Under the Surface of EEOC Enforcement

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Earlier this week, the U.S. Equal Employment Opportunity Commission (EEOC) asked the U.S. Supreme Court (SCOTUS) to grant Mach Mining LLC’s petition for certiorari, following its Seventh Circuit victory in December, 2013, here.  In EEOC v. Mach Mining LLC, the Seventh Circuit sided with the EEOC, holding that courts lack the authority to adjudge the adequacy of the EEOC’s pre-litigation conciliation efforts.  According to the EEOC, its administrative enforcement activities (e.g., mediation, investigation, determination, and conciliation) are immune from court scrutiny under the “government deliberative process privilege,” including the question of whether the EEOC has fulfilled its four statutory “conditions precedent” prior to initiating prosecution—e.g., charge, investigation, determination, and conciliation.

While the EEOC seeks a SCOTUS ruling that its enforcement activities are shielded from court (and public) oversight, Congress has also recently raised questions about the adequacy of the EEOC’s mandatory conciliation efforts prior to initiating litigation against employers. In the context of the EEOC’s budget request, a report from the House appropriations committee expressed concern that the EEOC has not, in fact, been conciliating with employers in good faith, and demanded some accountability:

Conciliation.—The Committee is concerned with the EEOC’s pursuit of litigation absent good faith conciliation efforts. The Committee directs the EEOC to engage in such efforts before undertaking litigation and to report, no later than 90 days after enactment of this Act, on how it ensures that conciliation efforts are pursued in good faith.

May 8, 2014 House Report.

As a former EEOC litigator (1997 – 2000) and longtime EEO defense attorney who successfully battles the EEOC, I worry that Congress’s budgetary control now stands as the ONLY means to hold the EEOC accountable for (1) the pain it unnecessarily inflicts upon employers; (2) more meaningful and realistic measurements of progress toward EEO; and (3) “law enforcement” that looks an awful lot like advocacy.  After all, the EEOC refuses to disclose any information about its investigations, decision-making processes, negotiations, and conciliation efforts.  In fact, even getting the EEOC to adhere to its own statutory disclosure obligations under the Freedom of Information Act (FOIA) involves much struggle, here. And now, the Seventh Circuit has slammed shut a possible judicial window into these super-secret EEOC administrative processes. But for Congress’s control of the EEOC’s purse strings, do employers have any recourse from an abusive administrative agency that measures its “efficacy” in the amount of money it collects from them?

The Dangers and Damages Occur Below the Surface

In addition to “government deliberative process privilege,” the EEOC also relies heavily on the statutory confidentiality built to Title VII of the Civil Rights Act of 1964 (“Title VII”) to resist disclosing any information about its administrative charge handling unless and until the matter becomes public with the filing of a lawsuit.  See § 706(b) of Title VII, 42 U.S.C. §2000e-5(b).  The combined effect of statutory confidentiality and “government deliberative process privilege” is an administrative process that occurs in secret, again, unless and until the EEOC (or the Charging Party) initiates a lawsuit in U.S. District Court.   Most charges, the EEOC would surely agree, never see the light of a courtroom; on the contrary, for most EEOC-related disputes, the real action (e.g., mediation, investigation, determination, conciliation) occurs below this surface of confidentiality and government deliberative process, like a dangerous iceberg.

Consider, for example, the monetary burden on employers.  For at least the past two fiscal years, the EEOC has measured its efficacy by the amount of money it has collected from employers to resolve discrimination allegations: in both FY2012 and in FY2013, the EEOC has characterized its historic collections from employers–$365.4m and $372.1m, respectively—as evidence of “enforcing the law more effectively.”   According to the EEOC’s FY2013 Performance and Accountability Report (PAR), however, litigation accounted for only $39m of this historic take, whereas the EEOC’s Mediation (ADR) and Enforcement (e.g., investigator settlements, conciliations) programs took in the most money, as depicted in Figure 1.   Thus, employers feel the real financial impact of the EEOC’s enforcement activities in these confidential/privileged administrative processes, where questionable investigations, unfounded reasonable cause determinations, and perfunctory conciliations never reach the surface and public light.  How can an agency of the federal government inflict this much pain, with such little transparency?

Figure 1

EEOC Collections FY2013

 If Mediations, Then [a fortiori] Conciliations

Earlier this month, we released the results of our year-long survey of practitioners (e.g., HR, attorneys, EPL adjusters) regarding their experiences in EEOC mediations, ultimately hitting 780 responses.  Notably, we recently learned of other organizations that are using online surveys and social media to explore what happens to Respondents (e.g., employers, school districts) in these secret, administrative processes. Given how fiercely the EEOC and other federal agencies resist scrutiny, surveys and social media may be the only way to peek behind this iron curtain of carefully guarded secrecy.   We have other projects planned; please stay tuned.

Our EEOC mediation survey probed whether EEOC mediators made (or did not make) specific representations to employers in the mediation process; we then tested these representations against published EEOC information, including enforcement statistics.  Over 80% of practitioners reported that EEOC mediators emphasized the cost-of-defense when encouraging them to settle regardless of charge merits, here.  What impact, therefore, would threats of EEOC enforcement activity have on employers’ cost-of-defense expectations and by extension, settlement deliberations?

In fact, over 70% of practitioners reported mediator threats of reasonable cause determinations and prosecutions.  Worse, over 60% reported that EEOC mediators even raised the specter of expensive, lengthy systemic investigations if the matter did not get resolved.  After presenting these findings, we highlighted how improbable those outcomes were under the EEOC’s own Priority Charging Handling Procedures (PCHP) and published enforcement statistics.

Our ultimate conclusion shocked some, angered others, and resonated with MOST practitioners who have represented employers in EEOC mediations over the past few years:  EEOC mediators stress cost-of-defense, and then brandish  the EEOC’s enforcement powers (e.g., cause determinations, systemic investigations and prosecutions) to drive up employer settlement payouts.   For that reason alone, EEOC mediations are not “neutral” or a “wonderful opportunity to settle,” as the EEOC would have employers believe.  On the contrary, our findings expose EEOC mediations as a vehicle to ratchet up the one measurement that the EEOC counts as progress—i.e., employer settlement money.  We have questioned (and will continue to question) whether (a) wielding federal enforcement weapons to effectuate private settlements is a responsible use of governmental power; and (b) this accuse-and-settle enforcement scheme has actually worked to foster equal employment opportunity, here.

Nevertheless, if employers encounter exaggeration and bullying in the EEOC’s mediation process, what fate must befall them in the EEOC’s conciliation process?  Unfortunately, even experienced practitioners often misuse these terms interchangeably: unlike mediation, conciliation occurs after the EEOC has issued a reasonable cause determination to believe that a statutory violation has occurred and after the EEOC has technically taken a position adverse to the employer; by contrast, the EEOC takes an ostensible “neutral” stance in mediation, although our survey casts doubt on that representation too.

Based on our EEOC mediation survey (as well as my own experiences WITH and AGAINST the EEOC), I envision a conciliation process fraught with threats of prosecution, paired with cost-of-defense monetary demands far exceeding six figures, take it or leave it.  And, the EEOC has offered clues that this vision of the conciliation process may be accurate.  In its 2012 PAR, the EEOC credited the close collaboration between EEOC’s Legal and Enforcement Units for the record amount of employer settlement monies “obtained” in the conciliation process:

Of particular note was the increased number of charges resolved through successful conciliations, with 1,591 in FY 2012 compared with 1,351 in FY 2011, an 18 percent increase. The increase in conciliations reflects an emphasis on even closer consultation between the Commission’s investigators and attorneys.

 FY2012 EEOC PAR, “Enforcing the Law More Effectively,” here.  As most practitioners quickly discover, the EEOC exercises its prosecutorial discretion through the General Counsel (Legal), not the Commission (Enforcement), such that the presence of an EEOC Trial Attorney in the conciliation process would certainly signal an intent to prosecute—i.e., the intended effect.  Under these circumstances, most employers would opt to settle in the still-confidential conciliation process rather than face a long EEOC prosecution, suffocating defense fees, and a brand-bashing EEOC press release.

Indeed, Congress needs to probe FURTHER the EEOC’s conciliation efforts, focusing on not only matters that reach the surface of litigation, but more importantly, on those conciliation negotiations that remain hidden below the surface of governmental deliberative process privilege and confidentiality.   If the courts cannot (or will not) provide this appropriate oversight and check on the EEOC’s use of executive power, then employers have nowhere to turn but Congress.  Dig deeper . . .

The EEOC Exposed: Does the Emperor Have Clothes?

The Obama EEOC has behaved more like an advocacy group than a federal law enforcement agency.  EEOC Commissioner Chai Feldblum has publicly stated that the EEOC’s job is to interpret the anti-discrimination laws entrusted to its enforcement, which raises some fundamental “separation of powers” and “checks-n-balances” questions about our tripartite system of government.  In effect, this EEOC’s “interpretive” law enforcement bent is like a cop pulling you over and saying

Under my novel, untested and possibly incorrect view of the law, you have just violated the law.  Now, you can pay $500K to prove me wrong, or you can settle for $250K now.

The EEOC possesses tremendous enforcement powers (e.g., to issue subpoenas, to investigate, to render determinations, to conciliate, to prosecute, to demand injunctive relief) that inflict pain on employers, even though it may be advancing novel legal theories and junk statistical methods.  In EEOC v. Kaplan (credit reports), the EEOC’s investigation, conciliation, and prosecution proceeded based on a statistical analysis that a federal judge, once the case reached the surface of litigation, tossed out as inherently unreliable.  Likewise, in EEOC v. Freeman (criminal background checks), a federal judge also tossed out the EEOC’s statistical analysis for “egregious errors” and extreme “academic dishonesty.” Read more here.  The employers in Kaplan and Freeman likely spent millions in non-recoverable defense fees fending off these EEOC incursions, incursions that were not grounded in competent facts and legal precedent.

In an EEOC prosecution that I defended a few years ago under the Americans with Disabilities Act (ADA), EEOC v. Picture People, I set out to prove that the EEOC conducted absolutely no investigation whatsoever into the essential functions of a retail sales position at the nucleus of its five-year campaign against a photography retailer.  An inevitable discovery dispute ensued after I issued a 30(b)(6) deposition notice to the EEOC—e.g., government deliberative process, burden to the government.  After a lengthy hearing, the U.S. magistrate judge ordered the EEOC to answer “contention interrogatories” about the investigative evidence undergirding its Determination that a deaf/mute person was “qualified” to perform a high-octane retail sales position requiring strong verbal communication skills.  The EEOC’s responses reveal an alarmingly perfunctory and partisan “investigation” that failed to take into account even the most basic employer prerogatives built into the ADA.  The EEOC’s prosecution ultimately failed—e.g., dismissed on summary judgment, affirmed en banc at the 10th Circuit.  This employer, however, endured five years of EEOC litigation, six figures in attorneys’ fees, and governmental “brand-bashing” at an incalculable cost, based on an incompetent (or simply arrogant) EEOC investigation and erroneous interpretation of the ADA.

Any governmental effort to resist transparency must be opposed in a free society. Experience teaches me that under this cloak of governmental deliberative process privilege and confidentiality lie legitimate opportunities to critique the EEOC’s competency and long-term efficacy, just based on the litigation that has recently reached the surface. In Picture People, the EEOC resisted transparency to conceal an incompetent investigation; in Kaplan, the EEOC cited government deliberative process to hide, among other botches, the reality that it engaged in the same hiring practice (i.e., credit scores) for which it was prosecuting this employer.  In fact, two extremely well-respected legal academics, Margo Schlanger of University of Michigan School of Law and Pauline Kim of Washington University School of Law, have recently published their longitudinal analysis of the EEOC’s litigation program, ultimately questioning its value as a tool to reform the workplace, here. If the EEOC’s litigation program—i.e., the cornerstone of our entire EEO enforcement model—is just another ineffective, bureaucratic burden, then all stakeholders (but particularly employers) should start asking fair cost-benefit questions about an administrative process so shrouded in secrecy.

Now that some courts have abdicated any oversight role in holding the EEOC accountable, only Congress’ “power of the purse” can pry open a window into the EEOC’s treatment of employers.  Given the EEOC’s resounding court defeats “above the surface,” employers must demand and/or find ways to CREATE more transparency into the EEOC’s super-secret administrative processes, or continue PAYING the consequences.

Merrily S. Archer, Esq., M.S.W., May 29, 2014