Labor: Dealing with the "new" EEOC

The EEOC’s recent approach to litigation can be both a threat and an opportunity for employers.

If you happened to notice that the EEOC recently filed a lawsuit against an employer you recognize (or even, heaven forbid, against your company), do not be surprised. The EEOC filed nearly 200 lawsuits during August and September 2011, the last two months of its fiscal year. Considering the EEOC filed approximately 250 lawsuits during the entire prior fiscal year, this volume of lawsuits filed in the past eight weeks is remarkable.

The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of race, color, religion, sex, national origin, age (40 or older), disability or genetic information. The EEOC also handles claims of retaliation over an individual’s complaining about discrimination, filing a charge of discrimination or participating in an employment discrimination investigation or lawsuit. Traditionally the EEOC investigated claims of discrimination or retaliation and sought to settle anymatters it found. If it could not reach a settlement, the EEOC had the power to file a lawsuit to address the discrimination. But, historically, those suits have been very rare and just a miniscule fraction of the thousands of employment discrimination lawsuits filed each year. The odds of an employer facing a lawsuit filed by the EEOC were exceedingly low. The recent spate of filings, however, shows that the EEOC’s tradition and history is changing in dramatic fashion.

Today’s EEOC is aggressive, litigious and particularly on the lookout for matters involving multiple individuals alleging discrimination or claims of "systemic discrimination."  It wants to challenge practices or policies affecting large groups of employees with a big employer or within an industry. The EEOC considers itself out in the forefront, searching for discrimination to attack and remedy. Rather than just addressing claims brought to it by employees, the EEOC is seeking to make changes in the workplace through aggressive action, particularly through litigation. This new attitude of the EEOC presents both a threat and an opportunity for employers.

The threat is that no company wants to have such a lawsuit filed against it. Litigating against the EEOC is different than litigating against a private party and private attorney with unique, personal motives, because:

  1. The EEOC is looking to prove a point, expose an improper practice or a discriminatory company, and generate publicity, as well as recover significant settlement dollars or a large verdict at trial.
  2. The EEOC’s lawyers are not working for a contingency of the recovery and just looking to get paid. Rather, they justify their existence by their lawsuits and justify their value to Congress and the community by the settlements they get employers to agree to or verdicts they get against them, and by touting the total dollars gained for alleged victims of discrimination as compared to their agency's annual budget.

The EEOC’s website  highlights all the money it takes credit for recovering: In FY 2010, it claims to have generated $319 million through its administrative enforcement efforts (the highest in the Commission’s history), $142 million through EEOC mediations and $85 million through litigation.

While this new EEOC is certainly a threat to employers, it also presents an opportunity for employers who are dealing with the EEOC on all other matters in which the EEOC has not filed a lawsuit. The EEOC has limited resources. In fact, its budget for FY 2012 is 2 percent less than its FY 2011 budget. To litigate these nearly 200 newly filed cases (along with the cases it will file in the coming months and all of the cases it filed in the first 10 months of this past year or which were still pending from prior years) takes money and the time of EEOC attorneys and officials. Since they are spending more time and resources on litigation, there will necessarily be fewer resources for existing and new Charges, especially those that do not present opportunities for high-profile litigation. The EEOC may not be able to fully investigate all other claims, or use other resources evaluating and processing the claims. Smart employers will recognize this and will seek opportunities to resolve EEOC Charges quickly, efficiently, through other means (such as through private settlements or private mediations) and to try to encourage the EEOC to expend its limited resources elsewhere.

This opportunity also comes at a time when Courts are showing less patience for the EEOC’s often clumsy litigation tactics. Federal trial courts have recently sanctioned the EEOC where its tactics have turned out to be questionable and its claims unfounded. For example, a Michigan federal court recently awarded an employer more than $750,000 for its fees and costs in litigating against the EEOC. The EEOC v. Peoplemark Inc. case had gone on for more than three years before the EEOC dropped the case when its claims were found to be without merit. The court noted that the EEOC failed to do even a basic investigation into the claims before filing its lawsuit, and that if it had done such a review first, it would have seen it had no basis for the lawsuit. While this sanction is likely a record against the EEOC, most notable was the court's conclusion that because the stakes in EEOC litigation against an employer are so high for the employer, and the expense of litigating so great, employers should "pressure-test" the EEOC's theories at the beginning and make the EEOC "show its work" on all aspects of its claims. That is not advice ordinarily given out by judges.

Employers  are wisely taking that advice and being aggressive in responding to EEOC lawsuits. For instance, in Ohio, the EEOC brought a class action claim against Kaplan Higher Education Inc., which allegedly discriminatorily used credit histories in hiring. In response, Kaplan sought discovery about the EEOC's own use of background and credit checks in its hiring practices. Over the EEOC's strong objections, the court ruled that Kaplan was entitled to this discovery. Because the EEOC alleged that Kaplan's use of credit information was not job-related or consistent with business necessity and that there were non-discriminatory options available, what the EEOC itself did in its own hiring process was relevant to the issues in the case. This "what's good for the goose is good for the gander" approach is certainly novel, but it is a tactic, along with other aggressive approaches and responses, that employers need to consider if faced with litigation from the EEOC.

The EEOC no longer acts in a passive, purely investigatory and conciliatory fashion. It is out in front, trying to make examples of employers it believes are violating the laws it enforces. While wise employers will do all they can to avoid EEOC litigation, those faced with it should consider being aggressive in response and recognize both the risks and opportunities created by the EEOC's recent approach to litigation.

Partner

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Evan Pontz

Evan Pontz is a partner in the Labor & Employment practice of Troutman Sanders. He specializes in employment and labor law matters, including employment discrimination...

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