Editor's Note: The following article was written by Robert A. Fisher, Esq. and Michael L. Rosen, Esq. of the law firm Foley Hoag LLP in Boston. The two presented their findings at the June AIM HR Roundtables.
The Equal Employment Opportunity Commission (“EEOC”), the federal agency responsible for enforcing federal anti-discrimination laws, is shifting its focus from investigating charges brought by individuals to pursuing class-action type claims of discrimination against employers, so-called “systemic discrimination” charges.
This change in focus means a resurgence of the Boston office of the EEOC, and, more importantly, Massachusetts employers risk being the targets of a costly and sweeping investigation into their hiring and employment practices.
The EEOC has made it an enforcement priority to bring a greater number of systemic discrimination cases. These cases are essentially class action cases – a claim that an employer, an industry or a profession discriminates against a class of employees or applicants because of their membership in a category protected by law.
These investigations are often initiated by the EEOC, not an individual complainant. The EEOC believes that these cases, so-called “Commissioner Charges,” will have a broader impact than those brought by individuals and that they will enable the EEOC to set national policy regarding the eradication of employment discrimination.
How is the EEOC Identifying Employers for Investigation?
We understand that the EEOC is using a variety of sources of information to identify employers for investigation.
First, the EEOC is looking at patterns in charges that have been filed by former employees or applicants. For example, if an employer has been named in several charges alleging age discrimination over the years, then those multiple charges might trigger a systemic discrimination investigation by the EEOC regarding age discrimination.
Second, we understand that the EEOC is using charges brought by individuals as a vehicle to broaden an investigation into an employer’s overall policies and practices, rather than just the specific allegation of the charge.
Third, the EEOC is closely reviewing employers’ EEO-1 reports and comparing their workforce demographics against industry-wide data and the demographics of an employer’s geographic location. For example, an employer’s EEO-1 report might show a lower percentage of minorities than the employer’s industry as a whole or as compared to the working population where the employer operates. Such disparities might trigger an investigation.
Finally, the EEOC is relying on information from “stakeholders,” meaning labor unions and pro-employee groups, to identify employers. While all of these sources of information suggest that the focus is on larger, national companies, we are aware of investigations involving small, local companies.
What Happens During an Investigation?
A typical Commissioner Charge of systemic discrimination provides little information to employers regarding what policies or practices are under investigation. Unlike a charge filed by a former employee, a systemic discrimination charge often does not identify a particular incident, policy or practice as being under investigation.
We have seen some Commissioner Charges which state only that the EEOC is responsible for enforcing federal anti-discrimination laws and that the employer is being investigated to determine whether it is in compliance with those laws. In essence, the charge is nothing more than notice of an investigation and a vehicle by which the EEOC obtains information about the employer.
Most charges include substantial requests for information and documents. It is typical for the EEOC to request years of applicant and employee data. Employers often spend a significant amount time, energy and money responding to the EEOC’s requests for information, despite not knowing what the EEOC is actually investigating.
Once information is produced, we understand that the EEOC uses this data, along with the power of the federal government, to find and then to interview applicants or former employees regarding an employer’s practices. Thus, employers who receive a Commissioner Charge are subjected to a sweeping investigation designed to find disgruntled former employees and applicants. Employers are often invited to file a position statement early on, but in our experience, employers do not know enough about the investigation to respond adequately.
Once the investigation is underway, the EEOC takes an aggressive approach to find evidence to support a theory of liability against the employer. In addition to trying to find disgruntled employees who will support the EEOC’s theories, the agency operates very similarly to plaintiffs’ class action attorneys. The EEOC publicizes its investigations, maintaining employer-specific toll free numbers and email boxes designed to encourage former employees and applicants to come forward.
Unlike private lawyers, however, the EEOC takes the position that the 300-day rule – the requirement in states like Massachusetts that charges must be filed within 300 days of the alleged act of discrimination – does not apply to it, allowing the agency to pursue claims that are years old. Further, the EEOC does not have to satisfy the typical class action applicable to private litigants who seek to represent a class of current and former employees. As a result, we have seen the EEOC take aggressive positions regarding damages by seeking years of back pay for a class of employees even though no individual has ever filed a charge.
The EEOC reports that there are a number of key areas of focus. On the theory that applicants are less likely to bring charges than former employees, the EEOC is looking closely at employers’ hiring practices, particularly as to minorities, disabled workers and older workers. One area of focus has been employers’ use of criminal backgrounds checks to disqualify applicants. The EEOC also reports that it is focused on barriers to access to management jobs or management trainee programs.
What Can Employers Do?
The challenge for employers is that it is hard to predict if and when the EEOC might subject an employer to a systemic discrimination charge. However, there are things that employers can do to minimize the potential risk.
Employers should think about their workforce demographics and consider where and how they advertise open positions. For example, employee referrals of friends and relatives are effective ways to find great hires, but employers run the risk of ending up with a workforce that is skewed demographically.
Further, good records remain an employer’s best defense to a claim of discrimination, whether systemic or not. Finally, employers need to regularly audit their handbooks and policies to ensure legal compliance.
The laws and regulations governing the workplace are constantly changing, and we have seen employers get in trouble simply because they have not kept up with those changes. An outdated handbook could become a ready-made claim of systemic discrimination.
If an employer receives a Commissioner Charge of systemic discrimination from the EEOC, it should treat this like a potential class action. An employer will need counsel to navigate the process.
In our experience, the EEOC is willing to negotiate deadlines and the scope of its information requests. An employer also should be prepared for EEOC investigators to interview both managers and rank-and-file employees. The investigative process will be slow, and we have seen the EEOC engage in multiple rounds of requests for information.
Taken together, this process is far more expensive and time-consuming than responding to a typical charge filed by a single employee. Plus, employers should keep in mind that the EEOC is devoting significant resources to these cases. It is both prosecutor and investigator, and thus employers facing a Commissioner Charge should be prepared for the EEOC to be aggressive in its efforts.