How Companies Are Bracing for EEOC Class Action Initiative Goals
February 2007
In 2006, the Equal Employment Opportunity
Commission announced an increased commitment to filing a greater number of class
actions and to addressing systemic discrimination in the workplace. Given the
cost of defending against those claims, employers are at greater risk of burdensome
litigation.
by Paul
J. Siegel, Esq.
Jackson Lewis
LLP
As a prerequisite to commencing a lawsuit under the Americans with Disabilities
Act, the Age Discrimination in Employment Act, or Title VII, an aggrieved individual
must file an administrative charge within 300 days of the alleged discrimination.
Regardless of whether the Commission finds "probable cause" or a "no probable
cause" on that individual charge, the aggrieved individual can file suit in
federal court under the statutes within the Commission's jurisdiction within
90 days after receiving the Notice of Dismissal. Astoria
Fed. Savings & Loan Ass'n v. Solimino, 501 U.S. 104 (1991); University of Tennessee v. Elliott, 478 U.S.
788 (1986). Alternatively, the Commission itself can initiate a proceeding. See, e.g., EEOC
v. Sidley & Austin, 437 F.3d 695 (7th Cir. 2006).
Statistical Overview
While the number of charges filed with the Equal Employment Opportunity Commission
has decreased since 1997, the Commission has found probable cause in a greater
number of cases. For example, between 1992 and 2003, findings of probable cause
increased from 2.3 percent (1992) to 6.1 percent (2003). If probable cause is
found, the Commission requires that conciliation be considered and tends to
take on aggressive stance in pursuing or supporting litigation. That aggressive
stance has resulted in consistent increases in the amount of money recovered
by the Commission through settlements or litigation over the past 10 years.
Findings of probable cause also can lead to initiation of suit by the EEOC.
In addition, settlements negotiated by the EEOC increased from $136 million
(1995) to $272 million (2005).
The EEOC's Increasingly Aggressive Litigation Posture
The Commission's announcement that it intends to be more aggressive in the
filing of class actions addressing systemic discrimination is consistent with
other litigation positions taken by the Commission. For example, the EEOC successfully
insisted that it retained the right to file suit even though the aggrieved individual
had agreed that arbitration would be the sole means of remedying alleged discrimination
or other disputes. EEOC v. Waffle House, Inc.,
534 U.S. 279 (2002). Similarly, under the Age Discrimination and Employment
Act and the Older Workers Benefit Protection Act, the Commission has attacked
the enforceability of releases and voided "tender back" provisions where a release
is found not to be enforceable. See, e.g., Oubre v. Entergy Operations, Inc., 522 U.S. 422
(1998). The EEOC also has been upheld in its assertion that partners in a law
firm could be considered employees who have rights under, inter alia, the Age Discrimination and Employment
Act. EEOC v. Sidley Austin LLP, 437 F.3d 695
(7th Cir. 2006).
EEOC Litigation Successes
To appreciate the potential impact of the Commission's Systemic Task Force Report, look no further
than the rapid growth of monies collected by the Commission. For example, between
2002 and 2005, the amount of money collected by the Commission through litigation
or settlements increased from $52.8 million to $107.7 million. Similarly, during
the same period, the number of lawsuits in which the Commission participated,
either as an intervener or as the party filing a suit, increased from 332 cases
to 383 cases. The vast majority of those cases were brought under Title VII.
Growth of Class Actions: The Strategy
The Commission is embarking on a class action oriented strategy at a time
when wage-hour class actions are filed far more often than discrimination-related
class actions. In light of the relative decline of discrimination class actions
and the difficulty obtaining certification, the Commission's position may signal
a shift to government-led class actions. Compare Dukes
v. Wal-Mart Stores, Inc., 222 F.R.D. 137 (N.D. Cal. 2003) (appeal pending
before the 9th Circuit) with Gutierrez v. Johnson &
Johnson, 2006 U.S. Dist. LEXIS 93575 (D.N.J. Dec. 19, 2006) (denying
certification).
As set forth in its systemic discrimination litigation analysis, the Commission
considers itself "uniquely positioned to litigate systemic cases" because the
EEOC is not required to meet the stringent requirements of Rule 23 of the Federal
Rules of Civil Procedure to maintain a class action. Further, the EEOC is willing
to bring cases where monetary relief may be limited, and injunctive relief is
the principle remedy. Also, the Commission's nationwide presence and federal
funding enables it to act as a "highly specialized law firm with a unique role
in civil rights enforcement."
The Commission believes that a national approach by the EEOC is appropriate
because there has been a lack of proactive, consistent efforts to identify systemic
discrimination by the Commission and a decline in the number of Commissioner's
charges. While there was an average of nearly 40 Commissioner charges per year
in the 1990s, there were only a few per year in the past decade. Similarly,
the Commission has not dedicated significant resources to class action litigation
at which it was the principal litigant.
The Process
When evaluating cases for potential class action treatment, the Commission
will consider data gathered through EEO-1 surveys of private employers of 100
or more employees (or federal contractors with 50 or more employees); analyses
developed by private statisticians retained by the Commission; charges filed
by claimants; the EEOC's own databases; pending litigation; and, long-term analysis
of EEO-1 reports.
Class and Multiple Plaintiff Actions by the Commission
In fiscal year 2005, the EEOC collected almost $70 million dollars in the
5 largest cases that it resolved. These were just
5 of the almost 400 suits filed by the Commission in fiscal year 2005.
What Should Employers Do?
Class action claims brought by the Equal Employment Opportunity Commission
are costly and time-consuming litigation. To avoid becoming embroiled in such
an action, employers should consider preventive practices such as the following.
-
Updating and analyzing affirmative action plans and the data they contain
to identify adverse impact in recruitment, hiring, transfer, promotion,
compensation, termination, or other terms and conditions of employment;
-
Reviewing criteria used for personnel decisions (from recruitment through
discharge) to identify particular standards or actions that are likely to
lead to adverse impact;
-
Reviewing instances of statistical adverse impact to ensure all criteria
are job related and supported by business necessity;
-
Conducting regular training of management involved in the interviewing,
hiring, job assignment, compensation, job advancement, and termination phases
of the employment process to ensure that participants understand their obligations
under the equal employment opportunity laws;
-
Training members of management to understand the negative impact that
e-mails have on the defense of claims, especially where careless phrases
are used, insulting comments are made or e-mails foolishly are utilized
for pranks or other inappropriate purposes;
-
Ensuring that policies are published to prohibit all forms of discrimination,
harassment, and retaliation, and that nonmanagement employees are educated
about those policies and their obligation to report immediately any actual
or perceived harassment, discrimination, or retaliation;
-
Posting and regularly disseminating policies regarding reporting harassment,
discrimination, or retaliation, in "paycheck stuffers," e-mails, or other
processes to take advantage of the affirmative defenses provided in Ellerth/Farragher (harassment) and Kolstad (punitive damages);
-
Developing a program whereby exiting employees receive severance pay
or other consideration in exchange for execution of binding releases that
comply, inter alia, with the Older Worker
Benefit Protection Act; and,
-
Ensuring retention and regular review of electronic data to identify
potential problems and to avoid spoliation.
Information about the Commission's strategic initiative can be found at www.EEOC.gov.
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