Numbers EEOC Hopes You Won’t Notice

shutterstock_244880089

On February 11, 2016, EEOC released composite charge data from fiscal year 2015, which ended on September 30, 2015.  And not surprisingly, the EEOC emphasized certain data points while completely burying other important (even helpful) facts about its charge intake.

As a matter of math, EEOC prosecutes less than .1% of the charges filed.  Accordingly, and contrary to EEOC propaganda, the likelihood that any employer will deal intimately with the EEOC (i.e., beyond filing a Position Statement or participating in an EEOC mediation) is exceedingly low.  The overwhelming bulk of Equal Employment Opportunity (EEO) enforcement, therefore, comes in the form of PRIVATE litigation, filed pursuant to the Civil Rights Act of 1991 (CRA 1991).  Much more on that topic later.

Before any employee can initiate a private lawsuit in state or federal court, he must first file a Charge of Discrimination within 300 days with the EEOC or its state counterparts (FEPA’s in EEOC-speak). Failure to file charge, or otherwise exhaust “administrative remedies,” is fatal to discrimination litigation.  Because of this critical jurisdictional prerequisite to litigation, the EEOC’s charge intake data provides the best barometer of how employers are experiencing our EEO enforcement scheme (i.e., private litigation) on the ground.  Thus, a more holistic, panoramic view of the EEOC’s charge intake data (e.g., what data EEOC highlights and what data it obscures) provides valuable insights into (a) how the EEOC thinks; and (b) the state of EEO enforcement, particularly private litigation, in the American workplace.

Data EEOC Highlights

M-O-N-E-Y

In its press release, the EEOC underscored the “metric that matters” at the EEOC–i.e., M-O-N-E-Y.  The EEOC touted the number of charges “resolved” (92,641) and the amount of employer dollars collected on behalf of “victims” ($525 million) of discrimination. Chair Jenny Yang, a plaintiff-side lawyer from California, claimed that

we demonstrated our strong commitment to working with employers to voluntarily resolve charges of discrimination by achieving the highest mediation and conciliation success rates in our history.

Not even close.  EEOC “resolutions” and employer settlement payouts make terrible proxies for progress toward equal employment opportunity, especially given the suffocating cost of defense on employers.  Allegations of discrimination, harassment, and retaliation are extremely difficult to prove, but extremely easy to allege.  And the allegation itself causes employers to incur upwards of $70,000 in non-recoverable legal bills to prove they did nothing wrong in the first place.

The EEOC not only appreciates employers’ cost-of-defense conundrum, its personnel actively exploit it.  From 2013 – 2014, EEO Legal Solutions conducted a national survey of employers’ experience in the EEOC’s mediation program.  Nearly 800 mediation participants representing Respondents (e.g., HR practitioners, employment lawyers, and EPL adjusters) took the survey, the first of its kind to peer beneath the surface of carefully-guarded, selectively-invoked confidentiality and “government deliberative process” privilege.

The results show that the EEOC has now re-calibrated its entire enforcement machinery to churn out quick cost-of-defense settlements.  Over 82% reported that EEOC mediators hammered cost-of-defense when recommending settlement, regardless of charge merit. Worse, participants reported that EEOC mediators then disingenuously brandished EEOC enforcement weaponry to bully them into settlement, threatening “reasonable cause” determinations (73%), systemic investigations (61%) and even EEOC prosecution (70%) if not “resolved” in mediation. Learn more HERE.  Given the amount of bullying employers experience in the EEOC’s ostensibly neutral mediation program, we urged our courts to exercise some oversight of the EEOC’s conciliation process, an EEOC precondition to prosecution, HERE.   At the EEOC, employers walk into a cost-of-defense conversation (i.e., “it will cost $70K to prove you did nothing wrong, but you can pay $35K to just make the charge go away for good“), even when the allegations themselves are provably unfounded.

Thus, the EEOC’s emphasis on employer “resolutions” and monetary payouts for “victims” of retaliation, harassment, and discrimination raises questions about whether, as a law enforcement agency, it can (or even tries to) distinguish between ALLEGATIONS and ACTUALITY.  Under EEOC logic, the fact that an employer paid some money transforms Accusers into “Victims” that the EEOC has “helped” by securing monetary settlements. And although this enforcement model works wonderfully well for trial lawyers who take 33% to 40% of these “resolutions,” EEOC and Bureau of Labor Statistics (BLS) data show that this scheme has failed to level the playing field in HIRING and PROMOTION for African-Americans, Latinos, and women.  Learn more HERE.

Data EEOC Downplays

The EEOC’s press release neglects to mention other numbers that depict more accurately the EEO enforcement landscape.

  • Reasonable Cause/No Reasonable Cause Determinations

According to EEOC data, the EEOC issued Determinations of Reasonable Cause–i.e., the formal agency finding of a violation and a condition precedent to prosecution–in 3.5% of charges and “No Reasonable Cause” in 65.2% of charges, as depicted below.

Picture1

This low rate of finding “Reasonable Cause” to believe discrimination, harassment, or retaliation has occurred casts considerable doubt upon the alleged 92,641 “Victims” for whom EEOC obtained $525 million in “relief.”  Certainly, a Reasonable Cause determination rate of 3.5%–juxtaposed against steady No Reasonable Cause determination rates of 66% or 2/3 of all charges–belies the EEOC’s campaign to characterize all Accusers as Victims and all employers as perpetrators of discrimination, harassment, and of course, retaliation. On the contrary, the EEOC’s own data demonstrates that workplace discrimination occurs far more rarely than alleged. Employers, however, pay anyway.

  • Employment Practices Yielding EEOC Charges

Reasonable employers may inquire, “What kinds of employer practices generate the most EEOC charges?”  This information, after all, could help employers address specific problems and risks associated with EEOC charges.  But in its press release, EEOC Chair Jenny Yang simply stated

Over the past year, EEOC removed barriers to hire and obtained relief for thousands of people facing retaliation, unfair pay, harassment, and other forms of discrimination.

This statement is both grammatically and factually problematic.  Although the EEOC touts its National Enforcement Plan (NEP), its ad hoc task forces, and its interpretive enforcement guidance, these efforts have little impact on employers compared to the steady swell of private litigation. Indeed, in the real world of EEO enforcement (i.e., private litigation), very few charges involve HIRING, PROMOTION, and UNFAIR PAY. Post-CRA 1991, the overwhelming majority of workplace EEO disputes (76%) deal with TERMINATION decisions.

* “Discharge” includes “constructive discharge” allegations, in which an employee voluntarily quits but blames the employer for creating an intolerable work environment.

Why this overwhelming emphasis on employer TERMINATION decisions? For trial lawyers, TERMINATION cases yield higher settlement payouts than HIRING and PROMOTION cases. Unlike a hiring context with limited employer/accuser contact, termination cases enable trial lawyers to pile on numerous perceived violations throughout the employment relationship (e.g., discrimination, harassment, retaliation), including weird ones referenced in the EEOC’s “Statutes by Issue” data—e.g., “Filing EEO Forms,” “Intimidation”, “Seniority” and “Severance Pay Denied,” HERE.  Further, terminated employees have a tougher time find comparable employment, especially when, due to incremental cost of living adjustments, their wages exceed the market value of their labor; thus, long periods of unemployment and income differentials rack up big damages. By contrast, in HIRING cases, employees find comparable employment far more quickly, thereby reducing damages and rendering their cause far less attractive to trial lawyers.

Since CRA 1991, trial lawyers’ pecuniary interests have distorted our national dialog about equal employment opportunity, shifting employers’ focus AWAY from ensuring equal opportunity in HIRING and PROMOTION TOWARD ensuring that their TERMINATION decisions are legally defensible.  On the ground, termination decisions pose Code Red Risk, whereas from an enforcement and compliance perspective, other kinds of employment decisions (even discriminatory HIRING and PROMOTION ones) pose little risk of detection or prosecution. Likewise, employers also find this enforcement focus on TERMINATIONS particularly frustrating, especially in light of a recent Gallup report that validated many employers’ observations: nearly 2/3 of American workers are “disengaged,” a third of which are “actively disengaged” (i.e., “checked out,” unproductive, aggressively disloyal).  HERE.  For employers, termination decisions involve an employee’s squandering of an opportunity that they actually provided.

And the results of CRA 1991’s scheme speak volumes.  Discrimination in HIRING and PROMOTION against African-Americans, Latinos, and women remains rampant, based on both EEO-1 and BLS data. In 2015, the EEOC published its “50th Anniversary Report on the American Workplace,” citing results that largely mirrored the findings of Dan Kuang, PhD of Biddle Consulting Group issued more than two years earlier:

  • Advancement: Women, African-Americans and Latinos have made little progress toward achieving top-paying Official/Manager and Professional jobs, whereas Asian Americans show significant gains in reaching both Professional and Official/Manager ranks; and,
  • Job Segregation: African-Americans and Latinos remain concentrated in lower paying Service, Technician, and Operative jobs, whereas Asian Americans and Whites still predominate in Official/Manager and Professional job classifications.

These findings line up squarely with BLS data: quarterly unemployment reports consistently show that unemployment hits the African-American and Latino communities the hardest, that African-Americans and Latinos continue to make less than their White and Asian American counterparts, that women continue to exit the workforce at a rate disproportionate to male peers, etc., etc.  More HERE.

Looking Back, Looking Ahead: The March from Here

These statistical realities should cause alarm.  First, the slow pace of progress toward achieving equal employment opportunity in top jobs, toward ending rampant “job segregation,” and toward dismantling the glass ceiling in the Official/Manager ranks should make civil rights advocates question the efficacy of our EEO enforcement model–i.e., 99% private litigation and 1% anemic EEOC “enforcement.” Indeed, both EEOC and BLS data show that although employers are spending record amounts of money on EEO enforcement, Title VII’s underlying mission of removing barriers in HIRING and PROMOTION remains more elusive than ever.  Unfortunately, these advocates have apparently forgotten what sparked the great March over 50 years ago and the passage of Title VII: to level the economic playing field for the generations marching behind us. Instead, CRA 1991 perfected a wealth redistribution loop between employers, insurance carriers, and lawyers where nothing much changes except money changing hands.  And trial lawyers like EEOC Chair Jenny Yang and her ilk at the National Employment Lawyers Association (NELA) like it that way: M-O-N-E-Y.

Unless and until we change our national dialog about equal employment opportunity and how to achieve it in HIRING and PROMOTION, African-Americans, Latinos, and women will face even greater future challenges breaking through glass ceilings and historic job segregation barriers.  The kinds of jobs in which African-Americans, Latinos, and women are currently concentrated are MOST vulnerable to technological replacement–e.g., Service, Technician, and Operative jobs, in EEO-1 speak.  According to Professors Andrew McAfee and Erik Brynjolfsson of MIT’s Sloan School of Management in their work, How Technology is Destroying Jobs and The Second Machine Age, advances in technology account for sluggish job growth over the past 10 to 15 years. These MIT academics also forecast dismal job prospects, as employers increasingly adopt new technologies to reduce headcount, “not only in manufacturing, clerical, and retail work but [also] in professions such as law, financial services, education, and medicine.” In other words, because of technology, the pool of available jobs (i.e., the Opportunity Pie) is shrinking, which means we must remain even more vigilant to ensure that impact and economic opportunity are evenly distributed.

For employers, however, the choice between TECHNOLOGY and HUMANS is pretty easy: after all, technology may FAIL, but it certainly cannot SUE.  Few employers that I’ve represented over a 16-year litigation defense career ever complained about governmental regulation, even in heavily regulated industries (e.g., trucking, health care, pharmaceutical manufacturing).  By contrast, many employers have likened private EEO litigation (and the EEOC’s ADR/mediation program) to “extortion”–i.e., leveraging the cost of disproving allegations, even ridiculous ones, for pecuniary gain.  For businesses, technology  (just like off-shoring) provides the workaround–namely, a foreseeable market response to the high cost and legal risk of hiring humans.  Ultimately, time and longitudinal data will continue to show CRA 1991’s litigation-based model (ostensibly designed to help “victims” of discrimination) only further divided HAVE’s and HAVE NOT’s along color and gender lines.

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

February 24, 2016