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Wary of EEOC's Success

The EEOC's recent report highlighting record monetary rewards and efficiency may be good for the agency -- but for employers, it's just another reminder that they are being hit hard by greater demands for information about potential bias.

Monday, December 12, 2011
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Interpretation of a recent announcement by the U.S. Equal Employment Opportunity Commission about its increased success and efficiency this year appears to depend on which side of the agency you're on -- the issuing side or the receiving side.

According to its recent Performance and Accountability Report, the EEOC finished fiscal year 2011 (ending Sept. 30) with a 10-percent decrease in its pending-charge inventory (the first such reduction since 2002).

The report also touts the agency's "historic relief through administrative enforcement -- more than $364.6 million in monetary benefits for victims of workplace discrimination" (the highest level in the agency's history) as well as "a record 99,947 charges of discrimination" received.

"I am proud of the work of our employees and believe this demonstrates what can be achieved when we are given resources to enforce the nation's laws prohibiting employment discrimination," says EEOC Chair Jacqueline A. Berrien, referring to budget and staff increases the agency has been granted in recent years.

Specifically, according to the report, EEOC staff went from 2,176 full-time equivalents in FY 2008 to 2,506 FTEs in FY 2011.

This boost has included many new research specialists and investigators, according to Justine S. Lisser, senior attorney-advisor for the EEOC's Office of Communications and Legislative Affairs.

Federal funding has also increased, going from $329.3 million in FY 2008 to $366.5 million in 2011, with $360 million slated for 2012.

"The EEOC," Berrien says, "was able to strategically manage existing resources and take full advantage of increased resources in the past two fiscal years to make significant progress toward effective enforcement of the nation's civil rights laws."

But employment attorneys say it's this very focus on enforcement -- as opposed to helping companies comply with the ever-changing law through guidance and consultation -- that lies behind the agency's impressive numbers and achievements.

It also bodes very ill for the business community.

When the agency first announced its initiative to focus on larger, systemic cases back in April 2006, the organization began shifting from "being balanced between aggressive law enforcement and having a well-developed employer program" to, in essence, "making money and going after the bad guys, the employers," says Merrily S. Archer, special counsel with Hall and Evans in Denver, who began her career as a trial attorney with the EEOC.

That shift has dramatically accelerated since 2008, under the Obama administration, says Michael Lotito, a partner in the San Francisco office of Jackson Lewis.

It is at the point now, he says, where "companies aren't willing to engage in [costly] back-and-forth communications [with an emboldened, aggressive and well-backed EEOC], so they go ahead and settle more quickly."

The EEOC, on the other hand, stresses that its commitment is "to providing employers with training and information about the laws that we enforce," says Lisser.

"We believe that preventing discrimination from occurring in the workplace in the first place is preferable to remedying the consequences of discrimination. However, when efforts to resolve charges ... out of court fail, the commission may engage in litigation."

In fact, the report puts the number of people "directly reached" by the EEOC's public outreach and education programs in 2011 at 540,000, more-than-double the 250,000 or so reached the previous year.

"Additionally," says Lisser, "the Commission issued two sets of regulations this year -- one on the Genetic Information Nondiscrimination Act and the other on the Americans with Disabilities Act Amendments Act -- both with accompanying technical-assistance documents, including question-and-answer documents directed specifically at small businesses."

Both Lotito and Archer, however, are wary of the agency's intentions.

In August of this year, the EEOC was ordered to reimburse Cincinnati-based uniform supplier Cintas Corp. more than $2.6 million in attorneys' fees and legal costs for what U.S. District Judge Sean Cox criticized in his ruling as the agency's "sue first, ask questions later" strategy.

That strategy, say employment attorneys, is at the heart of the agency's push toward larger, systemic and far-more-lucrative class-action cases.

"What we see happening around the country," says Lotito, "is [EEOC investigators and attorneys] are being way more aggressive about an individual charge and are much more inquisitive and searching for additional causes of action."

They're also looking for more pattern-or-practice cases in which a particular affected process may result in actions covering a large group of employees. It is these types of cases, he says, that "can bring them more bang for their buck."

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Indeed, says Archer, "the [old practice] of working with the EEOC has become hugely more expensive."

Instead of preparing a position statement responding to an individual complaint -- which she says "should not cost an employer more than $5,000" -- employers end up spending millions because they feel compelled to immediately seek legal counsel to respond to EEOC requests for information.

The EEOC, Archer says, "has an amazing amount of power to take an individual charge and project it to include an entire class of people in a particular corporation. Employers don't really understand this. I get calls from employers who used to work with the former EEOC and now they're getting requests for national data."

Employers, she adds, "need to realize the Commission has changed its focus. This systemic train is on the tracks and it's not slowing down because it's too successful [growing cases to make more money]. The stakes have gotten much bigger. They're not there to help employers solve their cases anymore."

Archer recommends auditing all workplace practices -- hiring, compensation, promotion, etc. -- to, as she says, "fix the roof when the sun is shining." Companies need to discover any risks that could spark or enflame an EEOC investigation, she says.

Organizations must bring together risk managers, HR professionals, internal and external public relations professionals, business-unit leaders, in-house counsel, insurers, etc., to have a strategy in place should the EEOC come knocking, Lotito says.

"Figure out who your law firm will be to answer [a] charge," he says. "Figure out what resources you really have to fight it when it comes. Dig into the organization and pinpoint areas that could be problematic."

The strategy should include how "success" will be defined, he says. "For instance, 'We define success if this [charge] is eliminated for less than $10,000.' "

He notes, however, the managers may not be happy with such a definition; to them, "that becomes an admission of guilt," when they may believe there was no clear legal infraction on the part of the employer at all.

Success also requires that the company's brand not be damaged.

"Companies tend to look at these things in terms of legal risk ... ," Lotito says. "The EEOC brings an action against you and it's no longer legal; it's reputational, and an organization's reputational risk is far greater than its legal risk.

"And it's not just about the facts of the charge," he adds. "It's about what other vulnerabilities you might have. You have to make sure you have a very strong foundation."

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