Employees May Not Waive Right to File Discrimination Charges in Exchange for Severance Package, Says EEOC

While employees may waive their right to collect monetary damages as part of a severance package, they may not waive their right to file a discrimination charge with the Equal Employment Opportunity Commission, according to the commission.

In a new document from the EEOC, “Understanding Waivers of Discrimination Claims in Employee Severance Agreements,” the commission explains exactly what rights employees may be asked to waive in exchange for a severance package. The commission said it decided to draft the document because “employee reductions and terminations have been an unfortunate result of the current economic downturn.”

“To minimize the risk of potential litigation, many employers offer departing employees money or benefits in exchange for a release … of liability for all claims connected with the employment relationship, including discrimination claims under the civil rights laws enforced by the [EEOC] — the Age Discrimination in Employment Act, Title VII [of the Civil Rights Act of 1964], the Americans with Disabilities Act and the Equal Pay Act,” the EEOC explained.

If executed correctly, waivers can be valid and enforceable, and prevent a former employee from filing a lawsuit in a federal court (as opposed to a claim with EEOC). In addition to meeting relevant state law requirements, a waiver must also be considered “knowing and voluntary” — a criterion explained in the guidance. The document also spells out situations under which employees may be required to repay severance.