Recruitment

Federal Judge Dismisses EEOC Severance Agreement Lawsuit Against CVS

By Jon Hyman

Sep. 19, 2014

The Chicago Tribune reported that U.S. District Judge John Darrah has granted CVS Pharmacy’s motion to dismiss a lawsuit filed by the Equal Employment Opportunity Commission, which challenged the company’s severance agreements as overly broad and retaliatory. 

Recall that the lawsuit challenged several garden-variety terms in standard employee severance agreements, including non-disparagement, confidentiality, and a covenant not to sue (which expressly disclaimed EEOC charges).
 
When the EEOC filed this lawsuit earlier this year, I exclaimed that a ruling for the agency could be ruinous for employers. Kudos to this judge for recognizing the folly of the EEOC’s position.
 
The Tribune reports that the court granted CVS’s motion at a hearing, and said that a written opinion would follow. I’ll have full coverage of this significant rebuking of the EEOC’s extreme position as soon as the opinion publishes.
 
In the meantime, this is not the end of this issue. It is possible, if not probable, that the EEOC will appeal this dismissal to the 7th Circuit. Also, the EEOC has filed a similar case in at least one other court. There is always a chance that another judge will see this issue the EEOC’s way, creating a split, and a headache for employers.
Jon Hyman is a partner in the Employment & Labor practice at Wickens Herzer Panza. Contact Hyman at JHyman@Wickenslaw.com.

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