The EEOC’s FY2013 PAR: How STUCK Employers Are

The EEOC bullies employers into cost-of-defense settlements, and then characterizes its historic monetary collections as evidence of “enforcing the law more effectively.”

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Finally, last Monday, December 16, 2013, the EEOC released its long-awaited Performance and Accountability Report (PAR) for FY2013.  Although the PAR teems with fodder for future blogs, one particular statement really stood out: under the heading “Enforcing the Law More Effectively,” the EEOC’s FY2013 again highlighted its record monetary collections from employers ($372.1m).  In FY2012, the EEOC also claimed that its record collections ($365.4m) showed what a swell job it was doing.   Notably, in FY2013, nearly half of the EEOC’s historic bounty ($160.9m) came from the EEOC’s “fabulously successful” ADR program.

The cost of defense now drives employers’ settlement deliberations, more than ever before.  Almost every day, the EEOC issues a press release touting settlements ranging from $25K to $75K.  These amounts smack of defense cost considerations, not any recognition of guilt or investment in rehabilitation.  For employers, settlements in this range simply signify an effort to stop the financial hemorrhage and incredible inconvenience of EEO litigation.

The EEOC understands, if not EXPLOITS, this sad state of affairs for employers.  Our EEOC Mediation Study (now 610 responses) shows that EEOC mediators HAMMER the cost-of-defense to encourage employers to settle (82.21%).  In many cases, employers have perfectly legitimate reasons for taking the adverse action, as well as ample documentation.  For that reason, they understandably bristle at the suggestion of paying an employee upwards of $15K to $25K just because they cannot probably afford to fight when they’re right.

Given how much anticipated defense costs factor into the settlement equation, what impact, if any, would the specter of a cause determination, systemic investigation and EEOC prosecution have on employers’ settlement behavior?  Our study revealed that EEOC mediators routinely alarm employers with the ostensible danger of a reasonable cause determination (72.84%), systemic investigation, (61.30%), and even EEOC prosecution (68.99%).  Read more here,  And, the results speak for themselves: in FY2013, the ADR program collected the second largest amount ($190.9) in its history.

As commonplace as these mediator tactics are, the EEOC’s FY2013 PAR suggests that the EEOC is struggling to get a handle on its current charge Inventory, let alone reduce it in compliance with its own strategic plan.  Under the heading “Serving the Public More Efficiently,” the EEOC blamed sequestration, furloughs and budgetary constraints for its inability to control the Inventory of pending charges, even though new charge intake dropped by 6,000 charges.  As a result, the EEOC will likely adhere even more religiously to its Priority Charge Handling Procedures (PCHP), reserving a distinct minority of charges (“A-1”) for the full EEOC treatment.  Under PCHP, the vast majority of EEOC charges (“B”) will continue to get heaped on the Inventory pile, where they are “handled” (e.g., processed, settled, and dismissed) but never really investigated.

Further, the EEOC’s PAR demonstrates that it has become far more focused on systemic and class action cases than individual charges; in fact, according to the FY2013, employers’ overall risk of becoming the target of an EEOC prosecution has steadily decreased.  Thus, the likelihood that disaster looms if the charge does not settle in mediation and then gets “transferred to Enforcement” is extremely small, too small to legitimately influence employers’ settlement decisions.

Employers are paying too much in EEOC mediations, and for EEOC mediations.  They are STUCK between the rising likelihood of a workplace EEO dispute and the rising cost of defense; this dilemma, however, should never be confused with the EEOC’s “enforcing the [EEO] law more effectively.” In the end, we hope that our examination of what EEOC mediators say behind closed doors helps employers and their representatives (e.g., attorneys, HR practitioners) disarm common mediator money-making threats and make more informed settlement decisions.

Merrily, December 19, 2013