The EEOC’s FY2012 PAR (Part 1): The Money Metric

Reading between the lines of the EEOC’s FY2012 Performance and Accountability Report (PAR)

Part 1, Employer Money: The New Metric that Matters

On November 16, 2012, the EEOC released its Performance and Accountability Report (PAR) under the new Strategic Plan adopted on February 22, 2012.  The following Monday, November 19, 2012, the EEOC predictably issued a press release touting its “successes” in fiscal year 2012 (FY2012), which ended on September 30, 2012.  As a former EEOC Trial Attorney under the Clinton Administration and BIGLAW defense attorney for 12 years, this report telegraphed a very different message about the EEOC’s enforcement agenda than the carefully chosen words committed to paper.  This post is one of three addressing the “subtext” of the EEOC’s PAR.

At EEOC Field Offices across the country, “making numbers” each fiscal year is extremely important—only things that can be counted count.  During my era (1997-2000), the metric that mattered was the number of “cause determinations”, which ostensibly showcased the rampant discrimination still polluting the American workplace.  To that end, the EEOC’s District Director kept careful tabs on his office’s progress on achieving a pre-determined number of “cause determinations”—after all, his bonus depended on it.  As Q4 of the fiscal year approached, the pressure to “make” those numbers intensified: I can even still hear the District Director booming at August all-staff meetings “Go out there and find cause!”  Of course, cause determinations then flowed, and each year, we would later learn  that our office had “made its numbers,” and everyone was happy—everyone, except employers left wondering how they must now manage the risk and cost of a frivolous lawsuit bearing the EEOC’s stamp of approval.   

Exacting Employer Money as Evidence of EFFICACY?

Instead of “reasonable cause” determinations, the EEOC has more recently hyped the amount of MONEY it has exacted from employers as evidence that it is “enforcing the law more effectively.”  The EEOC’s 2012 PAR itself directly equates “enforcing the law more effectively” with its historic collections ($365.4 million) for FY2012.  The underlying assumption—i.e., the EEOC is more effective because employers have paid historic amounts to resolve their EEOC matters—distorts reality. 

Employers settle EEOC matters for numerous reasons completely unrelated to the merits of any given charge or the threat of EEOC action, the MOST IMPORTANT of which is the staggering cost of defense.  Because of the cost of defense, employers have convinced themselves that they can no longer afford to fight when they’re right. Accordingly, they very often seek to resolve EEOC matters as quickly and early in the process as possible, generally not because the matter poses real risk, but rather because the cost of defending the risk exceeds the risk itself.

For example, as reported in Bloomberg’s (BNA) Daily Labor Report on July 1, 2010, Petco retail stores  settled an ADA lawsuit with the EEOC’s Denver office for $145,000 to a profoundly deaf dog groomer while vehemently denying any wrongdoing whatsoever.  As Petco’s attorney from boutique giant Littler Mendelson explained, Petco settled only because “EEOC litigation is expensive.”  Meanwhile, in the same timeframe, the EEOC’s Denver office filed a strikingly similar ADA case against retailer Picture People involving a profoundly deaf employee that was completely dismissed on the merits in court and on appeal.

Considering EEOC’s 2009 Petco and Picture People cases side-by-side, one must wonder whether the EEOC was truly more “effective” in Petco than in the Picture People matter.  If the EEOC’s underlying objective is inherently redistributive, namely, to extract money from employers and redistribute it to employees, then the EEOC was surely more “effective” in EEOC v. Petco.  The EEOC’s original mandate, however, was the elimination of unlawful employment practices through the informal efforts of “conference, conciliation and persuasion.” Section 706(b) of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e-5(b).

Meeting Money Metrics with Bullying

According to the EEOC’s PAR,

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.

“Conciliations” occur only after the EEOC has issued a reasonable cause determination against the employer—i.e., the EEOC’s notice to the employer that its action, according to the EEOC, has violated federal anti-discrimination laws.  In fact, the legal provisions vesting the EEOC with enforcement authority require it to “conciliate” any charge in good faith before initiating any action against the employer in federal court.  If an EEOC Trial Attorney was involved in charge development and actually wants to prosecute the lawsuit, however, the EEOC will take incredibly hard, if not outright draconian, positions in the conciliation process, in tacit hopes that conciliation will fail.  As previously discussed HERE, if the EEOC’s demands in recent Consent Decrees (i.e., arising from EEOC settlement of a lawsuit) are any indication, then the EEOC has probably been seeking far more in conciliation than a court would even impose on an employer after a violation were proven. 

But what if the conciliation process proceeds based on the EEOC’s faulty or mistaken view of what the law really requires or means, the perceived strength of the case, and/or the merits of the employer’s defenses?  In those relatively common scenarios, employers literally get bullied into EEOC conciliations . . . again, to avoid the certain and staggering attorney defense fees.  With the elimination of the “conceptual barriers” between investigators and attorneys (more about that later), the EEOC is in a prime position to aim (and surely threaten to aim) its prosecutorial discretion and public warchest at an employer that will not surrender to its view of the law or case in the conciliation process. In fact, EEOC Trial Attorneys now routinely participate in conciliations, thereby “encouraging” employers to enter into cost of defense settlements just to contain their financial exposure. To suggest, therefore, that the amount of money obtained by the EEOC in the conciliation process demonstrates its enforcement success seems almost disingenuous when placed in its proper “on-the-ground” context.

Toward More Meaningful Measurements of EFFICACY

Instead of monetary collections from employers, perhaps a more meaningful way to adjudge whether the EEOC has been “effective” could focus on how it has enforced the laws entrusted to it.  This measurement must surely take into account the number of times federal trial and appellate courts have sided with or rejected the EEOC’s interpretations of the law.  In fact, the EEOC does not report on its losses, as well as the number of times federal courts chastise or sanction its personnel for advancing legal interpretations at odds with judicial precedent, which creates an incredibly skewed view of its “success.”  Instead, employers must rely on other resources like this Blog for information about the EEOC’s actual success rate in court, which is surprisingly low. 

Likewise, technological advances in communications, research capabilities, and social media could theoretically allow the EEOC and/or the GAO to survey Charging Parties, HR professionals, in-house counsel, small employers, etc. to ascertain how effective the EEOC’s constituency believes it has enforced applicable laws, guided them through the process, and/or sought to resolve the workplace issue through informal efforts of conference, conciliation, and persuasion.   The results would likely shock, and open a healthy discussion about more effective methods to ensure that our workplaces are as inclusive and diverse as our communities. 

For employers, the bottom line is that the EEOC wants your money, and that core dynamic will infect every interaction employers have with the EEOC. Just like District Directors once prevailed upon investigators to “go out and find cause” to achieve predetermined performance metrics, EEOC investigators and attorneys now understand that the amount of money they collect will be the metric that matters in their own evaluations, raises, bonuses and awards.  As a basic tenet of HR performance management (if not human behavior), if management tells employees to fulfill any quota (e.g., closures to reduce inventory, target dollar amount obtained, number of cause determinations, and 2,000 annual billable hours), they will find ways, some legitimate and some not, to achieve it.  Accordingly, employers can expect far more aggressive settlement efforts from investigators and attorneys than perhaps they have previously experienced.  Unfortunately, given the staggering costs of defense, many employers will continue to choose settlement instead of standing their ground with the EEOC. 

Please stay tuned for future blogs in this vein.  In Part 2 of this series addressing the EEOC’s recent PAR, we will consider whether reducing the EEOC’s huge “inventory” (i.e., freakish backlog of cases) really means that it is serving the public more “efficiently.”