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-Oliver Wendell Holmes, Jr.

Offering Severence Pay In An Agreement Which Would Deter Filing A Complaint With The EEOC Does Not Violate Title VII

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In Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., No. 14-3653, December 17, 2015, 7th Circuit, CVS fired a store manager and offered her a severance agreement which she signed. The agreement included a broad release of waivable claims relating to her employment, including claims under Title VII. The agreement expressly carved out the manager’s right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws. One month after signing the agreement, the manager filed a charge with the EEOC alleging that CVS fired her because of her race and sex. After CVS sent a copy of the severance agreement to the EEOC, the EEOC sent CVS a letter stating it had reasonable cause to believe CVS is engaged in a pattern or practice of resistance to the full enjoyment of the rights secured by Title VII. The EEOC contended the severance agreement was unenforceable. A short time later the EEOC dismissed the manager’s discrimination charge. CVS asked the EEOC to comply with the pre-suit conciliation procedures contained in Section 706 of Title VII. The EEOC responded it was not required to engage in conciliation because it was proceeding under Section 707(a) and was not bound by the pre-suit conciliation requirements contained in Section 706. The EEOC then filed a complaint alleging that CVS was engaged in a pattern or practice of resistance to the full enjoyment of rights guaranteed under Title VII by conditioning the receipt of severance benefits on an agreement which deters the filing of charges and interferes with an employee’s ability to communicate voluntarily with the EEOC. CVS filed a motion to dismiss and a motion for summary judgment arguing that the EEOC had refused to satisfy the pre-suit duties required by Section 706 for conciliation. The District Court entered summary judgment for CVS. On appeal, the EEOC argued that Section 707(a) of Title VII authorizes the EEOC to bring actions challenging a “pattern or practice of resistance” without following any of the pre-suit procedures contained in Section 706, including conciliation. CVS argued the EEOC was required to conciliate and also that an EEOC suit brought under Section 707(a) must contain allegations of employment discrimination or retaliation. The Seventh Circuit rejected the EEOC’s position that it was not required to follow pre-suit conciliation procedures when proceeding under Section 707(a). The Seventh Circuit ruled that Section 707(a) requires all action under Section 707 to be “conducted in accordance with the procedures set forth in [Section 706]”. The Seventh Circuit commented that the EEOC did not contend that CVS discriminated against the manager when it offered the agreement. Nor did the EEOC allege that CVS engaged in retaliation by offering the agreement to terminated employees. The Seventh Circuit ruled that such an allegation of retaliation would fail. This is because conditioning benefits on promises not to file charges with the EEOC is not enough, in itself, to constitute “retaliation” actionable under Title VII. The Seventh Circuit affirmed the District Court’s holding that the EEOC’s suit did not state a claim under Title VII. Further, the Seventh Circuit ruled that the EEOC was required to comply with all of the pre-suit procedures contained in Section 706, including conciliation. The Seventh Circuit also held that the EEOC cannot proceed without a charge. In this case, the EEOC had dismissed the manager’s discrimination charge. The Seventh Circuit ruled that Title VII gives the EEOC the power to file “pattern or practice” suits on its own, but Congress intended for the agency to be bound by the procedural requirements set forth in Section 706, including proceeding on the basis of a charge. The Seventh Circuit held that under Section 707(e) of Title VII, the EEOC is required to comply with all of the pre-suit procedures contained in Section 706 when it pursues “pattern or practice” violations.
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