EEOC’s Challenge to CVS’s Severance Agreement Dismisssed

A federal judge in Chicago recently dismissed the EEOC’s lawsuit against CVS. The EEOC had alleged that CVS’s standard severance agreement is unenforceable under Title VII. The EEOC’s attempt to invalidate CVS’s severance agreement was closely watched by employment lawyers. That’s because CVS’s severance agreement is typical of severance agreements used by many other employers. If customary terms of separation agreements, such as a general release of claims, confidentiality clause, and covenant to not sue, were declared unenforceable, employers would have less incentive to settle employment law claims. Why pay an employee a substantial amount of money to settle an employment law claim without getting a general release in exchange? This is the dilemma that employment attorneys would have faced when trying to resolve employment law claims, if the EEOC had succeeded.

The judge is expected to issue a written opinion explaining his decision to grant CVS’s Motion to Dismiss the EEOC’s Complaint. The EEOC may appeal the dismissal to the 7th Circuit.