Jottings By An Employer's Lawyer

Wednesday, October 25, 2006

6th Cir. Hands EEOC a Setback in Release War


One area of recent contention has been fights over employer's releases -- do they comply with the OWBPA, or worse, are they themselves retaliatory. That's the tact the EEOC took with respect to a severance agreement utilized by an employer that not only asked for a release of claims but also barred the employee from filing any administrative claims, including an EEOC charge. If a charge was filed after signing the release, the employer was entitled to the return of the severance payment.

The trial court granted summary judgment to the EEOC which argued the release was retaliatory on its face, calling it a “preemptive strike against future protected activity.” Disagreeing, the 6th Circuit in a 2-1 decision found while the bar on filing the charge was not enforcible, it was not on its face retaliatory. Probably realizing the complexity of the issues (not to mention the real world impact), the Court emphasized, the narrowness of its ruling:

SunDance’s mere offer of the SeparationAgreement does not amount to retaliation under ADA, ADEA, EPA, or Title VII, either as a facialviolation of those statutes’ antiretaliation provisions or under the conventional burden-shiftinganalysis. SunDance has not tried to enforce the Separation Agreement, and the question of theenforceability of the Agreement or any of its provisions is not before us.

EEOC v. Sundance Rehabilitation Corp. (6th Cir. 10/24/06) [pdf].

The dissent thought that the majority opinion was drawing too fine a line:

The majority in effect says that an employee who believes he or she has an EEOC enforceable claim or at a minimum is willing to testify in an EEOC enforcement action should sign the agreement, take the money and then go forward with the EEOC. If SunDance sues for a return of the severance pay, then the defense of retaliation should be raised and may carry the day. Any act by an employer which interferes with or chills a protected right is, I believe, contrary to public policy and in violation of the anti-retaliation provisions of the several statutes involved.

Most releases, at least in the 5th Circuit which has long held such requests are void as against public policy, make it clear that they do not bar filing a charge of discrimination with the EEOC. Today's opinion does nothing to change the wisdom of that approach.

Given the subject matter and the EEOC's position, I doubt this is the last word on this issue and maybe not even on this case.

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