and Now SEC Scrutiny Anticipating and Avoiding Agency Challenges to - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A 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 WEDNESDAY , SEPTEMBER 9, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Kerry E. Notestine, Shareholder, Littler Mendelson , Houston Christina A. Stoneburner , Partner, Fox Rothschild , Roseland, N.J. 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 .

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Drafting Severance and Confidentiality Agreements Amid New EEOC and NLRB Scrutiny Wednesday, September 9, 2015

Presented by: Kerry E. Notestine Littler, Houston knotestine@littler.com 713.652.4748 Christina A. Stoneburner Fox Rothschild, Roseland, N.J. cstoneburner@foxrothschild.com 973.994.7551 5

Agenda  EEOC requirements and legal framework for severance agreements  NLRB requirements and legal framework – Confidentiality provisions – Employee behavior and conduct policies – Non-disparagement provisions  Drafting best practices 6

A EEOC Requirements and Legal Framework for Severance Agreements Kerry Notestine, Littler 7

Background to Current Issues  This is NOT just about the OWBPA and Age issues  EEOC Enforcement Guidance on non-waivable employee rights under EEOC enforced statutes, EEOC Notice 915.002 (4/10/97)  29 USC § 626(f)(4) codifies this obligation for claims under the ADEA.  EEOC v. Eastman Kodak, 2006 case under Title VII and the ADEA. 8

Kodak Consent Decree “Except as described below, you agree and covenant not to file any suit, charge or complaint against Releasees in any court or administrative agency, with regard to any claim, demand, liability or obligation arising out of your employment with Kodak or separation therefrom. You further represent that no claims, complaints, charges, or other proceedings are pending in any court, administrative agency, commission or other forum relating directing or indirectly to your employment by Kodak. Nothing in this Agreement shall be construed to prohibit you from filing a charge with or participating in any investigation or proceeding conducted by the EEOC or a comparable state or local agency. Notwithstanding the foregoing, you agree to waive your right to recover monetary damages in any charge, complaint, or lawsuit filed by you or by anyone else on your behalf .” Consent Decree, EEOC v. Eastman Kodak (W.D.N.Y. October 11, 2006). 9

EEOC v. Baker & Taylor  EEOC sues Baker & Taylor May 20, 2013  EEOC and Baker & Taylor enter into sweeping consent decree July 2013  “Employees retain the right to participate in any action [before the EEOC or comparable state or local agencies] and to recover any appropriate relief.” 10

CVS and CollegeAmerica Cases 11

EEOC v. CVS Pharmacy  EEOC sues CVS Pharmacy on February 7, 2014  EEOC alleges “Pattern or Practice” of unlawful conduct  Release agreement attached to Complaint  Covenant not to Sue includes Charge Carve- out 12

EEOC v. CVS Pharmacy  Provisions challenged • Covenant not to Sue • Non-Disparagement and Non- Disclosure • Notification • Remedies including Attorneys’ Fees • Five-Page Single Spaced Document 13

EEOC v. CVS Pharmacy  Motion to Dismiss  No Unlawful Discrimination  No Pattern & Practice  EEOC failed to Conciliate  Court Dismisses Case based on Conciliation Issue  Currently on Appeal. 14

EEOC v. CollegeAmerica  EEOC Phoenix District Office sues CollegeAmerica in Denver on 4/30/14  Employee (Potts) Resigned  Signed Settlement Agreement  $7000 payment and No Dispute on Unempl.  Agreement Not to Contact Gov’t Agency  Forward Complaints and Non-Disparagement 15

EEOC v. CollegeAmerica  Allegedly disparaging emails with another former employee that are forwarded to Company  Potts files Charge  Company sues Potts 7 days later  Potts files two Retaliation Charges 16

EEOC v. CollegeAmerica  Potts and 4 Form Agreements Attached to Complaint  Prohibits Filing Charge/No Carve Out  EEOC challenges Additional Provisions No Claims  Certification of Non-Compliance Disclosure  Severability Clause   CollegeAmerica filed MTD on Same theories as CVS  Court Dismisses Interference Claim based on Failure to Conciliate  Retaliation Claims Remain 17

SEC v. KBR  KBR used a Confidentiality Statement For Internal Investigations Covered by Attorney Work Product Privilege  Required Confidentiality Unless Law Department Agrees to Disclosure  No evidence that the Agreement Prevented Anyone From Contacting the SEC  SEC Claims Statement Violated SEC Rule 21F- 17 which prevents interference with SEC investigations 18

SEC v. KBR  KBR Agrees Amend Agreement to Carve Out Right to Complain to SEC and Participate in SEC Investigations  Employees not required Law Department Approval to make reports or participate in investigations  $130,000 Civil Penalty 19

A NLRB Requirements and Legal Framework Christina A. Stoneburner, Fox Rothschild

Can a Severance Agreement Waive Claims Under the NLRA?  General Rule is that Severance Agreements should be treated as any other non-Board settlement and Board would defer after examining: ─ Whether the parties have agreed to be bound, and the position taken by the General Counsel regarding the settlement; ─ Whether the settlement is reasonable in light of the violations alleged, the risks inherent in litigation, and the stage of litigation; ─ Whether there has been any fraud, coercion, or duress by any party in reaching the settlement; and ─ Whether the respondent has a history of violations of the Act or has breached past unfair labor practice settlement agreements ( Independent Stave Co., 287 NLRB 740, 743 (1987) 21

Can a Severance Agreement Waive Claims Under the NLRA? (cont.)  NLRB may or may not defer to the terms of the severance agreement  Even an employee who signed a severance agreement may later file an unfair labor practice charge or recover money in the event a charge is filed on the employee’s behalf 22

Cannot Be an “End Around” the Union  Hotel Bel-Air and Unite Here Local 11, Case 31-CA-029841 (September 27, 2012) ─ NLRB invalidated severance agreements that were directly negotiated with employees • Terminations and severance pay were subject to negotiations with Union • Company claimed they were at impasse so sent severance letters directly to employees • Board held not at impasse and thus company was prohibited from dealing directly with employees 23

Why Has the NLRB Been Actively Reviewing Severance Agreements?  Memorandum OM 08-13 (December 5, 2007)  Issued to all Regional Directors Calling for them to Actively Investigate Waivers 24

Confidentiality and Non-disparagement Provisions: Why Does the NLRB Care?  NLRA Section 7: “ Employees shall have the right to self- organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . .” 25

Confidentiality and Non-disparagement Provisions: When Did the NLRB Start Caring?  Not a new concept  See, for example, Metro Networks, Inc,. and American Federation of Radio and Television Artists, Philadelphia Locals, AFL-CIO , Cases 4-CA-26812 and 4-CA-27207 (September 28, 2001)  Violation of Section 8(a)(4) where fired employee for union activity and then gave release with unlawful confidentiality provision: ─ Stating employee would not “publish, publicize, disseminate, communicate or cause to be published, information concerning your employment . . . , the existence of this Agreement or the terms described herein except to your immediate family, attorneys, accountants, or tax advisors.” 26