5 Top Trends In Workplace Class Action Litigation: Trend #4 Government Enforcement Litigation

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Seyfarth Synopsis: In our continuing coverage of the top trends found in Seyfarth’s 2021 Workplace Class Action Litigation Report, in 2020, government enforcement litigation slowed considerably. Although the value of government enforcement settlements went up, agencies like the EEOC downsized their litigation enforcement programs and brought fewer lawsuits in 2020 than in any year of the past decade. Most significant for employers, during the past year, the EEOC undertook multiple initiatives that reflected a shift away from systemic litigation as a priority.

During 2020 employers saw significant shifts in the EEOC’s enforcement agenda, including a notable shift away from litigation as a one-size-fits-all tool for combatting workplace discrimination. As the EEOC’s enforcement agenda shifted, employers experienced a marked decrease in federal complaints and a marked increase in settlements as the EEOC sought to wind down its litigation docket. These shifts likely resulted from the pro-business stance of the Trump Administration. The EEOC saw considerable leadership turnover at the top as Trump’s nominees for Commissioner slots were finally confirmed on May 3, 2019 (Janet Dhillon, Chair) and September 22, 2020 (Keith Sonderling, Vice Chair, and Andrea Lucas, Commissioner).

Prior to September 2020, the EEOC’s leadership consisted of only three of five Commissioners, including Janet Dhillon, Chair (Republican), Vicki Lipnic (Republican), and Charlotte Burrows (Democrat). Commissioner Lipnic’s term technically expired in July 2020, but she was allowed to stay on through September 2020 so that the Commission would have a quorum and could operate. On September 22, 2020, the Senate confirmed three new Commissioners, two Republicans and one Democrat, for the two vacant seats and the seat formerly held by Lipnic. The Commission must remain bipartisan by law, but these new additions solidified a Republican majority at least until July 2022 when Dhillon’s term expires, despite the result of the 2020 election in flipping the White House from red to blue.

The total number of new lawsuits filed by the EEOC decreased significantly during 2020. The EEOC filed 94 merits lawsuits and seven subpoena enforcement actions, a stark decline compared to the 144 merits lawsuits and eight subpoena enforcement actions filed during 2019. This represented a 35% reduction in total actions commenced by the Commission year over year. Despite the shift in administrations, employers can expect that the EEOC’s majority-Republican leadership will continue to curtail litigation efforts in 2021.

Although the numbers declined, when considered on a percentage basis, the distribution of cases filed in terms of their theories of liability remained largely consistent compared to 2019. Title VII and ADA cases once again comprised the majority of cases filed by the Commission, suggesting that enforcement priorities did not shift dramatically and remained fairly consistent under the Trump Administration. This past year marked the fourth year of the EEOC’s 2017-2021 Strategic Enforcement Plan (“SEP”), which guides enforcement activity. The six enforcement priorities set forth in the SEP include: (1) the elimination of systemic barriers in recruitment and hiring; (2) protection of immigrant, migrant, and other vulnerable workers; (3) addressing emerging and developing issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach.

The Commission maintains discretion to interpret and pursue these priorities as it deems appropriate. Although the SEP defined priorities, they are broad and apply to an expansive landscape of issues. For example, the EEOC consistently has focused on the protection of lesbian, gay, bisexual, and transgender individuals over the past several years as an emerging and developing issue in the workplace.

The EEOC’s efforts in this area resulted in a body of case law across jurisdictions, culminating in the U.S. Supreme Court’s landmark decision in R.G. & G.R. Funeral Homes, Inc. v. EEOC & Bostock v. Clayton County, Georgia, which held that Title VII prohibits discrimination against gay or transgender employees as a form of sex discrimination. The 6-3 decision authored by Justice Gorsuch represented a significant victory for the EEOC during 2020.

Additionally, during 2020, employers saw a flurry of activity at the EEOC relative to its internal practices and procedures, with the Commission pushing to meet objectives prior to the change in administrations on January 20, 2021. Notably, the EEOC made strides to shift its internal decision-making authority, update its conciliation and mediation procedures, and voluntarily scale back some of its authority.

First, on March 10, 2020, the EEOC released information about a significant internal resolution that reassigned authority for certain high-stakes litigation decisions within the Commission. The resolution reined in many of the powers previously held by the EEOC’s General Counsel and, in turn, the Commission’s various Regional Attorneys, who historically have wielded considerable discretion over the types of lawsuits that they file and the legal positions that they advance. Under the new resolution, the Commissioners – and not the General Counsel (or Regional Attorneys) – will make key litigation decisions concerning systemic litigation and various other matters. According to the resolution, the Commissioners now have exclusive authority over the following:

  • Cases involving an allegation of systemic discrimination or a pattern or practice of discrimination;
  • Cases expected to involve a major expenditure of agency resources, including staffing and staff time, or expenses associated with extensive discovery or expert witnesses;
  • Cases presenting issues on which the Commission has taken a position contrary to precedent in the Circuit in which the case will be filed;
  • Cases presenting issues on which the General Counsel proposes to take a position contrary to precedent in the Circuit in which the case will be filed;
  • Other cases reasonably believed to be appropriate for Commission approval in the judgment of the General Counsel. This category includes, but is not limited to, cases that implicate areas of the law that are not settled and cases that are likely to generate public controversy;
  • All recommendations in favor of Commission participation as amicus curiae; and
  • A minimum of one litigation recommendation from each District Office each fiscal year, including litigation recommendations based on the above criteria.

Even with respect to those cases that do not raise the issues enumerated above, the General Counsel is now obligated to communicate about more garden variety cases with the Chair and, at the Chair’s request, shall consult with the Chair to decide whether those cases should be brought before the Commissioners for a vote. If the Chair does not advise the General Counsel within five business days as to whether a particular case must be submitted to the Commissioners for a vote, the General Counsel retains authority to proceed with a lawsuit on her own initiative.

These changes represent a stunning reduction in the General Counsel’s discretion. For many years, the General Counsel and attorneys in the field appeared to exercise broad control over the types of cases the EEOC would file, the theories of law that it would pursue, and the litigation tactics that it would employ. Because the General Counsel was encouraged to delegate that authority to Regional Attorneys across the country, the result was a sometimes fragmented, district-by-district approach to EEOC enforcement litigation.

Second, on July 7, 2020, the EEOC issued a press release announcing two new six-month pilot programs aimed at increasing voluntary resolutions of discrimination charges via changes to its conciliation and mediation programs. Then, on October 8, 2020, the EEOC released the specifics of a Notice of Proposed Rulemaking (“NPRM”) seeking to make additional changes to the conciliation process. In its NPRM, the EEOC acknowledged that, historically, it elected not to adopt detailed regulations relative to its conciliation efforts based on its belief that retaining flexibility over the conciliation process would “more effectively accomplish its goal of preventing and remediating employment discrimination. Although the Commission’s NPRM makes clear that the Commission still believes that it is important to maintain a flexible approach to conciliation, it also acknowledged that, over the last several years, its conciliation efforts resolved less than half of the charges where a reasonable cause finding was made. Specifically, between fiscal years 2016 and 2019, only 41.23% of the EEOC’s conciliations with employers were successful.

Third, on September 3, 2020, the EEOC issued a rare opinion letter regarding the Commission’s interpretation and enforcement of § 707(a) of Title VII, which authorizes the EEOC to sue employers engaged in a “pattern or practice” of discrimination. The opinion letter addressed two seemingly technical questions, including: (1) whether a pattern or practice claim under § 707(a) requires allegations of violations of § 703 or § 704 of Title VII; and (2) whether the EEOC must satisfy pre-suit requirements such as conciliation before it can bring a § 707 case. In a lengthy discussion, the EEOC ultimately concluded that the answer to both questions is “yes.” Notably, the Commission’s letter first acknowledged that “[t]he Commission, like all agencies, is a ‘creature of statute’ that only has the authority that Congress has given it . . . Therefore, in performing its duties, the Commission must follow the statutory language that Congress has provided.” This language signals a new approach from the Commission that voluntarily limits the EEOC’s authority, particularly relative to claims in pattern or practice suits to only concrete allegations of discrimination.

Fourth, on November 2, 2020, the EEOC held its first public meeting of FY 2021 to consider a proposed memorandum of understanding (“MOU”) between the EEOC, the Department of Labor (“DOL”), and the Department of Justice (“DOJ”) aimed at recommitting to collaboration between the agencies and coordinating efforts to protect civil rights in the workplace. Key provisions of the MOU included strengthening procedures for coordination between the three agencies at the field and headquarters levels, including discussions on enforcement priorities and coordinating on issues like religious liberty, conscious protections, and novel or unique issues and bringing greater efficiencies to the investigation process.

Collectively, these changes represent a significant shift in the EEOC’s philosophy and practice toward a curtailment of its own powers and a shift away from using litigation as the blunt-force instrument of choice. These changes are apt to influence the Commission’s approach into 2021 and beyond.

Although the EEOC’s total litigation filings for 2020 reflected a marked decline, the Commission’s “Agency Financial Report” (“AFR”), which was released in November 2020, touted a surge in recoveries on behalf of employees. The AFR provided a snapshot of FY 2020 performance highlights, including the following:

  • During FY 2020, the EEOC recovered a record amount of $535.4 million on behalf of alleged discrimination victims. By comparison, the EEOC recovered approximately $486 million in FY 2019; approximately $505 million in FY 2018; and approximately $484 million in FY 2017.
  • The amount recovered through mediation, conciliation, and settlement dropped from $354 million in FY 2019 to $333.2 million in FY 2020.
  • Conversely, litigation recoveries increased from $39.1 million in FY 2019 to $106 million in FY 2020, the highest in 16 years. The EEOC credits this surge in litigation recovery to its resolution of 165 lawsuits in FY 2020 and stated that it achieved “favorable results” in approximately 96% of its court resolutions.
  • The Commission reported a reduction of the inventory of pending private sector charges by 3.7% – to 41,951 charges – that now represents the lowest inventory of charges in 14 years.

Further, national origin discrimination has continued to become an increasingly large part of the EEOC’s enforcement agenda. The EEOC has expressed in a number of places that it is concerned about the impact that global phenomena can have on worker relations in the United States. Historically, those concerns have been focused on how global terrorism and unrest in the Middle East could lead to discrimination against Muslim or Sikh employees or those of Middle Eastern or South Asian descent, or how illegal immigration issues could give rise to discrimination against Mexican or South and Central American workers. The COVID-19 pandemic could change this focus somewhat moving forward, as the outbreak of a deadly pandemic that had its origin in China has given rise to increased concerns about national origin discrimination against Asian Americans, as cautioned by EEOC Chair Dhillon in a statement issued early during the COVID-19 pandemic.

On the DOL front, like many agencies, its agenda this year was occupied with issues relating to the COVID-19 pandemic. The DOL was busy enforcing and issuing guidance on implementation of the Families First Coronavirus Response Act, with the Wage & Hour Division consistently updating FAQ guidance on the Act. The DOL also issued final “temporary” regulations interpreting the FCRA. Despite the COVID-19 detour, the DOL accomplished many of its other objectives prior to the 2020 election. The agency announced new joint employer and independent contractor rules, discussed above; issued a final rule that allows employers to pay bonuses or other incentive-based pay to salaried, non-exempt employees whose hours vary from week to week; issued joint guidance with the IRS providing that insurers can allow the newly jobless to sign up for a coverage extension known as the COBRA, at any time up to 60 days after the national emergency declaration for COVID-19 is lifted; and announced it would no longer seek “double damages” in FLSA actions where there is no clear evidence of bad faith and willfulness or where the employer has no prior history of violations.

Finally, the National Labor Relations Board (“NLRB”) continued its trend toward more conservative views of labor laws in 2020. It ruled that an employer may discipline workers for making profane, abusive, or offensive statements, so long as the employer’s action is not based on specific anti-union animus, reinstating the previously-reversed Wright Line analysis, and it issued a final rule providing that an entity may be considered a joint employer of a separate employer’s employees only if the two share or co-determine employees’ essential terms and conditions of employment, which are exclusively defined as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. Employers can anticipate, however, that 2021 will look markedly different, as the Biden Administration has reiterated that supporting organized labor will sit atop of the agenda. The Board is currently operating with a vacant seat with a term running through August 2023, and the General Counsel’s term expires in one year. Before any significant change can happen at the NLRB, the Biden Administration will need to fill the two open seats, necessitating additional changes in leadership.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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