Legal Developments Affecting Settlement Agreements in Discrimination Cases
| Publication year | 1988 |
| Pages | 857 |
| Citation | Vol. 17 No. 5 Pg. 857 |
1988, May, Pg. 857. Legal Developments Affecting Settlement Agreements in Discrimination Cases
In Equal Employment Opportunity Commission v. Cosmair, Inc., a case of first impression decided in July 1987,(fn1) the Fifth Circuit Court of Appeals held that an employee's waiver of a right to file a charge with the Equal Employment Opportunity Commission ("EEOC") under the Age Discrimination in Employment Act ("ADEA")(fn2) was void as against public policy. Prior to the Cosmair decision, no court had considered whether a release signed by an employee could prohibit the employee from filing a charge with the EEOC. This article includes a discussion of Cosmair, other new cases that suggest limitations on settlement and overall settlement considerations.
Cosmair, Inc., terminated the employment of 53-year-old Robert Lee Terry. In exchange for salary and medical benefits for thirty-nine weeks following his discharge, Terry released Cosmair
. . . from all actions, causes of actions, claims and demands whatsoever including, but not limited to, any claims, such as those under any federal, state or local law dealing with discrimination in employment on the basis of sex, race, national origin, religion, or age, arising from or in connection with his employment with COSMAIR, INC. which he ever had, now has or may have from the day of his commencement of employment with COSMAIR, INC. to the date of this release.(fn3)
Terry signed this release without consulting an attorney.
Approximately three weeks later, Terry filed an age discrimination charge with the EEOC.(fn4) Cosmair promptly stopped the severance benefits, claiming that Terry had breached the release. Terry then filed a second charge with the EEOC, alleging retaliation. The district court accepted Terry's retaliation argument and granted the EEOC's motion for a preliminary injunction, barring Cosmair from refusing to pay severance benefits to Terry.
On appeal, Cosmair relied on general principles of contract law to argue that the release signed by Terry was valid, enforceable and not against public policy. However, the EEOC asserted that the language of the ADEA "makes the filing of a charge an absolutely protected activity."(fn5) The EEOC bolstered its public policy argument by emphasizing the necessity for dissemination of information to the EEOC under the ADEA.
The Fifth Circuit relied on the EEOC's concerns regarding the free flow of information to the agency in ruling in favor of the EEOC:
Allowing the filing of charges to be obstructed by enforcing a waiver of the right to file a charge could impede EEOC enforcement of the civil rights laws. The EEOC depends on the filing of charges to notify it of possible discrimination. . . . We hold that an employer and an employee cannot agree to deny to the EEOC the information it needs to advance this public interest. A waiver of the right to file a charge is void as against public policy.(fn6)
As of this writing, no other court has specifically discussed the Cosmair holding prohibiting waiver of the employee's right to file a charge.
The case is likely to have a significant impact on the settlement of further employment disputes because of the EEOC's promise to adhere to the Cosmair ruling. "The right to file a charge and participate in a Commission investigation is absolutely protected because it is essential to the Commission's enforcement of the ADEA."(fn7) The EEOC also said that it intends to apply the Cosmair rule to releases prohibiting charges under Title VII.(fn8)
The Cosmair court took care to preserve the rule that an employer is free to bargain for a release of the employee's private cause of action against the employer, as well as the employee's right to recover in a suit brought by the EEOC on the employee's behalf.(fn9) This rule merits discussion because recent
...
To continue reading
Request your trial