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Employment Law Alert: Sixth Circuit Rejects EEOC’s Position That Mere Existence Of Waiver In Severance Agreement Of Right To File Charge With That Agency Constitutes Unlawful Retaliation

In a decision issued October 24 (which is to be published), the Sixth Circuit held that employers do not engage in unlawful retaliation merely by including a waiver of an employee’s right to file a charge of discrimination with the EEOC in a severance agreement. At issue was the severance agreement offered by SunDance Rehabilitation Corp. to several of its employees who were being terminated as part of an overall reduction-in-force. The severance agreements contained language that the employees, by accepting the severance pay being offered, waived their rights to file discrimination charges with the EEOC, and/or to otherwise participate in EEOC proceedings. The EEOC, calling the waivers a “preemptive strike against future protected activity,” claimed that the mere existence of the language in the severance agreements constituted unlawful retaliation. The agency also relied on its Enforcement Guidance on Non-Waivable Employees Rights, EEOC Notice 915.002, in support of its position. Disagreeing with the EEOC, the Sixth Circuit said that the waivers did not themselves constitute retaliation under the traditional burden-shifting approach applied to such claims under the ADA, Title VII, the ADEA or the Equal Pay Act because there was neither protected activity nor an adverse employment action. Specifically, the Court said: “[s]everal courts have found that declining to pay severance or settlement amounts (not otherwise due) when an employee refused to sign a waiver or release does not amount to an adverse employment action in the retaliation context.” The Court did caution, however, that if the employer attempted to enforce the waivers, such action would likely be unenforceable.

Bottom Line

This is obviously a good result for the employer in question. However, the Sixth Circuit’s assertion regarding the enforceability of such provision may render it toothless in practice. Simply stated, the language can be used as a deterrent, but cannot be actually enforced by an employer.

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