Posts Tagged ‘severance agreements’

Employer to Tone Down Severance Agreements

An employer in Colorado has agreed to revise severance agreements so they don’t impede employees’ ability to seek redress for employment discrimination.

The U.S. Equal Employment Opportunity Commission (EEOC) and The Coleman Company, Inc. have reached a voluntary conciliation agreement to resolve allegations of disability discrimination raised by a former employee, the federal agency said Feb. 6.

Following an investigation, the EEOC found that it was probable that Coleman violated Section 503 of Americans with Disabilities Act (ADA) and Section 704 and 706 of Title VII of the Civil Rights Act of the 1964, by conditioning employees’ receipt of severance pay on an overly broad severance agreement that interfered with employees’ rights to file charges and communicate with the EEOC, and which precluded employees from accepting any relief obtained by the EEOC, should the agency take further action.

Without admitting liability, Coleman agreed to enter into a conciliation agreement with the EEOC. As part of that agreement, the company agreed to hire an outside equal employment opportunity consultant to review its separation agreements and make sure they comply with law. Coleman also agreed to revise past agreements and notify signatories who signed a prior version between 2013 and 2015 that they could file a charge of discrimination with the EEOC and the company will not raise the time limits on charge filing as a defense. The EEOC will monitor compliance with this agreement.

“We applaud the Coleman Company for proactively tackling this issue once it was brought to its attention,” said EEOC Phoenix Regional Attorney Mary Jo O’Neill. “Increasingly, we are seeing employers, whether intentionally or not, including overbroad language in their separation agreements that interferes with signatories’ rights to participate in EEOC processes or that impedes the EEOC’s ability to enforce federal anti-discrimination laws as it deems necessary.”

Phoenix District Director Elizabeth Cadle added, “We hope other employers learn from Coleman’s model behavior and pay closer attention to their separation agreements. No matter what the intent, whether intentionally misleading or inadvertent, employers cannot insist on agreement provisions that are void against public policy.”

Preserving access to the legal system, including addressing overbroad separation agreements, is one of the EEOC’s Strategic Enforcement Plan priorities. For more information about the EEOC’s priorities for 2017 – 2021, visit https://www.eeoc.gov/eeoc/plan/sep-2017.cfm.

Courts generally deem contract provisions that preclude employees from filing charges with the EEOC or cooperating with the EEOC during an investigation to be void as against public policy. See EEOC v. Astra USA, 94 F.3d 738, 744 (1st Cir. 1996) and EEOC v. Cosmair, Inc., L’Oreal Hair Care Div., 821 F.2d 1085, 1090 (5th Cir. 1987). Recently, the district court of Colorado, in the case EEOC v. Montrose Memorial Hospital, Civ. No. 16-cv-02277 (D. Colo., April 12, 2017), voided settlement agreement provisions that limited

an employee’s right to participate in the EEOC’s lawsuit and accept a share of any financial or other relief obtained by the EEOC.

The EEOC’s Phoenix District Office has jurisdiction for Arizona, Colorado, Utah, Wyoming, and part of New Mexico (including Albuquerque).

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