Organizations that pay employees severance not otherwise owed under policy or a prior agreement commonly require employees to sign a separation agreement releasing all claims against the employer in exchange for the severance. Because the EEOC has previously challenged broad releases, many separation agreements now include an explicit provision protecting employees' right to file EEOC charges and to participate in EEOC investigations.
Recently the EEOC has filed multiple lawsuits challenging the validity of certain separation agreement provisions, and it has pressed employers to add more explicit carve-outs for cooperation with administrative agencies.
Clauses challenged by the EEOC
- Non-disparagement clauses that prohibit employees from making remarks that could harm the employer's reputation.
- Cooperation clauses that require employees to notify company counsel about contacts related to an "administrative investigation."
- Confidentiality clauses that prohibit employees from disclosing employee or other information without prior written permission.
The EEOC asserts these types of provisions can interfere with employees' rights to cooperate with the EEOC and other administrative agencies investigating discrimination claims.
As part of a settlement in one case, a company agreed to include language in future separation agreements stating: employees retain the right to communicate with the EEOC and comparable state or local agencies and such communication can be initiated by the employee or in response to the government and is not limited by any nondisparagement obligation under the agreement.
While courts have not uniformly resolved every challenge, employers can take practical steps now to reduce unwanted attention from the EEOC and to strengthen defenses if an agreement is attacked.
Recommended actions
- Confirm the release expressly allows employees to file charges with the EEOC and to participate in EEOC investigations.
- Review the agreement for any language that could reasonably be read as limiting participation in federal, state, or local investigations (for example, non-disparagement, cooperation, and confidentiality clauses).
- Rather than deleting common protections, consider adding explicit language stating those provisions do not limit an employee's right to participate in any administrative investigation or proceeding conducted by the EEOC or other federal, state, or local agency.
For employers concerned about broader risk management, consider employment-practices liability coverage such as EPLI E&O (Employment Practices Liability Insurance and E&O) to help address claims and associated defense costs.
Minor, targeted edits to recently reviewed agreements are often sufficient; a full overhaul is usually unnecessary. For information on other lines of coverage that may be relevant to your operations, see Shelters Insurance.
If you have concerns about specific language in a separation agreement, discuss the matter with counsel and, if appropriate, talk to an agent.
Contributed by Elarbee, Thompson, Sapp & Wilson LLP and the Worklaw Network.
Don Phin, Esq., is VP of Strategic Business Solutions at ThinkHR and has extensive experience in HR and employment practices.
Frequently Asked Questions
Can a separation agreement prevent me from filing an EEOC charge?
Generally no; separation agreements should not and typically cannot stop an employee from filing a charge with the EEOC or cooperating with its investigation.
Should employers remove non-disparagement or confidentiality clauses?
Not necessarily; employers can keep those clauses but should add explicit language clarifying they do not limit cooperation with administrative agencies.
What is a practical first step for employers reviewing separation agreements?
Confirm the release contains an express carve-out for filing charges and participating in investigations, and review any cooperation or confidentiality language for potential conflicts.