February, 2014

February 26, 2014

Do Confidentiality Provisions In Separation Agreements Violate Title VII? The EEOC Thinks So.

by Salvatore Gangemi of Murtha Cullina LLP

When providing a departing employees with severance pay, most employers require that the employee sign a separation or severance agreement, which, among other things, contains a general release of claims. The payment of severance is given in exchange for the employee’s agreement not to raise any claims against the employer. The Equal Employment Opportunity Commission (“EEOC”) does not have a problem with this type of exchange; otherwise, cases could never settle. The EEOC does, however, take issue with provisions that have become standard in most separation agreements. Earlier this month the EEOC filed an action in an Illinois federal court against CVS Pharmacy, Inc., alleging that CVS’s severance agreements violate Title VII of the Civil Rights Act of 1964, as amended, because they constitute a “pattern or practice of resistance to the full enjoyment of any rights secured by Title VII.” The EEOC believes that these provisions violate the retaliation protections contained in Title VII.

According to the Complaint filed in EEOC v. CVS Pharmacy, Inc., certain provisions of the form severance agreement at issue prohibit employees from filing charges of discrimination, and interfere with an employee’s right to participate and cooperate with investigations conducted by the EEOC and state fair employment practices agencies. The alleged offending provisions included a non-disparagement clause, a confidentiality provision, a cooperation provision that requires the releasee to notify CVS if they are compelled to provide information about the company, and an agreement not to sue.

As most attorneys who practice in the area of employment discrimination law are aware, the clauses challenged by the EEOC are contained in virtually every separation/severance agreement. If the EEOC prevails, employers may have to give up some of the guarantees and assurances that they have taken for granted. Although some argue that prohibiting these types of provisions will make employers less likely to pay severance or settle claims of discrimination, the concern is overstated. Employers will likely continue to pay severance in exchange for general releases because at the very least they will have secured an agreement that the particular claim at issue will not come back, or continue, to haunt them.

February 25, 2014

Congress Considers SNOPA to Curtail Snooping of Social Networking Accounts

by Salvatore Gangemi of Murtha Cullina LLP

As many individuals have learned the hard way, their postings on social networking sites are generally not private. It comes as no surprise that employers routinely check the web for postings or other information concerning current or prospective employees. In the last few years, using the web to perform informal background checks has increased significantly. To make their searches easier, many employers have begun requesting social media user names and passwords of their prospective and current employees. Currently, there is no federal law prohibiting such a practice. This may change with the Social Networking Online Protection Act (“SNOPA”), which was introduced in 2012 by Representative Eliot Engel (D-NY) and Representative Jan Schakowsky (D-Ill).

Although the bill went nowhere in 2012, the bill was reintroduced earlier this month on February 6, 2013. SNOPA seeks to prohibit employers and others from requiring or requesting that employees, job applicants and others provide their user names, passwords or other information needed to access personal accounts on social networking sites. SNOPA also prevents discharging, disciplining or discriminating against any employee or job applicant who refuses to provide such information. SNOPA does not, however, prohibit employers from taking adverse actions against employees or prospective employees for their social media activity. So, SNOPA does not seek to protect individuals from themselves. Regardless of whether SNOPA becomes law, employees still need to be aware of the consequences of their social networking activity.

SNOPA would also apply to schools and universities.

February 17, 2014

New York Federal Court Refuses to Enforce No Hire Agreement

by Salvatore Gangemi of Murtha Cullina LLP

In this age of mergers and acquisitions, and increased employee mobility, it is critical that employers and employees understand their respective noncompetition obligations. A Southern District of New York court recently applied the “reasonableness” standards governing enforceability of non-competition agreements, or restrictive covenants, to no-hire agreements. Specifically,in Reed Elsevier Inc. v. TransUnion Holding Company (S.D.N.Y. 13-CV-08739), the court found that the agreement was not necessary to safeguard a “protectable interest” of Reed Elsevier, and was, therefore, unenforceable.

In TransUnion, the parties had entered into an agreement prohibiting TransUnion from hiring certain senior management employees of Reed Elsevier for a time. Ultimately, TransUnion hired the former Chief Technology Officer of Reed Elsevier, after TransUnion purchased the assets of the employee’s subsequent employer, and assumed the former employee’s employment contract. It’s not clear to what extent the court was influenced by the fact that the employee had previously left Reed Elsevier to work for another employer (not TransUnion) and ended up becoming a TransUnion employee through a bankruptcy sale of assets. Thus, the court considered whether under New York law, the no-hire agreement was (1) reasonable in time and area; (2) necessary to protect the employer’s legitimate interest; (3) not harmful to the public; and (3) not unreasonably burdensome to the employee.

Although the court found that the time restriction was unreasonable, because under the circumstances of the case, it would have prevented the employee from working for TransUnion for a period extending 31 months after his departure from Reed Elsevier, the court refused to shorten that restriction to a more reasonable period because Reed Elsevier could not prove that the agreement was necessary to protect a legitimate interest. Under New York law, a legitimate interest entitled to protection through a restrictive covenant would include (1) trade secrets; (2) confidential customer information; (3) the employer’s client base; and (4) irreparable harm where the employee’s services are unique and extraordinary. The court found that none of these interests was at stake in this case.

February 10, 2014

Equal Employment Opportunity Commission Releases Fiscal Year 2013 Enforcement and Litigation Results

by Salvatore Gangemi of Murtha Cullina LLP

On February 5, 2014, the Equal Employment Opportunity Commission (“EEOC”) released its annual statistics on its FY 2013 activity. Among other things, the data reveals that there was a 5.7% decrease in charges received by the agency in FY 2013 as compared to FY 2012. In all, the EEOC received 93,727 charges of discrimination last year.

The most cited basis for charges of discrimination was retaliation, which increased both in number and as a percentage of all charges from the prior year. Following retaliation was race discrimination, sex discrimination (including sexual harassment and pregnancy discrimination) and disability discrimination. Also in 2013, the EEOC filed 131 lawsuits, with 78 of them alleging violations of Title VII, and 51 arising under the Americans with Disabilities Act.

The EEOC’s statistics can be found on the Enforcement and Litigation Statistics page of its website.