The Frustrating EEOC Conciliation Process

by Jones, Skelton & Hochuli, P.L.C.
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Employers are often frustrated when dealing with the Equal Employment Opportunities Commission (EEOC) regarding employee Charges of Discrimination. Many EEOC charges are legitimate and allow current or former employees an appropriate forum in which to remedy employer discrimination. Employers are encouraged to comprehensively investigate charges early, with counsel’s assistance if appropriate, to determine if there is likely exposure on the allegations contained in the charge. If so, employers are well served by attempting to quickly resolve the matter.

However, employers are often frustrated by being forced to expend significant time, effort and funds to defend against what often appear to be groundless claims asserted by employees who do not realize that employers have the right to discipline or terminate employees for legitimate non-discriminatory reasons. Perhaps it is a sign of the times that many employees cannot accept being disciplined for inappropriate conduct, and instead can only conclude the discipline was imposed because of their gender, age, disability, or their purported membership in some other protected class. When an employer has legitimate defenses to a charge, we are generally able to work with them to prepare position statements and assist with the EEOC investigation process, with the end result of having the EEOC dismiss the charge.

Many EEOC charges are eventually dismissed. If not, the EEOC will render a cause determination against the employer. The employer will then be invited to participate in conciliation in an attempt to resolve the Charging Party’s claims. With some charges, the employer has enough information from its investigation to evaluate potential exposure, and can accordingly attempt to resolve the charge. However, conciliation can become an exceptionally frustrating process when the employer sees no objective evidence to support the cause determination, and is therefore faced with either having to settle a seemingly groundless claim or accepting the risk of incurring significant costs to defend an enforcement lawsuit filed by the EEOC. This article discusses the difficulties faced by employers in that situation.

The EEOC is bound by Title VII to engage in conciliation in an attempt to resolve a charge before it can bring an enforcement action against the employer. 42 U.S.C. § 2000e-5(b); 42 U.S.C. § 2000e-5(f)(1).  In other words, if a charge is not resolved at conciliation, the EEOC can proceed to litigate the question of an employer’s liability for alleged discriminatory conduct. E.g., EEOC v. Johnson & Higgins, Inc., 91 F.3d 1529, 1534-35 (2nd Cir. 1996).

Statutory conciliation requirements reveal Congress’s intent to have the EEOC attempt to informally resolve charges and bring employers into compliance with anti-discrimination laws. As one court stated, “[t]he EEOC fulfills this mandate if it (1) outlines to the employer the reasonable cause for its belief that the employer is in violation . . . , (2) offers an opportunity for voluntary compliance, and (3) responds in a reasonable and flexible manner to the reasonable attitude of the employer.” Johnson and Higgins, 91 F.3d at 1534-35. The conciliation process is therefore designed to allow the employer and the EEOC to negotiate how the employer may change its policies and practices to comply with Title VII in addition to determining the amount of damages, if any, the employer will pay to the Charging Party.

The important take-away from how courts interpret the conciliation process is that when Congress enacted anti-discrimination legislation, its intent was to develop a regulatory scheme that emphasizes voluntary proceedings and informal conciliation between an employer and the EEOC, as opposed to a regulatory scheme that encourages litigation. EEOC v. Bloomberg L.P., 967 F.Supp. 2d 802, 811 (S.D.N.Y. 2013). Federal courts have specifically concluded that the conciliation process is intended to avoid over-burdening the federal judicial system -- a system that is not the preferred avenue for resolving employment discrimination disputes. Occidental Life Insurance Company v. EEOC, 432 U.S. 355, 367-68 (1977). The United States Supreme Court went so far as to describe the EEOC’s purpose as follows:

[T]he EEOC does not function simply as a vehicle for conducting litigation on behalf of private parties; it is a federal administrative agency charged with the responsibility of investigating claims of employment discrimination and settling disputes, if possible, in an informal, noncoercive fashion.

Id. at 368.

As so described, the intent of the conciliation process seems entirely reasonable and logical. The frustration with conciliation therefore does not lie in its purpose, but in the EEOC’s application, which often requires employers to evaluate what can be extremely significant EEOC conciliation demands without having the benefit of knowing what evidence the EEOC has to support its cause determination.

EEOC conciliation often requires employers to negotiate with an inequity in knowledge regarding the material evidence relevant to the charge. In normal litigation, disclosure obligations and discovery result in both sides having a relatively equal understanding of the relevant facts, so the parties can engage in an independent evaluation of liability and damages exposure. A settlement judge or private mediator can supplement that evaluation with their own objective analysis. Having the evidence out on the table – or at least most of it – enhances the parties’ ability to reach an acceptable agreement because they are negotiating from the same or similar knowledge base.

In comparison, the EEOC conciliation process often forces the employer to negotiate from a position of ignorance because the EEOC is reticent to inform the employer about the evidentiary basis for the EEOC’s cause determination. This is not a material issue for some charges because the employer’s own investigation may uncover sufficient material facts to allow the employer to fully appreciate the nature and extent of its discriminatory conduct (e.g., an employer finds out after a charge is filed that a supervisor actually did sexually harass a subordinate).

But, what about charges where the employer performs an objective investigation, with the assistance of counsel, and finds little or no facts to support the EEOC’s cause determination? Prior to rendering a cause determination, the EEOC receives information from the Charging Party, from the employer through its position statement, and through the EEOC’s own investigation. Some of this evidence will be known to the employer, but some may not be known because the EEOC does not share the evidence obtained through its own investigation.

As a result, the employer may only know one side of the story, which greatly inhibits its ability to evaluate the EEOC’s conciliation demand. While employers can request additional evidence and information from the EEOC, those requests are seldom responded to in a comprehensive manner because the EEOC takes the position that it is not required to provide evidentiary support for its cause determination.

To an employer, it can seem that the EEOC’s position is, “you violated the law, but we are not going to tell you why we think that – trust us and accept our conciliation terms.” That attitude is arguably inconsistent with the Supreme Court’s belief that the EEOC is required to investigate “claims of employment discrimination and settl[e] disputes, if possible, in an informal, noncoercive fashion. Occidental Life Insurance Company, 432 U.S. at 368 (emphasis added).

Adding to this frustration is the EEOC’s tendency to quickly terminate conciliation discussions without significant negotiation if an employer takes a position that is substantially different from the EEOC’s initial conciliation demand. In the end, employers can be faced with either paying far more than they believe a claim is worth, and accepting intrusive EEOC administrative demands, or with the painful prospect of becoming entwined in an EEOC enforcement action that may last years and result in enormous defense costs.

Employers may often conclude that they have no choice but to reject a conciliation demand and risk proceeding to litigation. However, this choice is contradictory to the entire purpose of the conciliation process which, as outlined above, is to encourage informal resolution without forcing the parties to resort to litigation in federal courts. In fact, the U.S. Senate recently recognized this problem, and others, in the EEOC’s current handling of its administrative responsibilities. On November 24, 2014, the Senate Committee on Health, Education, Labor and Pensions issued a Minority Staff Report entitled “EEOC – An Agency on the Wrong Track? Litigation Failures, Misfocused Priorities and Lack of Transparency Raise Concerns About Important Anti-Discrimination Agency.” The report outlines several concerns regarding the EEOC’s conduct, including a history of being rebuked by federal courts for failing to adequately conciliate charges. The report cites examples where federal courts have criticized the EEOC’s conciliation efforts as violating the agency’s statutory obligation, and dismissing EEOC enforcement actions accordingly.

For example, in EEOC v. Bloomberg, 967 F. Supp.2d 802 (S.D.N.Y. 2013), the Court entered judgment against the EEOC because it sought to prosecute claims by individuals without first going through the conciliation process on those claims. The EEOC’s conciliation demand included more than $6 million each for identified Charging Parties, and a $7.5 million fund to be divided by the EEOC among members of a then-unidentified class of employees allegedly suffering pregnancy discrimination. Although the employer found the discrimination claims lacked merit, it offered each Charging Party $65,000 but stated it could not agree to any fund for the alleged class, “absent further information about other potential claimants.” The EEOC closed conciliation the day after receiving the employer’s response. The EEOC then filed suit on behalf of the purported class of employees suffering pregnancy discrimination. The employer eventually obtained summary judgment on those claims, after which the EEOC sought to continue the case on behalf of twenty-nine claimants who were not previously identified in the charge or during the conciliation process.

The employer brought another motion for summary judgment asserting the claims by the newly identified individuals failed because the EEOC did not engage in conciliation regarding those individuals’ claims. The Court’s opinion granting the employer’s motion is particularly damning of the EEOC’s conduct. It found, “the EEOC spurned any efforts to conciliate individual claims beyond those of the Claimant Parties, let alone offer [the employer] an opportunity to tailor any class-wide conciliatory efforts to the breadth of legitimate claims it might face.” Bloomberg, 967 F. Supp.2d at 813 (emphasis in original). The Court further concluded:

The EEOC’s pre-litigation conduct also failed to meet the requirements of the statute insofar as it failed to make a reasonable cause determination as to the specific allegations of any of the Non-Intervenors prior to filing the Complaint or to afford Bloomberg a meaningful opportunity to conciliate any individual claims beyond those brought by the Claimant Parties.

Id. at 814. The Court therefore granted judgment in favor of the employer on the twenty-nine discrimination claims. It further found that the employer was the “prevailing party,” which could seek an award of attorney’s fees against the EEOC.

The Bloomberg decision and others like it allow employers to file dispositive motions in EEOC enforcement actions if grounds exist for arguing the EEOC failed to conciliate the claims. That defense can be proffered when, as in Bloomberg, there is no actual conciliation effort for specific claims, and in cases where the EEOC’s conduct in conciliation is sufficiently one-sided to constitute the lack of a good faith conciliation effort as required by non-discrimination statues. So, while employers may have little ability to create an equality of information in the conciliation process to develop a fair and reasonable settlement effort, they may be able to raise an ineffective conciliation process as a defense to subsequent EEOC litigation. Employers should therefore be mindful of keeping detailed records of their negotiations with the EEOC in order to support such motions.

Not surprisingly, the EEOC has repeatedly taken the position that federal courts do not have authority to evaluate EEOC conciliation efforts. Despite consistent federal authority to the contrary, in 2013 the Seventh Circuit Court of Appeals adopted that argument and held that EEOC conciliation efforts are not subject to judicial review. EEOC v. Mach Mining, LLC, 738 F.3d 117 (7th Cir. 2013). The Seventh Circuit stated:

We therefore disagree with our colleagues in other circuits and hold that the statutory directive to the EEOC to negotiate first and sue later does not implicitly create a defense for employers who have allegedly violated Title VII.

Id. at 173. The issue of whether employers can assert a defense for failure to conciliate is now before the United States Supreme Court for review. Oral argument was held in January 2015.

A Supreme Court opinion in Mach Mining rejecting the EEOC’s argument would provide even stronger grounds for dispositive motions by employers based on ineffective conciliation efforts. Of course, a contrary finding will put employers back in the position of having to accept the inequities that sometime arise in the EEOC conciliation process.

In conclusion, employers must do what they can to develop an independent understanding of the facts material to an EEOC charge, because the EEOC is unlikely to share the evidence it develops regarding that charge. If faced with a cause determination, the employer should ask the EEOC to further outline its findings even though the EEOC will probably not provide actual evidence discovered during its investigation. Employers should also keep records of their communications with the EEOC regarding the conciliation process.

Importantly, employers are not bound to accept the EEOC’s findings, or the elements of an EEOC demand. If, in the end, an employer truly does not understand the basis for the EEOC’s cause determination, it must balance the weight of its conviction that it did not discriminate against the Charging Party against the possibility of having to defend an EEOC enforcement action. If that analysis leads an employer to ultimately reject the EEOC’s conciliation demand, resulting in subsequent EEOC litigation, the employer may be able to assert a procedural defense that the EEOC did not engage in conciliation in good faith, and thereby violated its statutory responsibility to seek informal resolution of discriminatory claims before instituting litigation.

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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