In December, 2013, EEO Legal Solutions released then-available results of its EEOC Mediation Survey, provided in full below. Since then, Bloomberg BNA picked up the story, increasing responses to well over 700—stay tuned: we will publish an updated report in April, 2014. Also since then, the EEOC released its Enforcement and Litigation statistics, many of which call into question the veracity of common EEOC mediator representations in the EEOC Alternative Dispute Resolution (ADR) program.
Consider the following:
Reasonable Cause Determinations: Over 70% of survey respondents reported that an EEOC mediator had stated or implied that the EEOC may issue a reasonable cause determination during the mediation. According to the EEOC’s recently published Enforcement statistics for FY2013, however, the EEOC issued reasonable cause determinations in only 3.6% of charges, down from 3.8% in FY2012; in fact, the EEOC issued “no reasonable cause” determinations in nearly 2/3 (66%) of all charges, a figure that also reflects a three year high. Contrary to EEOC mediator threats, the likelihood that an employer will face an EEOC “reasonable cause determination” following an unsuccessful mediation is actually decreasing.
EEOC Prosecutions: Nearly 70% of survey respondents reported that an EEOC mediator had implied that the EEOC may even litigate the charge, which would naturally scare employers into big cost-of-defense settlements. According to the EEOC’s report, however, the EEOC filed fewer lawsuits in FY2013 than in any other year reported on the EEOC’s website (i.e., back to 1997). The likelihood of falling prey to an EEOC prosecution has decreased markedly since 2011.
Monetary Benefits (in millions): The EEOC’s report also shows that despite prosecuting fewer cases, taking in fewer charges, and resolving fewer disputes in the administrative process, the EEOC took in more money–$372.1m—in FY2013 than at any other time in its history.
How did the EEOC pull off that amazing feat? Read on . . .
What EEOC Mediators Say to Make Employers PAY
In the late 1990’s, the EEOC launched its mediation or Alternative Dispute Resolution (ADR) program. I worked there then, and experienced firsthand the genuine excitement as the EEOC moved toward full implementation. The term “FIREWALL” (that is, the ostensibly impenetrable barrier between the ADR, Enforcement, and Legal Units) echoed through the halls. Office sizes shrunk as the EEOC constructed separate ADR Units with separate entrances, offices, and conference rooms—a visual FIREWALL to reassure employers of the impartiality, confidentiality, and above all, credibility of the ADR program. The EEOC implemented protocols, reserving ADR for only “B” charges under its 1995 Priority Charge Handling Procedures (PCHP). And, the EEOC promoted numerous investigators into mediator positions.
Since its roll-out in 1999, the EEOC has considered the ADR program its crowning achievement, as expressed by longtime EEOC leader Mary Jo O’Neil, EEOC Regional Attorney (Phoenix Region) at a recent hearing:
[W]e have a fabulously successful ADR program and I would urge employers to take more advantage of that than they do . . . It’s such a successful program. It’s a wonderful opportunity to settle.
Why We Wondered
In its 2012 Performance and Accountability Report, the EEOC characterized its historic collections from employers as evidence that it was “enforcing the law more effectively.” Given the staggering cost of defense, we questioned whether the EEOC’s unprecedented plunder really meant that the EEOC was more “effective,” especially in light of its statutory mandate to eliminate unlawful employment practices through “informal methods of conference, conciliation, and persuasion.” 42 U.S.C. §2000e-5(b); more here, http://eeolegalsolutions.com/the-eeocs-fy2012-par-part-1-the-money-metric/. Further, because only things that can be counted count at the EEOC (e.g., cause determinations, inventory reduction, lawsuits filed, and dollars collected), we wondered what impact, if any, this new metric-that-mattered would have on the behavior of EEOC personnel. After all, if EEOC equates employer collections with efficacy, experience teaches me that its personnel likely have explicit or tacit marching orders to maximize money.
By February, 2013, this hunch grew into suspicion. Several employers that EEO Legal Solutions coached through EEOC mediations reported high monetary demands, paired with threats of cause determinations, systemic investigations, and EEOC litigation regarding extremely weak charges. “That’s nuts,” I would reassure them, “if any of those outcomes were likely, the EEOC would not have invited you to mediation!” Could EEOC mediators be making those representations to other employers and attorneys, we wondered, particularly those less familiar with EEOC operations? And so, at EEO Legal Solutions’ March, 2013 free webinar on EEOC mediations, we asked participants about their experiences in EEOC mediations: nearly 1/3 of them reported similar representations over the past two years.
EEOC mediations occur under a cloak of carefully guarded confidentiality, which prevents employers from comparing notes about what EEOC mediators say behind closed doors to “encourage” employers to pay. To gain insight without compromising client/charge confidentiality, EEO Legal Solutions designed a short, 11-question survey using www.surveymonkey.com to probe whether EEOC mediators made specific representations in the mediation process . . . or not. Unlike prior ADR surveys undertaken by the EEOC in 2000, 2001, and 2003, we did not intend to research employers’ satisfaction with the ADR program or their reasons for non-participation. After all, employers could simultaneously report satisfaction with the ADR process, notwithstanding the use of specific mediator threats referenced in this survey. Thus, we used clear, simple questions like those used in formal depositions—i.e., did X state/imply Y? And then, we delimited response choices to the only legally viable answers: “yes”, “no”, and “I don’t remember”. Questions 4 through 11 follow this format.
Questions 1 and 2 request basic demographic information—e.g., role in the ADR process and state—to permit more detailed analysis later. Question 3 asks participants to identify the number of EEOC mediations handled over the past two years; if the participant responded “none,” the survey ended for that participant. To ensure study validity, only participants who reported some firsthand experience with an EEOC mediation over the past two years were allowed to answer substantive Questions 4 through 11.
Beginning in March, 2013, survey responses were solicited through (1) several LinkedIn professional groups targeting HR professionals, EPL adjusters, and employment lawyers (“practitioners”); (2) direct emails to practitioners with requests that they forward the survey link to their contacts; (3) announcements in numerous webinars sponsored by EEO Legal Solutions and BLR/HR Hero; and (4) EEO Legal Solutions’ blog. To maximize participation, however, EEO Legal Solutions has agreed to maintain the active survey link, www.surveymonkey.com/s/F5KLP2B at least until March 2014 and will periodically report any statistically significant changes in the results presented herein.
At this writing, the survey yielded 604 responses from a wide range of professionals who may play some role in EEOC mediations:
Consultant: 9.12% (55)
EEO/AA Practitioner: 7.63% (46)
EPL Adjuster: 6.47% (39)
HR Professional: 34.66% (209)
In-house Attorney (Generalist): 8.13% (49)
In-house Labor/Employment Attorney: 9.62% (58)
Small Business Owner: 5.14% (31)
Other: compliance specialist, a federal investigator, labor economist, several franchisees, a non-profit manager, etc.
Of these participants, 28.19% (170) had not participated in any mediation over the past two years and were disqualified from answering further questions. Approximately 40% (242) of participants had participated in at least one mediation over the past two years, with 15.75% (95) reporting six or more EEOC mediations. Almost 10% of the participants (56) reported handling over 31 mediations during a two-year timeframe; nearly all of these 56 participants were attorneys in law firms or in-house employment counsel.
Survey participants represented nearly every state, with a significant contingent from Colorado (124), California (40), Texas (40), Illinois (38), Florida (35), Virginia (19), Georgia (18), Connecticut (17), Michican (14) and New York (14). The large number of participants from Colorado likely stems from the survey collection process, and EEO Legal Solutions’ Colorado base. For that reason, we have elected to keep the survey open at least until March 2014 in hopes of drawing participants from the broader cross-section of the United States.
What EEOC Mediators Say to Make Employers Pay
Bearing the Suffocating Cost of Defense
Over 80% (82.13%, 340) of practitioners reported that their EEOC mediator referenced the cost of defense as a reason to resolve the EEOC charge.
No doubt, the staggering cost of defense is real. Employers spend thousands on attorney-prepared EEOC position statements and upwards of $75K to $100K in litigation, even when they have done nothing wrong. Although predatory billing practices, skyrocketing rates, and law firm inefficiencies also share the blame for the nearly suffocating cost of defense, employers start losing money as soon as the discrimination allegation is made. And so, the cost-of-defense conversation goes something like this
It’s going to cost you [employer] $75k to $100k to prove you were right in the first place. You might as well make it ‘go away’ for $25k to $30k—that’s the sound business decision.
Most employers, however, have difficulty viewing a $30k payout to an undeserving employee as a bargain, especially when their own experience and investigation have convinced them that they have committed no legal violation whatsoever.
Nevertheless, the clear emphasis that EEOC mediators place on the cost of defense raises legitimate questions about the meaning of its historic collections from employers in 2012. According to the EEOC, this unprecedented amount shows that it is “enforcing the law more effectively.” As the EEOC is aware, however, employers settle EEOC charges not because they have merit, but rather because the cost of defending the risk exceeds the risk itself. Ultimately, the EEOC’s increasing employer collections simply show how STUCK employers are between the rising incidence of EEOC entanglements and the rising cost of defense.
Losing in Later Litigation
According to our survey, EEOC mediators frequently forecast gloomy litigation outcomes, even before the Charging Party’s allegations have been tested in the discovery process. Further, as many seasoned defense litigators can attest, judges and professional mediators (many of which are attorneys) have standard “phrases that pay” to exploit employer insecurities about juries:
“Juries dislike employers”: 52.43% (216) of practitioners responded that an EEOC mediator has stated or implied that “juries dislike employers” in a mediation over the past two years.
“The jury won’t like . . .”: 53.26% (313) of practitioners responded that an EEOC mediator stated that a “jury would not like the employers’ evidence or witnesses” as a reason to settle.
“A judge will not grant summary judgment” or “this case will go to a jury”: 44.36% (177) of practitioners reported that an EEOC mediator expressed an opinion on the success of the employer’s future Motion for Summary Judgment. Typically, the employer files a Motion for Summary Judgment after the parties have conducted a substantial amount of discovery (e.g., depositions, document exchanges, disclosures) during litigation.
In their defense, EEOC mediators can (and probably should) talk about the merits of the charge and the comparative strength of the parties’ evidence, including layperson credibility determinations. Most EEOC mediators, however, are not attorneys and have never litigated an EEO matter, rendering their jury-based prognostications unreliable at best. Simply put, these representations mimic trial and employee-side lawyers, who have historically purported to intuit the likes/dislikes of future jurors. Experienced defense practitioners typically recognize appeals to “ghost juries” as posturing, bravado, and theater.
Further, in litigation, the fact-gathering process begins anew and is far more rigorous. Again, as most seasoned litigators would agree, after discovery, discrimination and/or retaliation lawsuits can reveal a story vastly different from the allegations in the Complaint. In fact, summary judgment orders following EEOC determinations of reasonable cause are just not uncommon.
Defending against EEOC Enforcement Activity
In creating the EEOC nearly 50 years ago, Congress entrusted certain statutory and governmental powers to it, including broad powers to: (1) initiate systemic or class investigations and issue subpoenas; (2) issue Determinations of Reasonable Cause and thereby force employers into the “conciliation process;” and (3) litigate civil “enforcement actions” against employers. Given the cost of defense, the threat of possible EEOC enforcement activity would necessarilyweigh heavily on an employer’s settlement deliberations. In fact, mitigating and containing future costs rank among the top reasons employers elect to settle in the first place. Thus, if employers believed the representations below, their settlement impact would be profound:
Threats of EEOC Reasonable Cause Determinations
73.19% (303) of practitioners reported that an EEOC mediator had stated or implied that the EEOC’s Enforcement Unit could issue a Determination of Reasonable Cause. After a Determination of Reasonable Cause, the EEOC initiates the “conciliation process,” a settlement conversation in which the EEOC may also impose its standard trinity of injunctive relief: training, posting, and reporting. The looming possibility of a cause determination, therefore, would likely prompt many employers to offer more money in mediation to avoid (1) inevitable defense costs; and (2) an inevitable increase in the Charging Party’s settlement expectations.
In FY2012, however, the EEOC issued determinations of reasonable cause in only 3.7% of charges containing Title VII allegations. In reality, the EEOC’s rate of issuing reasonable cause determinations has steadily decreased since 1998. This relatively low rate of reasonable cause determinations casts considerable doubt on whether this outcome is likely for employers. Indeed, given the EEOC’s adherence to its Priority Charge Handling Procedures, infra, the possibility of a reasonable cause determination following an unsuccessful EEOC mediation is highly unlikely.
Threats of EEOC Systemic/Class Investigations
61.55% (259) of practitioners reported that an EEOC mediator had stated or implied that the EEOC could launch a “systemic” or “class” investigation if the employer did not settle in ADR.
Since the EEOC’s shift from individual to systemic/class enforcement in April, 2006, the terms “systemic” and “class action” have become the phrases that PAY for both trial lawyers, employee-side attorneys, and the EEOC. EEOC systemic investigations often involve numerous Requests for Information (RFI’s), database construction and analysis, subpoena modification or enforcement actions, negotiations with investigators and/or attorneys, etc., etc. Indeed, the EEOC has nearly unlimited power to investigate, a public warchest, subpoena authority, and no meaningful timetables, thereby exposing employers to years of enforcement activity that easily racks up seven-figures in defense attorneys’ fees. From a cost of defense perspective, EEOC systemic and/or class investigations pose the single biggest financial threat to employers, even more than EEOC litigation. Thus, even though the EEOC has floundered (and employers have prevailed) in recent systemic litigation like EEOC v. Kaplan University and EEOC v. Freeman, the employer has still suffered the considerable expense and hassle of proving the EEOC wrong. http://eeolegalsolutions.com/some-straight-talk-about-the-high-cost-of-eeoc-systemic-losses/. The EEOC possesses great power to punish through prosecution alone.
Threats of EEOC-initiated Lawsuits
Nearly 70% (68.67%, 287) of practitioners reported that an EEOC mediator stated or implied that the EEOC may litigate the charge if not resolved at mediation. Given the impact anticipated EEOC litigation would naturally have on any employer’s settlement deliberations, this finding is troubling. In fact, EEOC mediators have neither the authority nor the ability to predict what EEOC charges will eventually become “litigation vehicles”–i.e., charges developed for litigation ostensibly to further EEOC enforcement priorities and legal interpretations. The EEOC exercises its prosecutorial discretion in an infinitesimal number of EEOC charges, less than .2% of charges in FY2012. In recent years, the number of EEOC lawsuits has decreased markedly, reflecting an overall litigation trend of larger, class-based or systemic lawsuits. Thus, the actual risk of EEOC-initiated litigation is quite low.
Under the Guise of Reality Testing
Shortly after EEO Legal Solutions launched this survey in March of 2013, an EEOC mediator reached out via LinkedIn, explaining that she was trained to conduct “reality testing” about what could happen if the charge did not settle and then ended up in the Enforcement Unit—e.g., cause determinations, systemic investigations, litigation. Overstating these risks, however, actually distorts reality, almost to the point of outright mendacity. As EEOC mediators well know, if any of these EEOC enforcement activities (e.g., cause determinations, systemic/class investigations, litigation) were likely, the EEOC would not have routed it to ADR in the first place under its longstanding Priority Charge Handling Procedures (PCHP).
Adopted in 1995 in response to a sharp spike in charge filings and an increasing backlog, PCHP sets the trajectory and determines the destiny of every EEOC charge based on a loose, three bucket triage in Intake: A, an enforcement priority or likely cause determination; B, the bulk of inconclusive discrimination allegations; and C, time-barred or jurisdictionally deficient charges dismissed right out of Intake. Under the EEOC’s own protocols, only charges designated as “B” are eligible for mediation. Thus, if the EEOC had deemed the charge worthy of Class A treatment under PCHP (e.g., full investigations, cause determinations, prosecutions) given its limited resources, it would not have invited the employer to mediate in the first place.
This practical reality of EEOC enforcement is a well-kept secret. At the EEOC’s hearing on March 20, 2013, Commissioner Lipnic suggested that EEOC investigators disclose each charge’s PCHP designation to “take the gamesmanship out of this.” EEOC field investigators instantly opposed the idea. They claimed that PCHP designations were top secret under the “government deliberative process privilege,” i.e., the armor that prevents stakeholders from holding the EEOC accountable for its decision-making processes. Ultimately, the EEOC hearing panel concluded, the EEOC should not disclose the PCHP designation to employers because disclosure would “hinder” their willingness to settle. In other words, if the employer knew, for example, that the EEOC considered the charge a “B”, and was, by logical extension, unlikely to devote its limited time and resources to “handling” it, it would be far more difficult to scare them into paying money to “resolve” the charge.
The same logic applies to the EEOC mediation process. By understanding that the EEOC does not actively or aggressively investigate “B” charges (but rather routes them to mediation), employers can disarm and dismiss the common EEOC mediator scare tactics uncovered in this survey. Further, by understanding how misleading these representations actually are, employers can make smarter, more informed settlement decisions in EEOC mediations, which translates into dollars saved.
MEDIA: A more detailed report with analytic charts and endnotes is available by contacting email@example.com directly.
To learn more, please join us on December 18, 2013 for EEO Legal Solutions’ free monthly webinar, “EEOC Mediations Unveiled: How to Negotiate More Effectively.”
Please register here, https://attendee.gotowebinar.com/register/304102181161102850