Federal Legal Corner: EEOC Voids Bad Faith Settlement Agreement

The EEOC recently reaffirmed the basic contract principle that “bad faith in negotiating and implementing a settlement agreement constitutes a breach” in the case Complainant v. National Endowment for the ARTS (NEA) Appeal No. 0120133264 (February 4, 2014). In that case the NEA entered into a settlement agreement with a complainant under which the complainant and the complainant’s named manager would each undergo training, and under which the manager was to have reconsidered the complainant’s previously denied telework request. The complainant was a probationary employee at the time of the settlement.

Two weeks after entering the settlement, the manager terminated the complainant, who was still in his probationary period.At the time she terminated the complainant, the manager had not yet considered or ruled on the telework request. The complainant initiated a breach action, but the agency issued a final agency decisionconcluding no “material” breach, since the complainant was terminated before the telework decision could issue.

The complainant appealed to the EEOC, and the manager issued a memo denying the telework request shortly thereafter.

The EEOC’s Office of Federal Operations reversed the agency’s finding of no breach. The EEOC held that the agency negotiated in bad faith because the manager terminated the complainant only two weeks after signing the agreement, and that it would have been “highly unlikely” that at the time of the negotiations she did not know that she planned to terminate the complainant during his probationary period because of his work performance. Accordingly, the EEOC voided the settlement agreement and remanded to the agency to resume processing of the complaint.

* This information is provided by the attorneys at Passman& Kaplan, P.C., a law firm dedicated to the representation of federal employees worldwide. For more information on Passman& Kaplan, P.C., go to http://www.passmanandkaplan.com.

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