Seventh Circuit Rejects EEOC's Attack On Severance Agreements

On December 17, 2015, the U.S. Court of Appeals for the Seventh Circuit upheld the dismissal of a lawsuit by the EEOC against CVS Pharmacy, Inc.  In Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., the EEOC alleged that CVS violated Title VII by offering terminated employees severance agreements that deterred former employees from filing charges with and participating in investigations by the EEOC.  The case garnered national attention because the CVS agreement was fairly standard.  Rejecting the EEOC's claims, the Seventh Circuit held that the EEOC's refusal to engage in pre-suit conciliation precluded it from suing CVS.  More importantly, it also ruled that an employer's offer of a severance agreement to terminated employees cannot serve as a basis for a so-called "pattern or practice" suit under Title VII without some allegation that the employer engaged in discrimination or retaliation.