EEOC Recoveries on the Rise

A new strategic plan and increased funding for EEOC enforcement efforts mean employers need to either pay closer attention, or pay the high price of litigation.

Wednesday, March 20, 2013
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The Equal Employment Opportunity Commission's recovery results in 2012 should serve as a strong reminder to employers that the agency is pushing hard on its most recent Strategic Enforcement Plan, according to a recent report on 2012 EEOC developments by a leading employment law firm.

Specifically, the recent report from Littler Mendelson, the employment law firm, for fiscal year (FY) 2012 notes that the EEOC recovered a total of $365.4 million in monetary benefits, the highest level the agency has ever achieved. In addition, in settling 254 EEOC lawsuits, the agency recovered an additional $44.2 million.

Perhaps the strongest indication that employers need to heed EEOC developments is based on "systemic investigations" alone. In FY 2012, the EEOC recovered $36 million - four times the amount recovered in the previous year. Barry Hartstein, a Littler partner and executive editor of the firm's EEOC report, explained that this amount is based solely on EEOC investigation and conciliation efforts - those without resorting litigation.

According to Hartstein, of the 240 systemic investigations the EEOC completed (cases with at least 20 expected class members), 94 resulted in "reasonable cause" determinations that the policies were discriminatory in nature.

"Employers should see these statistics as a warning," Hartstein says. "For the second straight year, we found that approximately 40 percent of the systemic investigations resulted in the determination of discrimination.

"That percentage does make you wonder if employers are getting a fair shake," he says, adding that systemic investigations are similar to class action lawsuits, only the former have a lower bar (they don't have to follow the same stringent federal rule, Rule 23, which determines if class action lawsuits can be certified).

"If the EEOC wants to bring a pattern case, they are not bound by Rule 23. They can just bring it," he says. "That puts employers at a disadvantage because these cases are most often very expensive to litigate."

Also, when the EEOC issues a reasonable cause finding, U.S. courts have typically decided not to second guess the EEOC.

"To me, those fundamental differences from class actions give the EEOC an enormous lever," he says. "The gist of it is if they take these actions, the message is 'we will hammer you.' As a result, many employers rush to settle these cases, though some do dig in and fight."

Betty Graumlich, an employment attorney at Reed Smith in Richmond, Va., says the EEOC statistics are not surprising, given that the agency has taken an aggressive litigation stance in several areas over the past few years. Bottom line, employers must educate themselves.

"With their systemic initiative and new budget, the EEOC has been far more aggressive from a litigation stance, and at times have taken positions consistent with their guidance but that are not always consistent with decisions the courts have reached." Graumlich says.

Graumlich explains that, faced with aggressive enforcement that costs the plaintiff very little or nothing at all, employers must make the difficult choice of mounting an expensive defense or settling. More often than not, employers settle, which partially explains the recent EEOC statistics.

"Employers should monitor the positions taken by the EEOC in all areas and either tailor their policies and practices accordingly or make the business decision to fight if challenged in areas critical to the company's success," she says.

 Graumlich says retaliation is rising faster than any other claim, and from an EEOC perspective almost any perceived negative action could qualify as retaliation. In fact, she says retaliation cases probably present the greatest danger and are the most difficult to defend.

"The interpretation of what constitutes retaliation can be very broad," she says. "You need to have good practices in place. The idea is to nip those claims in the bud at the earliest possible stage."

Graumlich also advises that employers do periodic audits of their EEOC-related practices, and make sure they conform to the latest interpretations and follow EEOC guidance.

"They are taking some very aggressive litigation stances," she says. "They are bringing cases that five years ago they would not have brought, especially in areas of retaliation, race discrimination and sexual harassment."

Hartstein says the EEOC's Strategic Enforcement Plan means the agency is adopting a "multi-pronged national law enforcement effort" that focuses on tighter integration among EEOC offices, and collaborating with federal agencies including the Department of Labor and Department of Justice. The EEOC also expects it will cooperate more closely with the private bar, which independently files and joins the EEOC in discrimination lawsuits.

On the communications front, Hartstein says the EEOC will leverage technology to facilitate cross-office communication, including development of a "Systemic Watch List" created to track private sector charges/litigation with details on the employer involved.

Littler's report mentions the six priorities the EEOC will focus on in its "targeted enforcement" efforts, now and in the future:

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*     Eliminating systemic recruiting and hiring barriers;

*     Protecting immigrant, migrant and other vulnerable workers;

*     Addressing "emerging" issues, including the ADA, LGBT (lesbian, gay, bisexual and transsexual) coverage under Title VII, and accommodating pregnancy;

*     Enforcing equal pay laws;

*     Preserving access to the legal system; and

*     Preventing harassment through enforcement and targeted outreach.

Todd Wulffson, a partner at Carothers DiSante & Freudenberger, a California law firm specializing exclusively in labor, employment and immigration law, believes there is an economic connection to the rise in EEOC litigation and recoveries.

"The trend in increased action . . . is not because there is more nefarious, bad behavior on the part of employers," he says. "But more a case of economic and political factors. Many people are out there looking for work, and these are high wage earners. So if there is a problem finding a new job, they eventually may get frustrated and look back at their former employer for a discriminatory possibility."

On the political side, he says there is nothing magical about the EEOC enforcement trend. Gridlock continues on Capitol Hill, with no new employment legislation being passed. At the same time, the Obama administration has its agenda, which drives the EEOC's new strategic enforcement plan.

"The administration's agenda matches up with its plan, and it is accomplished through agency action," he says.

Wullfson offers three specific pieces of advice for employers and HR executives. One, employers must do what they can to avoid "low-hanging fruit." For example, they need to monitor their social media hiring practices, which tend to lean toward more trouble on the discrimination front because social media is often not closely monitored.

Next, employers should deploy no pre-employment testing or screening strategies that might have a negative impact on any specific groups. Finally, he says, employers must train management by letting them know their bonuses or salary increases are dependent on their performance in these areas.

"Employers must do whatever they can to keep the grievance within the company," says Wulffson, whose firm's client list includes Domino's Pizza, Jack in the Box, Victoria's Secret, CVS/Caremark and Allied Barton, among others. "That way, they fix things before employees seek out the EEOC or a lawyer."


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