Can a Separation Agreement Block an Employee​'s Discrimination Complaint?

STOP Hand Sign indicating a Separation Agreement Blocking Employee's Discrimination Complaint

When employment discrimination comes to a head, it may be best for everyone if employer and employee part ways. But do you need to give up your legal civil rights claims to escape a hostile work environment? Can a separation agreement block an employee's discrimination complaint?

In this blog post, I will review a settlement between The Coleman Company, Inc. and the EEOC in connection with the company’s separation agreements with former employees. I will review how Title VII and the Americans with Disabilities Act (ADA) address waivers of claim, and whether a separation agreement can be used to cut employees off from filing discrimination complaints after they have been fired.

Federal Laws Protect Against Employment Discrimination

There are a variety of state and federal laws that protect workers against employment discrimination on the job. Title VII applies to workplace discrimination based on race, religion, gender, and other protected traits. The Americans with Disabilities Act ensures that employees are not punished for their physical and mental disabilities.

These employment discrimination laws make it illegal to fire an employee, or force them to quit or retire, because of a protected trait. It is also illegal to retaliate by firing a person after he or she files an employment discrimination complaint with the Equal Employment Opportunity Commission (EEOC) or federal court. Less severe forms of discrimination are also covered by the statutes including shift assignments, compensation, and promotion decisions.

Severance Agreements and Waivers of Claim

Severance agreements are a regular part of modern employment law and human resource policies. These contracts are signed by the employee and a representative of the employer at the time of separation and control everything from intellectual property ownership to civil lawsuits. Many severance agreements include "release of claim" or "waiver of liability" provisions. They say that in exchange for financial payouts (sometimes described as so many "months of severance") the former employee agrees to forgive any wrongdoing by the employer. But can these releases cut an employee off from filing employment discrimination claims to protect their civil rights?

EEOC Says Separation Agreement Violated Americans with Disabilities Act

The EEOC says no. In a recent press release, EEOC Phoenix Regional Attorney Mary Jo O'Neill said:

"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."

The agency and federal courts have generally said that contract provisions that cut off employees' access to civil rights protections are illegal and void because they are against public policy. In other words, the courts won't let companies get around following civil rights laws just by paying former employees not to file legitimate complaints. This means, even if the language of an employee's severance agreement suggests she gave up civil rights claims against the company, she will still be allowed to file a discrimination complaint.

EEOC & Coleman Company Settlement Corrects Severance Agreement Overreach

When an employee filed a complaint against The Coleman Company, Inc., with the EEOC, this issue of severance agreements became the center of the case. The basis for the complaint was a violation of the Americans with Disabilities Act and Title VII. However, the voluntary conciliation agreement announced in February 2018 centered on the employee's severance agreement and the employee's right to file charges and cooperate with an EEOC investigation of those charges.

The EEOC said the severance agreement itself violated the civil rights laws by blocking an employee's access to civil rights remedies. It interfered with their ability to file charges with the EEOC or accept relief obtained by the agency. Even if no other actual employment discrimination happened, the EEOC says the contract violated Title VII and the ADA by making employees believe they don't have the right to file claims after they sign it.

After informal negotiations, Coleman agreed to hire an outside equal employment opportunity consultant to review its separation agreements, and to revise its current and past employees' contracts to protect their ability to file EEOC charges. The company will also notify anyone who signed a separation agreement with the company between 2013 and 2015 that they may file employment discrimination charges and the company would not raise time-based defenses to the claims. O'Neill said:

"We applaud the Coleman Company for proactively tackling this issue once it was brought to its attention. . . . 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."

A severance agreement is not legally allowed to block employees' employment discrimination claims. At Eisenberg & Baum, LLP, our employment discrimination attorneys know how to defend your civil rights claims, even in the face of an overly broad severance agreement. Contact us today to schedule a free consultation.

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