations of Title VII. EEOC v. CVS Pharmacy, Inc., No. 1:14-CV-863-JWD (E.D. Ill.). The release provisions primarily pertain to cooperation, non-disparagement, non-disclosure and covenant-not-to-sue clauses in the release. The challenge has been made by the EEOC despite the fact that the EEOC does not claim that anyone has been discriminated against, retaliated against, or that a specific employee has been "chilled" by the release provisions. Further, the settlement agreement specifically states that it does not "interfere with employee's right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws, nor shall this Agreement prohibit employee from cooperating with any such agency in its investigations."

In challenging the "communications" portion of the release, the release requires the employee to release the company from all "charges," which were also covered by the "covenant-not-to-sue" provision. The EEOC contends that these provisions preclude the employee from filing "charges," as the statute specifically allows, and by using "clarifying" language the employer itself illustrates the document's broad prohibitions plausibly require clarification. Further, the EEOC contends that the "clarifying" provisions are not specific enough and do not actually undo the limitations on the charge filing imposed by the other provisions.

The EEOC also contends that the communication provisions limits communications with the EEOC, whether to support one's own charge or in connection with other employees' claims, by barring the sharing of "confidential" information. Similarly, the "non-disparagement" provision arguably limit comments by employees telling the EEOC about wrongdoing by company officials, and requires the employee to promptly notify the company if the employee receives any inquiry or request relating to any administrative investigation. The EEOC claims the "clarifying" language that purportedly corrects these provisions do not parallel what the provisions prohibit. None of the provisions allow an employee to simply respond voluntarily to an inquiry from the EEOC in the absence of a formal legal proceeding compelling a response, and even then only after notify the employer so that it may take steps to prevent the employee from responding at all, according to the EEOC.

The EEOC contends that these settlement or release provisions are contrary to the statutory right to "assist or participate in any manner" in an EEOC investigation, and have a chilling effect on the exercise of Title VII rights because they are unreasonably broad and ambiguous. Further, the "rights secured" by Title VII are not limited to the substantive rights to be free from discrimination because of race, color, religion, sex, and national origin, but also include rights to file charges and to assist and participate in Title VII investigations and other proceedings. Generally, according to the EEOC, the statute is addressed broadly to a "pattern or practice of resistance," not simply a "pattern or practice of violating Title VII."

To the reader, many of these contentions made by the EEOC may sound like similar contentions made by the National Labor and Relations Board ("NLRB") involving workplace rules that might "chill" the right of employees in the exercise of their rights guaranteed by Section 7 of the Labor Act. The NLRB has held, sometimes with court approval, that workplace rules susceptible to an overly broad interpretation that would unlawfully infringe employees' rights can violate the Labor Act. The EEOC argues that, if employees may be deterred from exercising Section 7 rights by overly broad workplace rules, it is possible that the same employees could likewise be deterred by severance terms that are susceptible to an interpretation that limits the full exercise of Title VII rights.

In response, the employer, CVS, contends that even if some of the substantive provisions of the release are ambiguous, the agreement expressly and specifically says, in terms any employee would easily understand, that it does not interfere with the employee's right to participate in discrimination agency proceedings or prohibit the employee from cooperating with any such agency in its investigation. Further, CVS contends that the case law is clear that if an employer purports to use a contract to block employees from working with the EEOC, that the appropriate remedy is to strike such provisions as contrary to public policy – not to hold the employer liable for violating Title VII. CVS contends that the EEOC cannot cite a single case in the history of Title VII that even suggests that the pattern-or-practice provisions forbids any conduct that may "discourage" ex-employees from talking to the EEOC.

CVS filed a motion to dismiss or, in the alternative, for summary judgment, on April 16, 2014, and the EEOC filed its memorandum of opposition on June 6, 2014. An amicus brief has been filed by an employer association, but no rulings have been made on the pending motions as of this writing.

There is a separate issue in the case as to whether the EEOC exhausted its administrative remedies by failing to conciliate its claims before filing suit. The EEOC contends that, in contrast to the provisions under Section 706, it need not conciliate Section 707 pattern-or-practice claims.

Wimberly & Lawson Comments:

There is no question that some, if not most, of the provisions challenged by the EEOC are contained in many standard-form separation agreements. The writer does not recall or know of a case in which an overly broad separation agreement has itself been held to be a violation of Title VII. If anything, the courts have traditionally held that overbroad settlement provisions are simply unenforceable, not law violations in themselves. Further, public policy would argue in favor of enforcing private severance agreements, rather than setting forth various subjective standards regarding their enforceability and/or legitimacy. The EEOC's approach thus would arguably make it more difficult to settle a case to the disadvantage of both the employers and plaintiffs. In addition to a rather undefined standard of what would be a lawful settlement agreement, such agreements would have the potential consequences for noncompliant agreements to include the "sword" of Title VII enforcement actions brought by the EEOC or possibly by private plaintiffs. Indeed, should a private claimant settle the case, he or she could then turn around and sue the employer again contending that the settlement agreement was overly broad.

In light of this pending and as yet unresolved litigation, what are employers to do about their "standard-form" settlement or release agreements? Some employers are reacting by considering the EEOC position to be so outlandish that no revisions are necessary. While this writer understands those sentiments, it is suggested that such settlement agreements or releases be reviewed by competent labor and employment counsel to ensure that the most controversial provisions are modified, and that broader and more specific "disclaimers" are included expressly indicating that the releases do not prohibit an employee from filing EEOC charges or participating in EEOC investigations.

 

The Occupational Safety and Health Administration recently announced a final rule requiring employers to notify OSHA in the event of an on-the-job fatality or work-related hospitalization, amputation or loss of an eye. The new rule also updates the list of employers partially exempt from OSHA record-keeping requirements. These rules apply effective Jan. 1, 2015.

Reporting requirements. Under the revised rules, employers will be required to notify OSHA of work-related fatalities within eight hours: work-related in-patient hospitalizations, amputations or losses of an eye must be reported within 24 hours. (Previously, OSHA’s regulations required an employer to report only work-related fatalities and in-patient hospitalizations affecting three or more employees simultaneously; reporting single hospitalizations, amputations or loss of an eye was not required under the previous rule). Employers may report 24/7 by calling OSHA at 1-800-321-OSHA, or by calling the closest Area Office during normal business hours. A new online form will soon be available. Only fatalities occurring within 30 days of the work-related incident must be reported to OSHA. An in-patient hospitalization, amputation or loss of an eye must be reported to OSHA only if it occurs within 24 hours of the work-related incident.

Recordkeeping changes. The new rule updates the list of industries that are exempt from the requirement to routinely keep OSHA injury and illness records, due to relatively low occupational injury and illness rates. The old list was based on the old Standard Industrial Classification (SIC) system and injury and illness data from the Bureau of Labor Statistics (BLS) from 1996, 1997, and 1998. The new list is based on the North American Industry Classification System (NAICS) and injury and illness data from the Bureau of Labor Statistics (BLS) from 2007, 2008, and 2009. The rule expands the list of severe work-related injuries that all covered employers must report. The current requirement to report all work-related fatalities within 8 hours is retained, and the requirement to report all work-related in-patient hospitalizations, amputations and loss of an eye within 24 hours is added. The open question is what constitutes amputations. There are indications that OSHA will not require bone loss. This would mean the loss of a fingertip with no bone loss may have to be reported.

Deadline for compliance. The new requirements are effective January 1, 2015.

All employers covered by the Occupational Safety and Health Act, even those who are exempt from maintaining injury and illness records, are required to comply with OSHA’s new severe injury and illness reporting requirements. OSHA is developing a Web portal for employers to report incidents electronically, in addition to existing phone reporting options. This is a two-edged sword: it will facilitate reporting in the web-based age, but also will facilitate immediate access to injury reports by news and advocacy organizations, which may complicate matters since reports must be made before investigations can even commence, let alone be concluded.

More information is available at http://www.osha.gov/recordkeeping2014.

An interesting and recent Gallup poll conducted in August shows how the American public feels about labor unions, and also about right-to-work (RTW) laws. The poll shows that 53% of Americans approve of labor unions, a figure similar to other union ratings in recent years. The record low approval rating for unions was 48% in 2009.

In contrast, the poll revealed that 71% of Americans would vote for a RTW law if they had the opportunity. Even among Democrats in the poll (who gave unions a 77% approval rating), 65% of the Democrats backed RTW or open shop laws. The poll results among Democrats are interesting in that even though two-thirds of Democrats favor RTW laws, the Democratic Party has been opposed to such laws.

The last time a Gallup poll asked about the opinion of Americans concerning RTW laws was 1957, when the enactment of RTW legislation had only a 62% approval rating, and it was in 1957 that unions received their highest approval rating ever, 75%. In another aspect of the recent Gallup poll, about 35% of respondents said they would like to see labor unions have more influence, while 37% said they would like unions to have less influence.

Currently, 24 states have RTW laws, which give workers the right to not join unions as a condition of employment. A recent study conducted by the Competitive Enterprise Institute addresses an economic analysis of RTW laws on state economies, and ranked states' per capita income loss for not having a RTW law. The study suggests that if non-RTW law states had adopted RTW laws 35 years ago, income levels would be approximately $3,000.00 per person higher today. The total estimated income loss in 2012, according to the study, from the lack of RTW laws was $647.8 billion – more than $2,000.00 for every American.

 

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