A familiar, if unsettling, trend the past four years has been layoffs. The calculus behind them is simple: companies need to cut costs to stay afloat amidst the weak economy, and reducing the size of their workforce is a means to that end. However, shedding jobs may be expensive in its own right, as disgruntled employees seek remedies in the courts for what they believe to be unlawful terminations. To preempt this risk, companies often resort to severance agreements to ward off potential litigation.
In contractually guarding against any claims, companies often take a bold stance. They insert sweeping language declaring that the employee will have no right to sue upon leaving the company and that the company enjoys a complete release of all potential claims. Companies may go further still and restrict the employee from even cooperating in a suit brought against it by another person or entity.
In exchange for signing off on these and other terms, employees receive severance pay upon their departure from the company. However, such expansive agreements have increasingly run afoul of the Equal Employment Opportunity Commission (EEOC), generating the very same litigation costs the severance agreements sought to avoid. As the complaint in a recently-filed Illinois case, EEOC v. Baker & Taylor, makes clear, the agency is intolerant of any restrictions that may interfere with an employee's right to file a charge with the EEOC or to cooperate with the EEOC. The case also demonstrates that the EEOC is not afraid of using the courts to enforce its view of the proper scope of severance agreements and that private settlement agreements don't always stay private.
The Most Recent Fight: EEOC v. Baker &...
