In-Depth Analysis

Is Your Severance Agreement Reducing Risk or Inviting EEOC Litigation?

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Most employers wisely utilize severance agreements as a means of mitigating risk. However, based upon recent EEOC action, employers should carefully scrutinize the agreements they are using to lessen the risk that questionable terms could invite EEOC litigation.

Most employers wisely utilize severance agreements as a means of mitigating risk. However, based upon recent EEOC action, employers should carefully scrutinize the agreements they are using to lessen the risk that questionable terms could invite EEOC litigation.

In October 2014, the Northern District of Illinois dismissed the Equal Employment Opportunity Commission's lawsuit against CVS Pharmacy. Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., civil action no. 1:14-cv-00863, (N.D. Ill, October 7, 2014) ("10/7/2014 Memorandum and Order"). This lawsuit involved the EEOC's challenge of standard terms most employers use in their severance agreements. While a temporary win for employers, the EEOC's recent enforcement efforts should be a call to action for all in-house counsel utilizing severance agreements.

Is Your Severance Agreement Reducing Risk or Inviting EEOC Litigation_2015.pdf