Fewer but BIGGER: What the EEOC’s FY2012 PAR Foretells for Employers

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This final installment analyzing the EEOC’s recently issued FY2012 Performance and Accountability Report (PAR) distills the important “takeaways” and “action items” for employers grappling with EEO risk. 

Expect Fewer but BIGGER Investigations and Prosecutions

The EEOC’s FY2012 PAR shows that it took in fewer charges, resolved fewer matters during the administrative process, filed fewer lawsuits, reduced its huge backlog by fewer cases and STILL extracted from employers the MOST money in its history–$365.4 million.  The EEOC pulled off this feat (i.e., less productivity yielding more money) by literally making mountains out of molehills, specifically, by transforming individual charges into large-scale, multi-plaintiff and/or systemic matters that (a) involve numerous actual and/or “phantom” class members; and (b) generate large settlements, typically exceeding seven figures.  This approach is nothing new; in fact, the EEOC took this strategy straight from the OFCCP’s playbook in the early 2000’s, switching its enforcement focus from individual disparate treatment allegations to systemic, disparate impact and/or class action matters to get the most bang with its limited resources.  And, the EEOC’s FY2012 PAR shows that it works: EEOC’s productivity has declined, while still obtaining record collections from employers. 

TRIAGE, TRIAGE, TRIAGE!

Most employers simply do not realize that the EEOC has triaged all incoming charges since 1995, when it adopted Priority Charge Handling Procedures (PCHP, in EEOC-speak).  With the passage of the Civil Rights Act of 1991 giving jury trials to employees in Title VII actions, the number of EEOC charges skyrocketed and created a giant backlog of charges. Faced with this crush of incoming charges, the EEOC wisely realized the importance of separating the wheat from the chaff early in the process (at INTAKE), to avoid the fool’s errand of investigating charges that were time-barred, jurisdictionally deficient, facially frivolous or just plain weird. Likewise, the EEOC also appreciated the importance of targeting (a) potentially meritorious and/or (b) “enforcement priority” charges early, thereby allowing the EEOC to set the stage for inevitable litigation.  Thus, at Intake, all incoming EEOC charges get stamped with an A, B, or C designation that almost invariably sets its path through the process and dictates its outcome. Notably, the EEOC’s Strategic Plan reinforces PCHP as a method to sharpen its focus on systemic matters.

Given the EEOC’s three-bucket triage approach, one would expect the cost of defense to vary accordingly.  Unfortunately for employers, BIGLAW employment practices too often offer a one-size-fits-all approach to EEOC matters.  And, it is like shooting fish in a barrel to sell more “fix” than the risk requires, given the emotional and relatively uncommon nature of EEO disputes in the employer’s limited experience.  After all, the incidence of EEO lawsuits is approximately seven per 1,000 employees.  Nevertheless, no manager or company owner has ever liked being branded as a “harasser,” “discriminator” or vindictive “retaliator,” and they’re often thirsty for vindication.  Thus, with the “commercial divorce” that is employment law, defense counsel can easily stoke emotions and drive up bills, instead of recalibrating employers’ expectations about what little the EEOC administrative can actually do for them, both practically and emotionally.

Given the FEWER BUT BIGGER focus of today’s EEOC, employers must learn to identify which EEOC charges pose real risk and which ones simply do not to avoid expensive “solutions” to minor workplace problems.  Risk evaluation also marks the first step toward proper resource allocation, which more often than not, will cut in favor of in-house preparation of Position Statements and participation in EEOC mediations. 

If, however, the EEOC charge itself carries systemic risk (i.e., involves a neutral policy or practice that adversely screens out or impacts a protected group) or the EEOC begins demanding excessive information, then employers should involve employment counsel who understand how to defend a huge EEOC incursion.  From my experience and observation, most “seasoned” employment defense practitioners have still never wrangled, let alone observed, this species of legal claim.  In fact, at my last boutique gig, my colleagues razzed me about my obsession with EEOC systemic discrimination by making a drinking game out of it, but never bothered to learn the basics of this growing area of EEO law. 

Fight  When You’re Right with Lean Litigation

When the EEOC invests time and resources training its prosecutorial discretion on an employer, it will inevitably demand seven-figures in the “conciliation process,” after it has (predictably) issued a Determination of Reasonable Cause.  In fact, the EEOC’s FY2012 PAR specifically credits the collaboration between its investigators and Trial Attorneys in the conciliation process for its historic monetary recoveries, which smacks of “cost of defense” bullying.  But, once employers understand the EEOC’s objectives and tactics, they can more strategically decide when and how to fight back.  After all, if the EEOC is going to demand seven figure settlements, five-figure defense fees are a little bit easier to swallow. 

With lean litigation practices, employers can still afford to push back when the EEOC advances positions at odds with precedent and its own enforcement guidance.  “Lean litigation” uses technology to streamline workflow, minimizes the legal “entourage” billing on a matter, collaborates closely with employer’s in-house counsel and HR team to “in-source” administrative work, strategically employs experts, etc.  And it works, yielding favorable employer outcomes below the costs of defense and settlement. 

Appreciate that Money is the Metric that Matters

The EEOC’s FY2012 PAR directly equates its historic collections from employers with its overall “efficacy,” openly claiming that these settlements show what a good job it has done fulfilling its mandate, namely, the elimination of unlawful employment practices through informal efforts of “conference, conciliation and persuasion.” Section 706(b), 42 U.S.C. §2000e-5(b).  Leaving aside the inherent absurdity of this proposition, employers must appreciate that the EEOC will continue to tout money exacted from employers as proof that discrimination pollutes the American workplace and that the EEOC is “effective” at addressing it.  Thus, given the EEOC’s emphasis on money, employers will likely see in FY2013

  • More Predetermination Interviews (PDI’s) in which EEOC investigators actively attempt to settle the charge for monetary benefits.  Often in these conversations, EEOC investigators tell employers that they are leaning toward “going cause,” but that they would be willing to work out a resolution with the Charging Party to avoid that unfortunate outcome.  Most (too many) employers fold. 
  • More interaction with EEOC Trial Attorneys in the administrative process, particularly in conciliation.
  • More charges in which the employer is invited to participate in the EEOC’s ADR program.
  • More systemic, multi-plaintiff investigations and prosecutions.
  • More EEOC press releases hyping large settlements from employers.
  • More perfunctory closures of individual charges alleging disparate treatment.
  • More EEOC emphasis on identifying other Charging Parties allegedly affected by the same practice—i.e., more charge mushrooming.
  • More EEOC subpoenas and subpoena enforcement actions, among many others. 

HR leaders and in-house employment counsel can help their organizations realize tremendous cost-savings with basic triage and resource allocation principles, thereby reserving tight legal budgets for the truly heavy stuff like EEOC systemic or multi-plaintiff investigations or prosecutions.  Otherwise, the EEOC’s emphasis on high-dollar settlements really begin to cost employers in a currency as valuable as money, namely, the right to select and retain employees they choose.