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    September 2014

    Avoiding Pitfalls When Resolving Discrimination Claims

    photo: gavel

    Educational employers routinely use settlement and severance agreements to end employment relationships or resolve employment-related disputes, sometimes using templates drafted years ago. Recently, the Equal Employment Opportunity Commission (EEOC) has brought enforcement actions challenging common provisions in such agreements. As a result, institutions should review and re-evaluate their settlement and severance agreements, particularly the provisions the EEOC focused on: the covenant not to sue; the nondisparagement clause; and the no re-hire provision.

    Covenant Not to Sue

    The covenant not to sue is part of a "belt and suspenders" approach to settlement that provides for a release of claims (the "belt") and a promise or covenant not to sue on those released claims (the "suspenders"). However, under the Age Discrimination in Employment Act (ADEA), covenants not to sue (the "suspenders") invalidate an otherwise enforceable release of an age discrimination claim. The EEOC takes the position that covenants not to sue are unlawful under all discrimination statutes within its jurisdiction, not only the ADEA.

    Although courts have rejected some aspects of this argument, the EEOC's consistent stance against covenants not to sue calls into question their utility. Institutions should consider requiring only a release of claims instead of insisting that employees also promise not to sue on those claims. This approach should still accomplish an institution’s desired result without generating the risk that comes with including a covenant not to sue.

    Nondisparagement Clause

    Employers resolving a dispute or providing severance typically want the employee to promise not to speak negatively of the employer after the fact. In the EEOC's view, such provisions infringe on the employee’s right to report or provide information about unlawful discrimination. In any provision that restricts what an employee may say or disclose about an employer, institutions should include a carve-out for "communications required or protected by law."

    No-Rehire Provision

    The no-rehire—or "never darken my doorstep" —provision requires that an employee not apply for future employment with the employer. Employers seek these assurances to obtain permanent peace. At least one regional EEOC office considers any no-rehire requirement retaliatory because it applies only to job applicants who previously filed a charge against or sued the employer.

    Although courts have not uniformly agreed with that position, an educational employer should consider having the employee acknowledge at the time of settlement that he or she understands the employer has decided the employee is not eligible for rehire, and, in addition, that the employee does not intend to apply for future employment. Including these provisions could help bring any later decision not to rehire within the scope of the original settlement agreement and avoid a retaliation claim by the employee.

    The goal of any settlement or severance agreement is to obtain closure for all parties. Educational employers should stay abreast of the EEOC's enforcement positions to help ensure that their severance and settlement practices meet this goal.


    By Amy Schmidt Jones, partner at Michael Best & Friedrich LLP in Milwaukee, Wis.


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