From Opportunity to Entitlement: How Private Litigation Distorted Our Dialog About Equal Employment Opportunity

Twenty-five years after the Civil Rights Act of 1991, the March toward Equal Employment Opportunity has stalled: trial lawyers’ pecuniary interests have shifted our focus toward TERMINATION decisions, instead of HIRING and PROMOTION practices that keep African-Americans, Latinos, and Women from competing on equal footing in the American economy.  

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Connecting the Dots

This November will mark the 25th anniversary of the Civil Rights Act of 1991 (CRA 1991), an important milestone in the march toward Equal Employment Opportunity (EEO). CRA 1991 fundamentally changed the enforcement scheme of Title VII of the Civil Rights Act of 1964 (Title VII), from initial informal administrative methods of “conference, conciliation, and persuasion” with employers to private litigation against employers. Today, private litigation (i.e., employee-initiated lawsuits) accounts for 99% of EEO enforcement in the workplace trenches.  The EEOC prosecutes less that .1% of its charge inventory and finds Reasonable Cause to believe discrimination occurred in only 3.5% of all charges. For the other nearly 90,000 charges in the EEOC’s annual intake, therefore, employers feel the effects of CRA 1991 through threatened and actual private litigation prosecuted by TRIAL LAWYERS.

Given the impact of CRA 1991, common sense invites us to ask: has CRA 1991 furthered the march toward EEO as its drafters had hoped (and as trial lawyers had promised?).  As the late great Steve Jobs sagely observed,

Indeed, an entire sub-discipline of social work and public policy analysis is devoted to determining whether our interventions (e.g., legislation, programming) have WORKED, to any degree.  For most non-profit organizations, grant funding depends on their ability to demonstrate, through carefully chosen metrics and reliable measurements, that their help is HELPING–namely, that (a) their methods and mission align; and (b) their methods are “moving the needle” toward positive outcomes. Thus, as a social intervention ostensibly designed to further the great March for Opportunity and Jobs that began in August, 1963, CRA 1991 merits attention and analysis.

Looking Back: A Brief History of EEO Enforcement

Most folks have long forgotten about the employment practices that prompted Title VII’s passage, especially the rampant discrimination in HIRING and PROMOTION that kept racial/ethnic minorities and women from participating fully in the American economy. Because paid employment forms the foundation of most people’s financial security, discrimination in HIRING and PROMOTION reinforced the separation of HAVES and HAVE-NOTS by race, ethnicity, and gender and prevented large swaths of the population from rising above the economic circumstances that trapped them in poverty and powerlessness for generations.

No Irish, no blacks no dogsonly native born americans need applyNo Italians, Blackswhites only

Men wanted

The great March of August, 1963 set out to secure basic equal rights in public accommodations, housing, education, and most importantly, EMPLOYMENT.  Without equal opportunity in employment, civil rights advocates realized, access to public accommodations, housing, and education would remain as ECONOMICALLY elusive as before. Thus, the leaders of the great March of 1963 emphasized equal access to EMPLOYMENT, equating JOBS (i.e., economic opportunity) with FREEDOM.

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This March set in motion a legislative blitz that ended with the passage of the Civil Rights Act of 1964 on July 2, 1964, including Title VII’s prohibition against discrimination in EMPLOYMENT.  History buffs will recall JFK’s assassination on November 22, 1963, as well as LBJ’s desire to fulfill JFK’s civil rights vision, notwithstanding his own Texan sensibilities on racial issues.

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The next year, the U.S. Equal Employment Opportunity Commission (EEOC) opened for business. Seven years  later, in 1972, the EEOC lobbied Congress to modify Title VII to give it the authority to PROSECUTE private employers for violations, complaining that without the authority to prosecute, the EEOC was nothing more than a “toothless tiger.” After this statutory modification, EEOC Litigation Centers sprung up all over the nation to not only fulfill Title VII’s promises through administrative enforcement (EEOC), but also through civil prosecution of employers in our federal courts.

In its original form, Title VII stressed injunctive, non-monetary relief and the resolution of discrimination disputes through “informal methods of conference, conciliation, and persuasion.” Section 706(b), 42 U.S.C. 2000e-5(b). Indeed, the original version of Title VII did not allow for jury trials, nor the recovery of compensatory (e.g., pain/suffering, humiliation) or punitive damages. At the time, Title VII’s architects surmised (surely correctly) that juries would not effectively enforce the civil rights of groups they had historically marginalized or hated.  Accordingly, Title VII enforcement was initially entrusted to federal judges, adjudicators with lifetime tenure and little oversight.  And not surprisingly, the great March sputtered along.

Enter Trial Lawyers . . . 

At the 25-year mile-marker, civil rights advocates called attention to our lack of progress on several EEO fronts (e.g., ending job segregation patterns, boosting diversity in top jobs, unemployment) and to a constellation of Supreme Court decisions that, advocates argued, unnecessarily limited Title VII’s broad remedial purposes.  They teamed up with trial lawyers, and fashioned a public policy argument that still echoes throughout state legislatures today: because of Title VII’s limited damages (and of course, lack of jury trials), trial lawyers had little incentive to take on employment discrimination cases. Accordingly, these self-proclaimed civil rights “gladiators” asked Congress to “sweeten the pot” by allowing recovery of compensatory damages, punitive damages, and attorneys’ fees and by guaranteeing civil jury trials. With these additional financial incentives to prosecute EEO matters, trial lawyers argued, they can help the EEOC, as deputized mini Attorneys General, stop discrimination and advance the march toward equal opportunity.

In 1991, these arguments still rang true. Due to chronic under-funding, the EEOC had developed an insurmountable backlog of pending EEO investigations, as well as a reputation for inertia.  But, according to trial lawyers and civil rights advocates, the threat of PRIVATE litigation would motivate offending, unenlightened employers to comply with Title VII’s mandates and “provide relief” for “victims” of their “unlawful employment practices.” Business groups offered anemic resistance to CRA 1991, except for insisting upon damage caps based on employer size. And by November of 1991, in backroom deals between lobbyists for advocacy groups, Chambers of Commerce, trial and civil rights lawyers, and small business, the Civil Rights Act of 1991 emerged, a significant change in federal enforcement backed up by surprisingly little legislative history.

Two Decades of Data and Dots to Connect

I joined the EEOC’s Denver District Office as a Trial Attorney six years later, in November of 1997, after finishing my JD/MSW at Washington University in St. Louis on a civil rights fellowship. I started out as a rabid “true believer” in the importance (and efficacy) of changing hearts and minds through rigorous litigation, a belief that dissipated through daily exposure to the EEOC’s methods, management, and much-distorted mission to maximize employer settlement payouts. But my own legal career grew up around CRA 1991, and because my interest equal opportunity has remained constant, I’ve paid careful attention to developments on the ground and in social science research.

Civil rights advocates and policy analysts too often forget a central tenet of natural law (Newton’s Third Law of Motion, actually): for every action, there is an equal and opposite reaction.  As a longtime attorney representing BUSINESSES, Newton’s Third Law roughly translates as the caption below.  How can we respond to or minimize the impact of CRA 1991’s costs and risks?

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In fact, after CRA 1991’s passage, the “market” responded in foreseeable ways that we have detailed in other articles:

  • EEOC’s Adoption of Priority Charge Handling Procedures (PCHP)

My tenure as an EEOC Trial Attorney in Denver from 1997-2000 let me observe firsthand how the EEOC grappled with the deluge of new EEOC charges following CRA 1991’s passage. In 1995, the EEOC adopted Priority Charge Handling Procedures (PCHP), triaging protocols that remain very much in use today. Although CRA 1991 effectively privatized EEO enforcement, its statutory scheme still required employees and their attorneys first to file a Charge of Discrimination within 300 days at the nearest EEOC office and to obtain a Notice of Right to Sue before proceeding to court . . . and not surprisingly, EEOC charge intake soared and its “handling” of charges became more superficial and perfunctory than ever before.  Of course, as indicated earlier, the EEOC acts on only a very small number of charges, issuing reasonable cause determinations in 3.5% of charges and prosecuting less than .1% of all discrimination allegations.

  • Proliferation of Employment Practices Liability Insurance (EPL)

In the 1990’s, few insurance carriers offered Employment Practices Liability coverage to defray the defense costs and risks of big damages under CRA 1991.  But where there is risk, the insurance industry offers a remedy, and without doubt, CRA 1991 exposed employers to greater risks (e.g., jury trials on sensitive issues) and costs than ever before. Nowadays, over the past 20 years, a majority of employers have purchased EPL coverage.

I became very familiar with EPL insurance after leaving the EEOC in 2000 to launch my defense practice.  In those early years, I considered EPL insurance a very poor fit for employment cases, given their typically emotional nature: whereas insurance carriers always favor settlement to minimize defense costs, most employers simply cannot not stomach the notion of paying out $30K on unfounded, nefarious, and brand-damaging allegations. Extortion, I’d often hear employers say, during spirited settlement conferences.

I also had difficulty reconciling a logical inconsistency about the insurability of EEO allegations, given that insurance is typically not available for INTENTIONAL acts and discrimination, harassment, or retaliation are theoretically intentional acts.  But over time, I realized that without EPL insurance, the non-recoverable defense costs of proving they did nothing wrong in the first place would force many small to mid-sized businesses into bankruptcy.

By design, EPL insurance took the sting out of CRA 1991’s enhanced remedies–i.e., the “stick” designed to scare employers into Title VII compliance.  Because EPL coverage pays defense and indemnity (e.g., judgments, settlements) costs, employers have minimal direct financial exposure in EEO disputes, except for their deductible and a potential increase in premiums.  And although EEO allegations inherently involve INTENTIONAL acts, many employers now treat EEOC charges as simply an UNAVOIDABLE COST of doing business, like a slip-n-fall or workers’ compensation accident. From a behavioral modification perspective, therefore, EPL neutralized CRA 1991, rendering it completely ineffective as a tool to effectuate workplace change. Instead, CRA 1991 spawned a wealth redistribution cycle between employers, EPL insurance carriers, and lawyers (on both sides) where nothing much changes except money changing hands . . . between themselves.

  • The Stalled March Toward Equal Employment Opportunity

Since 2013, in anticipation of Title VII’s 50th birthday on July 2, 2014, my friends at Biddle Consulting Group and I have, both individually and cooperatively, conducted on-going research about our progress toward EEO.  We started by asking, what kinds of measurements might indicate progress or lack thereof?  After all, the EEOC and OFCCP historically claimed that they were “enforcing the law more effectively” based on employer settlement payouts, a measurement that made little sense in light of their respective missions–namely, to end workplace discrimination against and to promote opportunity for women and minorities.

We analyzed the EEOC’s own EEO-1 data, examining the pace and trajectory of change in two specific areas: (1) historic job segregation patterns; and (2) minority advancement into the Official/Manager and Professional categories of jobs, the “top jobs” in EEOC-speak.  We dug further, analyzing quarterly data from the Department of Labor’s Bureau of Labor Statistics (BLS) on unemployment and its impact across racial/ethnic and gender groups. We tapped into the robust databases at Catalyst.org for international information on women’s corporate advancement, workforce participation, and governmental leadership. And, in March of 2014, we published our findings HERE and in EEO Insight, the nation’s leading periodical for the Affirmative Action and EEO industry.

Based upon our findings, we concluded that the great March for Jobs and Freedom of 1963 stalled out in the mid-1990’s, particularly for African-Americans, Latinos, and women. The next year, the EEOC released its 50th Anniversary Report on the American Workplace based upon the same EEO-1 data that Biddle’s Dan Kuang, PhD had analyzed and not surprisingly, the EEOC’s findings mirrored our earlier report (sans the helpful BLS and Catalyst.org data).

Why have African-Americans lost ground in their quest for Official/Manager jobs since 2008? Why have Women improved their participation rates in the Professional category, but not the Official/Manager category (i.e., the glass ceiling)?  Why are African-Americans, Latinos, and Women still concentrated in lower paying positions, whereas Whites and Asians dominate the highest echelons of the pay scale?

  • From Hiring and Promotion to FIRING Claims

On April 4, 2006, the EEOC announced another major shift in its administrative enforcement of Title VII, switching from a cohort discrimination model to a systemic model. The EEOC stated its intent to focus on “discriminatory hiring barriers” (e.g., criminal background and credit checks, pre-employment tests) that reinforce past “vestiges of discrimination.” In other words, under the EEOC’s systemic initiative, the EEOC planned to return its focus to HIRING and PROMOTION practices that have kept “economic minorities” (e.g., Women, African-Americans, Latinos) from breaking through historic job segregation barriers and glass ceilings.

The EEOC’s renewed focus on HIRING and PROMOTION came as a welcome surprise, until I remembered that the EEOC takes action on less than 3.5% of its charge inventory and prosecutes less than .1% of all allegations. Despite touting this initiative, the EEOC filed only 42 systemic prosecutions in FY2015, and its flagship prosecutions–e.g., EEOC v. Kaplan Higher Ed. Corp. (credit reports) and EEOC v. Freeman (criminal background)–did not survive summary judgment.

While the EEOC’s systemic initiative floundered (despite its laudable aims), however, employers continued to face an increasing number of EEOC charges and PRIVATE litigation from their own employees. These charges seldom involved HIRING and/or PROMOTION discrimination; on the contrary, increasingly over time, the bulk of the EEOC’s charge intake came to involve TERMINATION decisions.  By FY2015, the bulk of the EEOC’s charge intake challenged TERMINATION decisions, not HIRING or PROMOTION ones.

IntakeWHY?  Although data shows that discrimination in HIRING and PROMOTION likely remains rampant, trial lawyers disfavor hiring/promotion cases.  They require statistical experts and lots of work.  Because of the universal “duty to mitigate” damages, hiring and promotion cases typically yield small monetary recoveries; after all, in many cases, a rejected applicant (even one rejected for discriminatory reasons) will simply apply for and accept another job with comparable pay and benefits.

TERMINATION cases, by contrast, allow trial lawyers to pile on discrimination, harassment, and retaliation claims in a familiar “shotgun method” of pleading (i.e., spewing many pellets in hopes that one hits the target).  Termination cases yield bigger backpay awards, in light of most terminated employees’ inability to find comparable employment over long periods of time. Termination cases generate large frontpay awards. Termination cases engender greater emotional distress and juror sympathy–i.e., I was a loyal employee who planned to work here until retirement!  Termination cases, especially those involving retaliation allegations, are easier to spin into settlements, at least from a trial lawyers’ perspective.

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From the employers’ perspective, however, termination decisions involve an employee’s SQUANDERING of opportunity, not any discriminatory failure to provide opportunity. Indeed, for every employee allegation of discrimination arising out of a termination, there are one or more equal and opposite explanations for the decision, typically poor performance and failure to rehabilitate.  According to the EEOC’s own statistics, employers’ legitimate, non-discriminatory and non-retaliatory reasons for terminating the employee persuade the EEOC in the majority of cases that no discrimination occurred whatsoever.  Discrimination is, after all, difficult to prove, but easy to allege.

From Opportunity to Entitlement: Refocusing Our Dialogue About EEO

The great March for Jobs and Freedom and the quest for inclusiveness at ALL levels of our workforce have sputtered to a crawl at the 50-year mile-marker, likely for a multitude of reasons. But here’s one reason no one seems to have noticed thus far: instead of focusing on boosting diversity/inclusiveness in HIRING and PROMOTION, employers are naturally more motivated to neutralize any risk posed by TERMINATIONS and to allocate internal resources accordingly. Thus, while statistics suggest that discrimination in HIRING and PROMOTION remains pervasive, it often goes completely undetected or unchallenged because (a) few trial lawyers have the patience, wherewithal, or social conscience necessary for successful private prosecution; and (b) savvy employers allocate resources based on risk exposure–i.e., TERMINATION decisions.

Our national EEO focus on termination decisions, however, has also caused a shift in how employees perceive EMPLOYMENT generally, shifting the workforce from an OPPORTUNITY mindset to one of ENTITLEMENT:  i.e., You can’t fire me!  You owe me a job no matter how incompetently I perform it.  Quarterly Gallup polls reveal that over 70% of the American workforce is “disengaged” (i.e., “checked out”) at work–e.g., disinterested, disloyal, disenchanted like Peter Gibbons from Office Space.

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HR practitioners and workplace analysts have known for decades that disengaged employees are most likely to commit “job abuse”–e.g., chronic absenteeism, missed deadlines, poor work product or output.  Disengaged employees do not treat work like an opportunity, but rather an entitlement. They could care less about advancing their employers’ business objectives or even being good at their jobs. Likewise, they could care less about the impact of half-assed performance on others, such as students, patients, customers or clients. On the contrary, chronically disengaged employees chronically under-perform, while demanding that employers tailor their positions to their unique personal circumstances on and off the job. Disengagement and entitlement, I am convinced, also form part of a constellation of behaviors that are predictive of who will sue if terminated.

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The numbers are difficult to reconcile: 70% of employees are “disengaged” at work, yet 75% of EEOC charges now involve termination decisions, not HIRING or PROMOTION ones. Worse, the pool of available jobs is SHRINKING, given that technology has steadily replaced jobs quicker than it has created them.  MIT professors Andrew McAfee and Erik Brynjolfsson observed in their revolutionary work, The Second Machine Age, “as technology races ahead, it may leave a lot of people, organizations and institutions behind.”  And no doubt, unless we figure out how to deliver on Title VII’s promise of equal employment opportunity, the people that technology will first leave behind are those concentrated in Administrative Support, Operatives and Laborers/Helpers–to wit, Women, African-Americans, and Latinos.

The Road Ahead

Over the past few years, members of the National Trial Lawyers Association (NTLA) and National Employment Lawyers Association (NELA)–i.e., the chief architects and beneficiaries of CRA 1991–have called me “racist,” “unenlightened” and even “immature” and “anti-Islamic” for questioning the efficacy of this statutory scheme. But their attacks reveal their underlying intent: if they truly cared about advancing EEO as much as the financial windfall that CRA 1991 generates for themselves, they would echo my concerns about whether this enforcement model has worked, to any degree.

NTLA and NELA have convinced advocacy groups and the EEOC, however, that LITIGATION promotes inclusion and diversity or stated another way, that the ability to sue employers somehow equates with greater opportunity and inclusiveness.  Yet, after 25 years of CRA 1991 “enforcement,” NTLA and NELA attorneys have demonstrated that rather than solve the social problem of inequitable economic opportunity, they have simply found a way to make money on it.

NTLA and NELA attorneys also commonly retort: this is the only enforcement model we have; only racists would seek to deconstruct it!  In truth, this enforcement model is all we have because of their powerful lobbying and disingenuous marketing (i.e., “we’ll fight for you!”). But, public policy choices ABOUND for advancing the march toward EEO, from tax incentives like the Work Opportunity Tax Credit (WOTC) to internal management development and resource integration programs. Read more HERE.

Further, research continues to reinforce the strong correlation between diverse/inclusive workplaces and decision-making AND higher profits, better access to top talent, enhanced community reputation, and improved group synergy/creativity. More HERE. As this BUSINESS CASE for diversity/inclusiveness comes into sharper focus, our efforts to advance EEO should concentrate on collaborating WITH employers, not declaring war AGAINST them. With rapid technological advancement, businesses are increasingly questioning the value of hiring HUMANS entirely; after all, technology may malfunction, but it cannot sue.

Merrily Archer, Esq., M.S.W.

April 14, 2016