The Seventh Circuit recently condoned an EEOC practice that dramatically inhibits the private settlement of employment discrimination lawsuits.

Two Union Pacific employees filed an EEOC charge.  The EEOC provided a Notice of Right-to-Sue, and the employees filed a federal lawsuit alleging harassment, discrimination, and retaliation.  The employees’ lawsuit was later thrown out by the judge for lack of evidence.  However, while the lawsuit was pending, the EEOC issued a separate administrative subpoena to Union Pacific, which it sought to enforce for the matters being litigated in the employees’ lawsuit in federal court.  Union Pacific objected, arguing that the EEOC’s enforcement authority was terminated either when it issued the Notice of Right-To-Sue, or when judgement was entered against the two claimants in their federal lawsuit.

The Seventh Circuit rejected both of Union Pacific’s arguments.  The court concluded that nothing in Title VII prevents the EEOC from investigating a charge after issuing a Notice of Right-To-Sue or even after a civil lawsuit on the same subject matter has been disposed of.

The message to employers:  Even if you WIN a case in federal court against a charging party, you may still be whipsawed by the EEOC.  This is also true with respect to settling an EEOC charge with an individual.  This creates a perverse disincentive for employers to settle charges and lawsuits, since such settlements do not buy absolute peace of mind.

EEOC v. Union Pacific RR Co. https://dlbjbjzgnk95t.cloudfront.net/0954000/954665/rssexec.pdf