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2nd Circuit OKs Broad Subpoena Power for EEOC Probes

The Equal Employment Opportunity Commission's (EEOC) systemic discrimination initiative got a shot in the arm Nov. 19, 2009, when the 2nd Circuit boosted the agency's power to subpoena an employer's nationwide employment records.

When the EEOC launched its systemic discrimination initiative in 2006, it said it would focus on patterns of unlawful bias throughout a company's operations, rather than on individual complaints of discrimination. In practice, that has meant taking one or two charges as an indication of broader discrimination and seeking enterprise-wide records from an employer to try to make that case.

In the 2nd Circuit case, two Muslim UPS employees filed complaints against the delivery service alleging it unlawfully denied them positions because they refused to shave their beards for religious reasons. Instead of simply requesting records about the two individuals, the EEOC requested information about how UPS's appearance guidelines had impacted its entire workforce.

UPS objected, saying it did not keep such information in a centralized location, and the agency responded by issuing a subpoena for the nationwide data. The U.S. District Court for the Western District of New York refused to enforce the subpoena, holding in EEOC v. UPS that the nationwide information was not relevant to the specific charges being investigated.

But the 2nd Circuit reversed, finding that the EEOC was entitled to the nationwide information because the appearance guidelines applied to all UPS facilities. In other words, the court blessed the EEOC's tactic of expanding individual discrimination cases to nationwide investigations.

"This case is very important as a backdrop to what has been going on at the EEOC," says Gerald Maatman Jr., a partner at Seyfarth Shaw. "When I'm at a meeting with in-house counsel and I ask, 'Who has been hit with a subpoena from the EEOC?,' almost everyone raises their hands. So cases like EEOC v. UPS that create guideposts are very, very important, because what happened at UPS is happening around the country."

Hands-off Approach

A key UPS argument against the subpoena hinged on the facts of the case. The company's appearance policy prohibits employees in public contact positions from having facial hair below the lower lip. One of the Muslim employees claimed he was rejected as an applicant for a driver's helper position in Rochester, N.Y., because he refused to shave his beard. UPS said he wasn't hired because he gave a false Social Security number on his application.

The other complainant, who was a UPS employee in a nonpublic contact position in Dallas, alleged that he was denied a driver position because he refused to shave his beard. He also said his attempts to obtain a religious accommodation request form were turned down by employees at both the local and regional human resources offices who said they knew of no such form. He filed charges of religious discrimination with both the Texas Workforce Commission and the EEOC in April 2007, and two months later the company granted his accommodation request. Nonetheless, he made clear in his complaint that he believed UPS "has a pattern or a practice of refusing to accommodate the religious observances, practices and beliefs of its employees."

UPS argued that it rejected the first employee because he did not provide a valid Social Security number and that it accommodated the second, so the two charges did not justify nationwide discovery. But the appeals court rejected that defense.

"UPS's arguments as to the merits do not prevent the EEOC from investigating those charges," the court said. "Indeed, at the investigatory stage, the EEOC is not required to show that there is probable cause to believe discrimination occurred or to produce evidence to establish a prima facie case of discrimination." The court cited a 1984 Supreme Court case, EEOC v. Shell Oil Co., in which the high court said the EEOC's ability to carry out systemic discrimination investigations must not be impaired.

"The court is taking a hands-off approach to the enforcement power of the EEOC," says Daniel Schwartz, a member at Pullman & Comley. "In some ways the court is signaling to employers, 'Come back to us while the case is ongoing, but while the agency is investigating, we are going to give them a great deal of latitude.'"

Ground War Underway

The UPS decision comes at a time when employment attorneys are reporting an uptick in EEOC investigations and a more aggressive approach to pursuing them.

"The EEOC has ramped up in a way we haven't seen in a decade," Schwartz says.

Maatman attributes that to a "perfect storm" of the systemic discrimination initiative getting fully off the ground and more emphasis on and resources allocated to combating discrimination under the Obama administration.

"[The EEOC] is reaching out and being very aggressive," he says. "They now are asking for nationwide data, so corporate counsel are saying, 'What? This will take days and weeks to get.' In essence, a ground war is being fought over what is relevant and what is not."

Elizabeth Grossman, regional attorney in the EEOC New York District office, disagrees that there has been a change under Obama, saying the agency has been fully focused on systemic discrimination since 2006. "The systemic initiative sent a clear message to employers that we were ramping up," she says. "We are legally entitled to expand charges beyond individual claims, and we have always asserted our right to do so."

Grossman contends that employers are choosing more often to fight requests for information, while the EEOC remains willing to negotiate. She cites a "disturbing trend" of employers digging in their heels before the scope of the investigation has even been defined.

"We usually send out a request for information that says, 'Tell us how you keep your data so we can intelligently request it,'" she says. "There have been more and more refusals to
provide that."

She encourages employers to negotiate when they receive an EEOC request they believe is overbroad, citing other cases in which district and circuit courts have supported the EEOC's right to investigate broadly.

"Those who engage in dialog with us are much more successful than those who choose to fight us," she says.

Maatman agrees that negotiating can be a good strategy, even if no agreement is reached.

"It enables you to tell the judge, 'We offered a reasonable compromise,' a strategic positioning that can help if the EEOC brings an action in court [to enforce a subpoena]," he says.

Senior Editor

Mary Swanton

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