Bernabei & Wachtel Blog

Severance Agreements That Prohibit An Employee from Going to the EEOC

The Sixth Circuit issued a decision that has the potential for interfering with the EEOC’s enforcement of the employment statutes, where a former employee has signed a severance agreement that prohibits the employee from filing an charge of discrimination or otherwise cooperating with an EEOC investigation. Under this severance agreement, the penalty for doing so would be forfeiture of the entire severance payment. The majority opinion held that merely including such a provision in a severance agreement was not retaliatory; only if the employer tried to enforce that provision might the former employee have a claim. The dissenting opinion recognizes that this would put a needless burden on the former employee to enforce her right to go to the EEOC.

EEOC v. SunDance Rehabilitation Corp., No. 04-4178 (6th Cir. Oct. 24, 2006)

The decision is online at: http://www.ca6.uscourts.gov/opinions.pdf/06a0390p-06.pdf

Some excerpts follow:

BOGGS, C. J., delivered the opinion of the court in which BATCHELDER, J., joined.  COHN, D. J. (p. 13), delivered a separate dissenting opinion.

BOGGS, Chief Judge.

Defendant SunDance Rehabilitation Corporation ("SunDance") appeals the district court’s grant of summary judgment in favor of the Equal Employment Opportunity Commission ("EEOC") on cross-motions for summary judgment. The EEOC sued SunDance under the antiretaliation provisions of the Americans with Disabilities Act ("ADA"), 42 U.S.C. §§ 12117(a) and 12203; Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 623(d); Equal Pay Act ("EPA"), 29 U.S.C. § 215(a)(3); and Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e-3(a), alleging that the separation agreement that SunDance offered to discharged employees in exchange for severance pay not otherwise owed to the employees violates those statutory antiretaliation provisions. The "Separation Agreement, General Release, and Covenant Not to Sue" ("Separation Agreement") offers severance pay in exchange for, among other things, promises not to sue or file an administrative charge and not to make any statement or take any action that would reflect negatively on SunDance. The Separation Agreement contains a provision whereby SunDance has the right to return of the severance pay, any other damages, and attorneys’ fees and costs, in the event of a violation of the agreement’s terms by a releasor.

The district court held that the separation agreement constitutes facial retaliation under the antiretaliation statutory provisions to the extent that it conditions severance pay on a promise not to file a charge with the EEOC. We reverse. . . .

Whether a waiver of the right to file a charge with the EEOC is enforceable, however, is a different question. Given the importance of charge-filing to the EEOC’s investigatory and enforcement responsibilities, particularly under Title VII and ADA, as well as the rule set out in the Fifth Circuit’s Cosmair, it may be that the charge-filing ban in the Separation Agreement at issue here is unenforceable. If so, SunDance would be unable to recover if it attempted to sue under the Separation Agreement after paying severance to a former employee who had signed the Agreement and then filed a charge with the EEOC.

But we need not rule on the enforceability of the Separation Agreement or any of its specific provisions, because that question is not before this court. The EEOC argues that offering the Separation Agreement itself amounts to retaliation under ADA, ADEA, EPA, and Title VII. . . .

Keeping those statutory purposes in mind, we are not persuaded by the EEOC’s argument that SunDance’s mere offer of the Separation Agreement to all employees terminated in the reduction in force, without more, amounts to facial retaliation under the four statutes at issue here.

The language of the Separation Agreement probably does not prevent mere participation in EEOC proceedings, and is unenforceable if it does. And, as we have noted, the charge-filing ban may be unenforceable; but its inclusion in the Separation Agreement does not make SunDance’s offering that Agreement in and of itself retaliatory.

In sum, the employees of SunDance have not been deprived of anything by the offering of the Separation Agreement. Those who choose to accept it are better off, by receiving a benefit that was not "part and parcel of the employment relationship," as was the case in Hishon where the failure to provide that benefit led to the successful discrimination charge. Those employees who reject the agreement obviously do not give up any rights. And, as we have noted above, employees may, if they wish, accept the agreement and argue later that parts of it may be unenforceable under existing or expanded precedent. Under these circumstances, simply offering the Agreement is not facially discriminatory. Accordingly we reject the EEOC’s argument that SunDance’s Separation Agreement amounts to a facial violation of the antiretaliation provisions of the equal employment opportunity statutes.

. . . Our decision in this case is a narrow one. SunDance’s mere offer of the Separation Agreement does not amount to retaliation under ADA, ADEA, EPA, or Title VII, either as a facial violation of those statutes’ antiretaliation provisions or under the conventional burden-shifting analysis.

SunDance has not tried to enforce the Separation Agreement, and the question of the enforceability of the Agreement or any of its provisions is not before us. The decision of the district court is reversed. We therefore need not consider SunDance’s argument regarding the scope of the injunction issued by the district court.

COHN, District Judge, dissenting.

I dissent. The distinction the majority opinion makes between facial retaliation and what is surely intimidation cuts 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. The reasons for this conclusion are adequately supported by the district court’s decision and the EEOC Notice No. 915.002 issued April 10, 1997, "Enforcement Guidance on Non-Waiveable Employee Rights Under Equal Employment Opportunity Enforcement Statutes," and no further elaboration is necessary.

Alan R. Kabat, The Bernabei Law Firm, PLLC

A government investigation can be an adverse employment action

Velikonja v. Gonzales, No. 05-5030 (D.C. Cir. Oct. 17, 2006)

http://pacer.cadc.uscourts.gov/docs/common/opinions/200610/05-5030a.pdf

The plaintiff was a former FBI employee who was disciplined for allegedly falsifying her time records.  The DC Circuit, in a short per curiam decision, affirmed the dismissal of all but one of the plaintiff’s claims, in which she alleged that she was subjected to excessive and discriminatory disciplinary action as a result of the FBI’s investigation of her time records. 

The court, however, reversed the dismissal of the plaintiff’s retaliation claim, with a useful discussion of why an internal investigation that has the effect of preventing the plaintiff from getting a promotion would be an adverse employment action:

We reverse the District Court’s dismissal of Count I of Velikonja’s first complaint. In Count I, Velikonja alleged that the second time the FBI referred her to the OPR it did so for discriminatory and retaliatory reasons. The government argues that Velikonja’s discrimination claim fails because mere investigation by a disciplinary body cannot constitute an adverse employment action. See Brown v. Brody, 199 F.3d 446, 457 (D.C. Cir. 1999). We need not decide that issue, however, because Velikonja has alleged that “FBI officials referred [her] to OPR in order to prevent [her] from receiving promotions until the OPR complaints are finally resolved.” 1st Am. Compl. ¶ 46. And, at oral argument, the government conceded that preventing an employee from receiving a promotion constitutes an adverse employment action. See Stewart v. Ashcroft, 352 F.3d 422, 427 (D.C. Cir. 2003); Cones v. Shalala, 199 F.3d 512, 521 (D.C. Cir. 2000). Therefore, this claim survives a motion to dismiss and we are constrained to remand for further consideration by the District Court.

Count I of Velikonja’s first complaint also alleges retaliation in violation of Title VII. The District Court’s decision, however, was issued before Burlington Northern & Santa Fe Railway Co. v. White, 126 S. Ct. 2405 (2006). There, the Supreme Court held that a Title VII plaintiff need not allege an adverse employment action to state a claim for retaliation, but rather must show that the employer’s actions are “harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of discrimination.”  Id. at 2409. Velikonja alleges–allegations that we must accept as true at this stage of the litigation, Rochon v. Gonzales, 438 F.3d 1211, 1216 (D.C. Cir. 2006)–that she was subject to a lengthy investigation, that she was prevented from receiving promotions during the pendency of the investigation, and that “the FBI has placed a cloud over [her] career, which effectively prevents her from obtaining other career-enhancing assignments for which she is highly qualified.” 1st Am. Compl. ¶ 40. Because a reasonable jury could find that the prospect of such an investigation could dissuade a reasonable employee from making or supporting a charge of discrimination, we reverse the dismissal of Velikonja’s retaliation claim and remand for further consideration by the District Court.

Discovery of documents given to EEOC

A major issue in employment discrimination litigation is whether the EEOC can be compelled to turn over documents acquired from an employer in past and current EEOC investigations of that employer. The employer usually wants to prevent the EEOC from disclosing that information, on the grounds that it may be confidential or proprietary (e.g., information about compensation and personnel decisions). Employees, however, want to obtain that information in order to show, for example, that the employer has a pattern and practice of discriminatory conduct, or has otherwise admitted its liability. An employee may try to obtain this information from the EEOC through a discovery third-party subpoena or a FOIA request.

On September 29, 2006, Judge Leon of the U.S. District Court for the District of Columbia issued a decision in Venetian Casino Resort v. EEOC, Civ. No. 00-2980, 2006 WL 2806568 (D.D.C. Sept. 29, 2006). The decision is online at:

http://www.dcd.uscourts.gov/opinions/2006/Leon/2000-CV-2980~10:0:16~10-2-2006-a.pdf

Judge Leon’s decision, which was on remand from the D.C. Circuit [409 F.3d 359, 367 (D.C. Cir. 2005)], held that the EEOC was entitled to summary judgment, so that it could disclose the information about the Venetian Casino Resort’s prior discrimination complaints to plaintiffs in other litigation, or to FOIA requests, without first notifying the employer. The court held that the EEOC’s disclosure policy, 29 C.F.R. § 1601.22, properly allows disclosures to the employees, employers, and witnesses, and "supports Title VII’s scheme of enforcement, an important part of which is the private right of action."

The court also rejected the Venetian Casino’s arguments that the federal Trade Secrets Act prohibited disclosure, since that statute neither "affords a private right of action to enjoin disclosure of information in violation of the statute" nor does it "create affirmative obligations on agencies for its implementation." Similarly, the Copyright Act does not require "confidential treatment by the government of copyrighted material" so it provides no basis to challenge the EEOC’s disclosure policy.

Alan Kabat

Lie Detector tests for Federal job applicants

The use of polygraph examinations ("lie detectors") in the federal sector employment process remains a controversial subject.  Judge Sullivan of the U.S. District Court for the District of Columbia recently dismissed an employment lawsuit brought by several unsuccessful applicants who were rejected by the FBI or the Secret Service for having failed those examinations. Although the plaintiffs brought both constitutional and administrative challenges, the claims were all dismissed.

There were no constitutional deprivations because even if information about the lie detector tests was disseminated (which plaintiffs lacked evidence), the information was true (i.e., that plaintiffs failed the tests). What may be of broader significance as to these constitutional claims is the holding that being denied a job is not a liberty interest for a due process claim, in contrast to being demoted or discharged.

The opinion is online at:

Croddy, et al. v. FBI, et al., No. 2000-CV-651 (EGS) (D.D.C. Sept. 29, 2006)

http://www.dcd.uscourts.gov/opinions/2006/Sullivan/2000-CV-651~9:45:24~10-10-2006-a.pdf

Some excerpts follow:

Plaintiffs have brought three claims in this suit, alleging that: (1) Defendants' dissemination of the information that Plaintiffs failed polygraph examinations deprives them of their occupational and reputation-based liberty interests without due process; (2) Defendants violated their constitutional right to privacy because they asked questions regarding their medical, psychological, sexual, criminal, and drug use histories during the examinations; and (3) Defendants' use of the polygraph examination in the employment process violates the APA. Both parties seek summary judgment on all the claims. In addition, Defendants ask the Court to dismiss the non-constitutional claims for lack of jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). . . .

Under the "reputation-plus" theory, an employee's liberty interest is infringed when there is "official defamation" accompanied by either a "discharge from government employment or at least a demotion in rank or pay." O'Donnell v. Barry, 148 F.3d 1126, 1140 (D.C. Cir. 1998). Plaintiffs' claims do not satisfy either prong of the "reputation-plus" standard. Government-disseminated information must be false in order to be considered defamatory. See Graham, 2002 WL 32511002, at *4 n.2 (holding that a letter was not defamatory because its contents were not false); see also Codd v. Velger, 429 U.S. 624, 628 (1977) (holding that no hearing was required because plaintiff did not allege that government's report was false). Though reports that Plaintiffs failed polygraph examinations may imply that they lied or had used drugs, the reports are technically accurate - there is no dispute that Plaintiffs did in fact fail the Defendants' examinations. Therefore, information about Plaintiffs' polygraph results do not constitute defamation. See Graham, 2002 WL 32511002, at *4 n.2.

In addition, Plaintiffs fail the second prong of the "reputation-plus" standard because they were neither discharged nor demoted - they were merely not offered a position. See O'Donnell, 148 F.3d at 1140. The D.C. Circuit has explained that a discharge or demotion is required to ensure that the damage to the employee's reputation is sufficiently severe, and to limit the scope of permissible due process claims. See id. Even accepting Plaintiffs' characterization of Defendants' actions as revoking conditional offers of employment, those actions constitute neither a discharge nor demotion from an employment position. Therefore, Plaintiffs have not demonstrated the loss of a liberty interest under the "reputation-plus" theory.

. . . In this case, Plaintiffs concede that they have no evidence that Defendants disseminated their polygraph results, or that they were denied any job, other than with the Defendants, because of their polygraph examinations.

. . . In this case, Plaintiffs were applying for positions of public trust concerning the security of the nation and of our elected officials. Therefore, even assuming there exists a constitutional right to non-disclosure of private information, Defendants can legitimately inquire into the applicants' financial, drug use, health, and criminal history. See id. [Am. Fed'n of Gov't Employees v. HUD, 118 F.3d 786 (D.C. Cir. 1997)] at 793-94. With regard to the Secret Service's specific questions, the agency has made a reasonable determination that there is a danger if its employees in sensitive positions could be blackmailed for some reason. The Court will not second-guess that conclusion, and therefore the agency can legitimately ask whether applicants committed adultery or serious crimes. See id. at 793. Accordingly, the Court rejects Plaintiffs' constitutional privacy claims as a matter of law.

. . . Plaintiffs' APA claims thus fall within the ambit of the CSRA, and are therefore precluded.

Were Plaintiffs' APA claims not precluded by the CSRA, they are still barred in part because they challenge actions committed to agency discretion. See 5 U.S.C. § 701(a)(2).