Employers should carefully scrutinize policy provisions

07/24/2014 7:33 AM

08/08/2014 10:25 AM

The National Labor Relations Board has made it one of its missions in recent years to identify “overly broad” provisions in employers’ policies.

Seemingly countless decisions have identified policies which the board says violate the National Labor Relations Act by discouraging employees from discussing terms and conditions of employment.

Sometimes such policies are blatantly problematic, like those instructing employees not to discuss their wages. Others are simply not specific enough and leave too much room for interpretation – including policies that forbid employees from discussing “confidential” information or from “disparaging” the organization – without clearly defining the terms.

This trend from the NLRB has been going on for several years. More recently, the Equal Employment Opportunity Commission began focusing on overly broad policy provisions. One area in which the EEOC has shown specific interest is employers’ severance agreements.

While the NLRB’s concern is that employers may be discouraging employees from discussing terms and conditions of employment, the EEOC’s focus is that overly broad language in employers’ severance agreements may discourage employees from filing discrimination charges.

The attention given to this issue is not exactly surprising, as the EEOC has identified its intentions to “target policies and practices that discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or which impede the EEOC’s investigative or enforcement efforts.”

The EEOC went on to explain that such policies and practices include those which “prohibit filing charges with the EEOC or providing information to assist in the investigation or prosecution of claims of unlawful discrimination.”

True to its word, the EEOC has filed a few lawsuits centering on allegedly overly broad severance agreements, including one filed in February known as EEOC v. CVS Pharmacy Inc. In this case, the agency identified several problems, and many were based in elements that are common to severance agreements.

Following are some of the problem area in the agreements, as identified by the EEOC, along with some pointers for employers to avoid scrutiny from the federal agency.

Disparaging words

A clause forbidding employees from making statements that disparage the company – The EEOC’s argument against such a clause is that it could deter employees from making any negative statement at all, even in conjunction with filing a charge with the EEOC or participating in an EEOC investigation. A nondisparagement agreement should clearly state that it is not meant to discourage such activities.

Keeping confidences

A confidentiality clause prohibiting the disclosure of personnel-related information without written permission – Confidentiality clauses should clearly identify specific confidential and proprietary information (such as trade secrets or customer lists, for example) which should not be shared. Prohibiting the disclosure of information that could be pertinent to an EEOC investigation or charge (including personnel information, generally) might draw the agency’s attention.

Limits on rights

A clause prohibiting the filing of any “action, lawsuits, proceedings, complaints, charges” against the company, including “any claim of unlawful discrimination of any kind” – The EEOC indicated that this statement (along with others) intends to deny employees from fully exercising their rights (in particular, filing a charge of discrimination with the EEOC). Employers must take care to create clear phrasing in severance agreements to avoid creating the impression that these rights are restricted.

The company in this case did include a sentence in its severance agreement specifically stating that employees had the right to participate in, or cooperate with, any local, state or federal discrimination proceeding or investigation. However, the EEOC didn’t find this single statement to be substantial enough to offset the problems in the five-page agreement. Employers should ensure that such language is highlighted throughout the agreement and that these rights are abundantly clear.

It’s not yet clear whether the EEOC’s recent challenges have legal merit (courts have not yet issued final decisions), but until more information emerges, employers may want to review their severance agreements to avoid becoming the agency’s next target.

A review by a legal professional may be wise, but a thorough reading should give human resources professionals an idea of whether the language in their companies’ severance agreements could be considered “overly broad” by the agency.

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