The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. Drafting Severance and Confidentiality Agreements Amid New EEOC, NLRB, and Now SEC Scrutiny Anticipating and Avoiding Agency Challenges to Non-Disparagement, Cooperation, Confidentiality, No Rehire, Covenants Not to Sue, and other Common Provisions Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, SEPTEMBER 9, 2015 Presenting a live 90-minute webinar with interactive Q&A Kerry E. Notestine, Shareholder, Littler Mendelson, Houston Christina A. Stoneburner, Partner, Fox Rothschild, Roseland, N.J.
Transcript
The audio portion of the conference may be accessed via the telephone or by using your computer's
speakers. Please refer to the instructions emailed to registrants for additional information. If you
have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
Drafting Severance and Confidentiality
Agreements Amid New EEOC, NLRB,
and Now SEC Scrutiny Anticipating and Avoiding Agency Challenges to Non-Disparagement, Cooperation,
Confidentiality, No Rehire, Covenants Not to Sue, and other Common Provisions
coworker, customer or vendor will result in discipline
32
Confidentiality and Non-disparagement Provisions:
How Much Does the NLRB Care?
Not uncommon for NLRB to include in Notices
to Employees where violation is found that the
employer “will not require you to sign a
severance agreement or any agreement that
contains confidentiality or non-disparagement
clauses that restrict you from engaging in
protected concerted activities
─ See Board Decision in Pratt (Corrugated Logistics),
LLC and Teamsters Local 773, Cases 04-CA-07963,
04-CA-079858, 04-CA-079976, and 04-RC-080108
(February 21, 2014)
33
Problems With Severance Agreements in Pratt
Extensive discussion in the ALJ decision (JD-
08-13) of problem provisions:
─ Provision that prevented the employee from disclosing
the “contents” of the agreement with anyone except
family or financial or legal
─ Provision that prevented the employee from making
statements or engaging in conduct that “disparages,
criticizes . . . or otherwise cases a negative
characterization upon . . . any Pratt Entity . . . nor
encourage or assist anyone else to do so.”
34
Problems With Severance Agreements in
Pratt (Cont.)
Non-disparagement clause was not saved by
provision saying that is does not prevent
signatory from testifying in a legal proceeding
or complying with a subpoena
─ Employees must be able to consult with other
employees and their union on employment matters
35
Drafting Best Practices Kerry Notestine, Littler
Christina A. Stoneburner, Fox Rothschild
A
Drafting Best Practices
Don’t overreact
─ EEOC does not seem to be challenging the validity of
the releases themselves
─ BUT: Companies that make themselves a target must
either litigate or make the EEOC their drafting partner
on future releases
37
What You CANNOT Include
“In exchange for the
consideration contained in this
Release Agreement, I agree not
to file any claim, action,
complaint, charge or other
proceeding against the
Company”
38
Why Not?
29 U.S.C. §626 (f)(4): “No waiver agreement
may affect the Commission’s rights and
responsibilities to enforce this chapter. No
waiver may be used to justify interfering with
the protected right of any employee to file a
charge or participate in an investigation or
proceeding conducted by the Commission.”
EEOC Enforcement Guidance on non-waivable
employee rights under EEOC enforced
statutes, EEOC Notice 915.002 (4/10/97).
39
What You CANNOT Include
“I agree that if I hereafter bring
any action or proceeding of any
kind against the Company, the
Company shall have the right to
recover from me all sums paid
pursuant to this Release
Agreement, in addition to any
damages the Company shall
suffer”
40
Why Not?
29 U.S.C. §1625.23 (Waivers of Rights and
Claims: Tender Back of Consideration); Oubre
v. Entergy Operations, Inc., 522 U.S. 422
(1998).
However, it is permissible to include a tender-
back provision for violation of other
provisions of the Release Agreement,
including disclosure of confidential
information, non-disparagement of Company,
non-solicitation, etc.
41
What You CANNOT Include
“I agree that I shall not at any
time hereafter give testimony
to, or otherwise cooperate
with, the EEOC or any
individual bringing a claim
against the Company”
42
Why Not?
“Agreements that attempt to bar individuals from
filing a charge or assisting in a Commission
investigation run afoul of the anti-retaliation
provisions because they impose a penalty upon
those who are entitled to engage in protected
activity under one or more of the statutes
enforced by the Commission.”
─ EEOC Enforcement Guidance on non-waivable employee
rights under EEOC enforced statutes, EEOC Notice 915.002
(4/10/97).
─ EEOC v. Astra USA, Inc., 94 F. 3d 738 (1st Cir. 1996).
43
What You CANNOT Include
“I agree that in order to receive
the payment set forth in this
Release Agreement, I must first
withdraw the charge I previously
filed with the EEOC, Charge No.
XXXXXX”
44
Why Not?
To require a person to withdraw her EEOC
charge as a condition of receiving severance
pay violates the anti-retaliation provisions
contained in the ADEA (29 U.S.C. §623(d)) and
Title VII (42 U.S.C. §2000e-3(a).
─ EEOC V. Lockheed Martin Corp., 444 F. Supp. 2d 414
(D.C. MD 8/8/06).
45
Drafting Best Practices
Continue to include release of claims for
individual relief in agency proceedings
Continue to require representation of whether
a charge is pending
Continue to require agreement not to reapply
Consider requiring employee disclosure of
known company non-compliance with
regulatory obligations
46
Drafting Best Practices
For pending charge, weigh risks of requiring employee to request withdraw charge and right to sue
For pending charge, consider having employee advise EEOC of settlement and employee’s satisfaction therewith, with no explicit request for file closure
For pending charge: ─ Do not make actual withdrawal of charge a condition precedent to
payment
─ Consider making EEOC approval of settlement a condition of having a settlement (generally not advised)
─ Unless seeking EEOC approval as a condition of the settlement, do not make actual closure of charge a condition precedent to payment
47
Drafting Best Practices
Include carve out of agency charges
(regardless of other release terms)
─ Cover all governmental complaints (EEOC, NLRB,
state agencies, others)
─ Consider using a separate, highlighted paragraph
(omnibus carve out)
─ Consider referring to the carve out in each section that
might restrict assistance to an agency, e.g.,
confidentiality and nondisparagement
48
Sample Agency Charge Carve Out
Nothing in this Agreement including but not limited to
the release of claims, proprietary information,
confidentiality, cooperation, and non-disparagement
provisions, prevents Employee from filing a charge or
complaint with or from participating in an
investigation or proceeding conducted by the EEOC,
NLRB, or any other federal, state or local agency
charged with the enforcement of any laws, although
by signing this release Employee is waiving rights to
individual relief based on claims asserted in such a
charge or complaint, except where such a waiver of
individual relief is prohibited.
49
Drafting Best Practices
Consider foregoing the covenant not to sue
Revise or eliminate troublesome terms
─ Noncooperation with agency
─ Cooperation with employer
─ Confidentiality
─ Nondisparagement
─ Claims for breach by employee (prevailing party
attorney fees, etc.)
50
Drafting Best Practices
CVS: “Among other things, the five-page
single spaced Separation Agreement states . .
..” (emphasis in original).
The lesson:
─ Simplify
─ Simplify
─ Simplify
─ Simplify
─ Simplify
51
Resources
March 4, 2014 ASAP
on CVS
May 13, 2014 ASAP on
CollegeAmerica
52
Drafting Best Practices
Give employees sufficient time to review the
Agreement
─ Decisions applying the Independent Stave analysis
have upheld waivers of claims where employees had
45 days to review to the Agreement
• See BP Amoco Chemical – Chocolate Bayou, 351
NLRB No. 39 (September 29, 2007)
• Hughes Christensen Co., 317 NLRB 633 (1995)
53
Drafting Best Practices
Set forth in the Agreement that the employee
has the right to consult with an attorney
Consider also adding “union representative”
Be careful that other provisions of the
Agreement may not be read to restrict
concerted activity such as:
─ Statements that no further legal action will be filed
─ Non-cooperation and/or non-solicitation clauses
54
Drafting Best Practices
Add a Section 7 savings clause that nothing in
the Agreement is intended to interfere with an
employee’s Section 7 rights
55
Drafting Best Practices
Confidentiality provisions should be narrowly
drafted.
─ Generally the money is really what an employer wants to
keep confidential.
• Confidentiality provision can lawfully provide that
employee cannot disclose the amount paid except to
family, tax or legal advisors
─ Be careful about including broad provisions that forbid an
employee from discussing his or her employment
─ If there are specific things that you require to be confidential
such as trade secrets and proprietary business information,
provide specific examples of what those terms mean
56
Drafting Best Practices
Non-disparagement clauses should not just
say that an employee may not say “anything
negative”
─ Consider saying that the employee can not “defame”
the employer or any released party
─ Can still prevent the employee from “disparaging”
