Lots of employers use “last chance” agreements as the ultimate disciplinary step for problem employees. But they need to tread carefully.
Case in point: A federal judge ruled against an Illinois company after it fired an employee who wouldn’t agree to waive his right to sue in federal court as part of a “last chance” pact.
The case involved employee Steven Whitlow, whose employer required him to sign a “last-chance” agreement that prohibited him from filing a discrimination charge with the EEOC — even a charge based on something that might occur in the future.
Whitlow refused to be bound by that section of the agreement. The employer, Cognis Corp., fired him.
The Equal Employment Opportunity Commission charged that Cognis conditioned Whitlow’s employment on his agreement to give up his right to make any federal complaint of employment discrimination.
In federal district court, the judge ruled Cognis stripped Whitlow of his rights to seek relief for discrimination or to file a charge with the EEOC — and illegally retaliated against Whitlow by letting him go.
The decision came in the form of summary judgment, a rarity in retaliation cases.
But the court held that no jury could reasonably conclude that Cognis did not unlawfully retaliate against Whitlow when it fired him, and that Cognis’s argument to the contrary “defies simple logic.”
The case is EEOC v. Cognis. To read the full decision, go here.
So what’s to be learned here? Tim Garrett of the law firm of Bass, Berry and Sims says that LCAs can be effective tools but the more conservative — and arguably best — practice dictates that the waiver of statutory civil rights not be included.
But, Barrett says, if an employer wishes to include such waiver, the LCA (or the employer) should explain that:
- the employee is releasing only past claims, not future claims;
- the employee can still file a charge with the EEOC but is waiving the to right to recover any personal benefits; and
- the waiver of rights is not mandatory and if that part of the LCA becomes the only basis for the employee’s objections, the employer is willing to omit that section of the agreement.