EEOC Year-End Countdown

Fourth Circuit Deals Body Blow To EEOC Hiring Check Enforcement Litigation

Posted in EEOC Litigation

thBy Gerald L. Maatman, Jr., Pamela Q. Devata, and Jason Englund

Today the U.S. Court of Appeals for the Fourth Circuit dealt a lethal blow to the EEOC’s hiring check enforcement litigation in EEOC v. Freeman, No.13-2365 (4th Cir. Feb. 20, 2015).  The decision affirms a summary judgment ruling by Judge Roger Titus of the U.S. District Court for the District of Maryland last August (discussed here) which dismissed the EEOC’s nationwide pattern or practice lawsuit due to the EEOC’s reliance on “laughable” and “unreliable” expert analysis.  The EEOC had alleged that Freeman, Inc., a service provider for corporate events, unlawfully relied upon credit and criminal background checks that caused a disparate impact against African-American, Hispanic, and male job applicants.  In today’s ruling, the Fourth Circuit unanimously affirmed Judge Titus’ rejection of the “utterly unreliable analysis” of the EEOC’s expert, while a concurring judge went out of his way to chide the EEOC at length for its litigation tactics across this line of systemic background check cases.

The ruling is a stunner. It is well worth a read by any corporate counsel or business executive dealing with EEOC enforcement litigation.

The Fourth Circuit’s Opinion

The Fourth Circuit’s opinion centers on a series of “expert” reports prepared by the EEOC’s statistical expert, Dr. Kevin R. Murphy, which the District Court excluded due to a “plethora of errors and analytical fallacies.”  The Fourth Circuit reviewed the exclusion of the report for “abuse of discretion,” but roundly ratified the District Court’s reasoning, agreeing that the alarming number of errors and analytical fallacies” in Dr. Murphy’s report made it “impossible to rely on any of his conclusions.”

In rejecting Dr. Murphy’s report, the Fourth Circuit catalogued the “mind-boggling number of errors and unexplained discrepancies” identified by Judge Titus, including missing data, basic mathematical errors, and incorrect coding of race and background check results.  The Fourth Circuit placed particular emphasis on the highly selective sample, which analyzed only a limited number of background checks and excluded the data pertaining to “hundreds, if not thousands, of applicants” that were available for the relevant time period.  The Fourth Circuit concluded that the “sheer number of mistakes and omissions in Murphy’s analysis renders it outside the range where experts might reasonably differ.”  Finding that the expert’s report was properly excluded, the Fourth Circuit affirmed summary judgment for Freeman.

This ruling is the latest in a string of defeats to the EEOC in its campaign to challenge employer’s use of background checks in hiring decisions.  The Fourth Circuit decision is particularly noteworthy for a blistering concurrence by Judge Steven Agee.  Judge Agee agreed with the decision of the panel, noting that it “was not a close question,” but wrote separately to excoriate the EEOC for its questionable litigation tactics in the Freeman case and across this line of cases generally.  The concurrence details at length the “record of slipshod work” by the EEOC’s expert in other similar cases, including EEOC v. Kaplan Higher Education Corp., a similar ruling by the Sixth Circuit last year.  Judge Agee outlined a scathing critique of the “slapdash nature of Murphy’s work,” concluding that Murphy “undeniably cherry-picked” and perhaps even “fully intended to skew the results.”  In words that burn upon reading them, the concurrence then turned the criticism to the EEOC directly, noting that “the Commission’s conduct in this case suggests that its exercise of vigilance has been lacking.  It would serve the agency well in the future to reconsider how it might better discharge the responsibilities delegated to it or face the consequences for failing to do so.”

Implications

The Fourth Circuit’s decision is yet another stinging rebuke to the EEOC’s questionable use of statistics in challenging an employer’s use of background checks, and the opinion is another arrow in the quiver for employers defending against the EEOC in systemic litigation.

Readers can also find this post on our Workplace Class Action blog here.

Showdown At The Fifth Circuit Continues: Texas Gets The Last Word On Its Challenge To The EEOC’s Criminal Background Guidance

Posted in EEOC Litigation

By Gerald L. Maatman Jr. and Howard M. Wexler

Last year the U.S. District Court for the Northern District of Texas dismissed a high profile lawsuit brought by the State of Texas against the EEOC regarding the its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII.” The District Court held that Texas lacked standing to maintain its suit because it did not allege that any enforcement action had been taken against it in relation to the EEOC’s guidance.

Texas filed an appeal with the U.S. Court of Appeals for the Fifth Circuit seeking to overturn the dismissal of its novel lawsuit. On January 8, 2015 the EEOC filed its opposition brief  and now Texas has filed its reply brief and it is a “must read” for all employers caught in the crosshairs of the EEOC’s aggressive litigation approach concerning its criminal background guidance.

Case Background

In April 2012, the EEOC issued guidance urging businesses to avoid a blanket rule against hiring individuals with criminal convictions, reasoning that such rules could violate Title VII if they create a disparate impact on particular races or national origins. Like various other states, Texas has enacted statutes prohibiting the hiring of felons in certain job categories. In November 2013, Texas sued the EEOC, seeking to enjoin the enforcement of this guidance, which Texas has nicknamed the “Felon Hiring Rule.”

The District Court dismissed Texas’ lawsuit entirely on a lack of subject matter jurisdiction. Because Texas did not allege that any enforcement action had been taken against it by the Department of Justice (as the EEOC cannot bring enforcement actions against states) in relation to the Guidance, the District Court held that there was not a “substantial likelihood” that Texas would face future Title VII enforcement proceedings from the Department of Justice arising from the Guidance. As standing to bring suit cannot be premised on mere speculation, the District Court held that Texas lacked the necessary standing to maintain its suit against the EEOC.

Texas’ Reply Brief

Texas followed up on the arguments it set forth in its opening brief as to why the District Court incorrectly dismissed its suit for a lack of subject matter jurisdiction. Specifically, Texas asserts:

  • The guidance document is reviewable as a final agency action because unlike a mere general statement of policy, the guidance document binds the EEOC (and its staff) to the position that race-neutral refusals to hire felons can constitute unlawful employment practices.
  • The guidance document constitutes final agency action (and is thus reviewable) because it has material consequences for regulated entities, including that it:
    • purports to preempt state laws that are inconsistent with the EEOC’s understanding of Title VII;
    • erects an elaborate compliance regime for employers whenever a candidate is screen out due to a conviction and exposes employers to potential liability unless they create an intricate compliance apparatus” as a result; and
    • threatens employers with Title VII liability if they do not follow the mandates of the guidance document.

Id. at 6-17.

Implications For Employers

Now that the briefing is concluded, stay tuned for oral arguments on this appeal. This case remains “one to watch,” especially since the EEOC has repeatedly asserted that the guidance “has no legal consequences, nor does it impose any obligations on Texas, its-state agencies, or other employers” in trying to fend off Texas’ appeal. Stay tuned!

Readers can also find this post on our Workplace Class Action blog here.

EEOC Charge Filings Down And Monetary Rewards To Victims Through Investigations And Litigation Plummet

Posted in EEOC Litigation

By Gerald L. Maatman, Jr., Christopher J. DeGroff, and Paul H. Kehoe

Shortly after publishing its FY2016 budget justification (here) asking for an additional $8.6 million and authorization to hire hundreds of additional employees (over FY2014 levels), the EEOC released its FY2014 charge and litigation statistics (here and here).  Charge receipts, while still historically high, fell to 88,778, down from a high of 99,922 in FY 2010 at the height of the last recession.  The EEOC’s rate of finding reasonable cause was down, as was its effectiveness in successfully conciliating those charges.  Indeed, the monetary benefits secured through its investigations plummeted by over $75 million, or roughly 20%.  The EEOC’s litigation program filed 133 merits suits, down roughly 50% from FY2011 and down 65% over FY2005 levels.  In addition, the litigation program secured only $22.5 million for alleged victims of discrimination, down from a high of $168.6 million in FY2004.

A more in depth look at the numbers is below.

The EEOC’s Private Sector Investigations Program

Retaliation claims remain the number one allegation in EEOC charges with 37,955 (42.8%).  Race, sex, and disability discriminations charges were the top three alleged substantive violations. Claims under the Equal Pay Act and the Genetic Nondiscrimination Act were the least alleged violations.

                                                     

On a state-by-state basis, Texas, Florida, and California led the way with 8,035, 7,528, and 6,363 charges, respectively.  Wake Island was the only U.S. Territory without an EEOC charge on file.

The EEOC resolved 87,442 charges under investigation in FY2014.  The agency only found reasonable cause in 2,745 (3.1%) cases.  Between FY2010 and FY2013, the EEOC made reasonable cause determinations ranging from 3,515 and 4,981 cases annually, which represented 3.6% to 4.7% of its charges filed.

By statute, the EEOC must attempt to conciliate all of its reasonable cause findings before initiating litigation.  In FY2014, the EEOC reported that it successfully conciliated 1,031 of its reasonable cause findings.  This represents a significant drop from FY2012 and FY2013, when the EEOC successfully conciliated 1,437 and 1,591 cases, respectfully.

On the whole, the EEOC’s private sector investigation program secured $296.1M for alleged victims of discrimination, down from $372.1M in FY2013 and approximately $365M in both FY2011 and FY2012.

The EEOC’s Litigation Program

The EEOC filed 133 merits cases in FY2013.  While on par with the most recent two fiscal years, this represents a decrease in filings of roughly 50% compared to FY2011 and over 65% compared to FY2005.  The EEOC filed 76 Title VII suits, 49 ADA suits, 12 ADEA suits, 2 Equal Pay suits, 2 GINA suits and 7 suits alleging violations of multiple statutes.

The EEOC’s litigation program secured $22.5 million in monetary benefits for alleged victims of discrimination, down from $38.6 million in FY2013, $91 million in FY2011, and a high of $168.6 million in FY2005.

Implications For Employers

At a time when the EEOC was seeking an expanded budget, as it has in each of the years during the current Administration (here), the EEOC’s performance and recoveries for alleged victims of discriminations were something of a fizzle in FY2014 when compared to its historical results.  With focus on systemic litigation, it appears as that other potentially meritorious claims have received less, if any, attention.  While the President’s request for additional funds is dead on arrival for lack of even Democratic support, it remains to be seen what, if any, increase in appropriated funds will make its way to the EEOC for FY2016.  Regardless, the EEOC is likely feeling significant pressure to post big wins with its budget on the line.  Employers take note:  this may translate to even more aggressive agency enforcement tactics.

Readers can also find this post on our Workplace Class Action blog here.

Take Me To Court: The EEOC Is Allowed To Continue Pursuit Of Individual Prayer Break Religious Discrimination Claims

Posted in Motions for Summary Judgment

By Gerald L. Maatman, Jr. and Jennifer A. Riley

After issuing the EEOC a series of defeats on its pattern or practice claims, on January 28, 2015, Judge Laurie Smith Camp of the U.S. District Court for the District of Nebraska found in EEOC v. JBS USA, LLC, No. 8:10-CV-318 (D. Neb. Jan. 28, 2015), that those rulings do not bar the EEOC’s from pursuing individual claims for religious discrimination and retaliation for prayer break requests.

The EEOC suffered a series of defeats in its Phase I pattern or practice claims. First, the Court granted summary judgment as to the EEOC’s pattern or practice claims for unlawful termination and retaliation, finding that a single mass termination of 80 Muslim employees did not constitute a “pattern or practice.” (Read more here.) Second, after a bench trial, the Court dismissed the EEOC’s pattern or practice claims for failure to accommodate, finding that JBS established that accommodating claimants’ prayer requests would have imposed an “undue hardship” on the company. (Read more here.)

The first round of Phase II, however, went to the EEOC when the Court ruled that its earlier findings did not necessarily preclude the EEOC from pursuing individual claims for religious discrimination or retaliation. The Court refused to apply the doctrine of issue preclusion because the Court’s findings on issues other than undue hardship were not “necessary” to its Phase I rulings.

The Court’s opinions are a useful road map for any employer defending an EEOC pattern or practice lawsuit.

Factual Background

The EEOC filed two lawsuits alleging that JBS USA, LLC, which does business as meat packing company JBS Swift & Company, discriminated against a class of Somali Muslim employees at its facilities in Greeley, Colorado and Grand Island, Nebraska.

In the Nebraska suit, the EEOC alleged that JBS Swift engaged in a pattern or practice of religious discrimination when it failed to reasonably accommodate at least 153 Muslim employees by allowing them prayer breaks. The EEOC also alleged that the company: (1) harassed and retaliated against employees who requested that the company move their evening breaks; and (2) improperly terminated about 80 Muslim employees who “walked out” of the facility in protest of JBS’s refusal to change their evening breaks to accommodate prayer during Ramadan.

On April 15, 2011, the parties agreed to bifurcate discovery and trial into two phases. They agreed to address the EEOC’s pattern or practice claims in Phase I and to address all individual claims for relief, as well as any claims for which no pattern or practice was found, in Phase II. Id. at 4.

From May 7, 2013 through May 13, 2013, the Court held a trial on the EEOC’s pattern or practice claims.

The Court found that: (a) JBS did not discipline or discharge any of its Muslim employees for praying; (b) that JBS terminated Somali-Muslim employees who “walked out” of the plant for withholding work and violating the Collective Bargaining Agreement; and (c) that Individual Plaintiffs’ requested religious accommodations would impose an undue hardship on JBS. Id. at 5-6.

JBS then moved for partial summary judgment on two grounds. First, it argued that the Court’s findings in Phase I precluded the Individual Plaintiffs from pursuing claims of religious discrimination and retaliation in Phase II.  Second, it argued that the EEOC failed to meet preconditions for bringing its Phase II claims.

The Court’s Opinion

The Court granted in part JBS’s motion for summary judgment with respect to issue preclusion and denied without prejudice JBS’s motion with respect to preconditions to suit.

JBS claimed that the Court’s findings establish that its reason for termination was legitimate and nondiscriminatory and preclude Individual Plaintiffs from arguing that JBS terminated or otherwise retaliated against them for requesting religious accommodation. Id. at 6.

The Court noted that a party asserting issue preclusion must demonstrate several elements. It must show that the non-moving party was in privity with a party to the original lawsuit, that the issue it seeks to preclude is the same as an issue actually litigated in the prior action, was determined by a valid and final judgment, and was essential to the prior judgment. Id.

First, the Court found privity between the EEOC and the Individual Plaintiffs because, even though the EEOC could not seek damages for the Individual Plaintiffs in Phase I, the interests of the EEOC and those of the Individual Plaintiffs did not diverge. Id. at 7-8.

Second, the Court found identity of issues because the underlying facts supporting the EEOC’s pattern or practice claims in Phase I form the basis for the Individual Plaintiffs’ claims. As the EEOC previously had asserted, the claims “are closely related and stem from essentially the same factual allegations.” Id. at 9.

Third, the Court found that the parties fully litigated JBS’s undue hardship defense and that its findings with respect to such issue were essential to the Phase I judgment. Id. at 11.

Fourth, however, the Court determined that its other findings with respect to the Plaintiffs’ remaining individual claims were not essential to its Phase I judgment. Id. at 12. Although the Court found that Somali-Muslim employees were not disciplined for praying, and their terminations were due to their violation of the CBA, “the Court did not need to address all the EEOC’s claims because JBS proved its undue hardship defense.” Id. at 13.

JBS also moved for summary judgment on the ground that the EEOC failed adequately to conciliate each individual’s claim prior to bringing suit. The Court refused to resolve the issue because the U.S. Supreme Court currently is considering in Mach Mining, LLC v. EEOC whether and to what extent a court may enforce the EEOC’s duty to conciliate. Id. at 18. The Court held that it would not preclude JBS from reasserting its position following the Supreme Court’s ruling.

Implications For Employers

The Court’s opinions in EEOC v. JBS are a useful roadmap for employers litigating a pattern or practice case against the EEOC. During any bifurcated case proceeding along the Teamsters method of proof, issues decided during Phase I might be determinative of claims set for litigation in Phase II. Although the Court in JBS allowed the EEOC to pursue individual claims in Phase II, and did not find her earlier opinions binding, the Judge’s rulings provide a useful guidepost for predicting the outcome of the remainder of the case.

Readers can also find this post on our Workplace Class Action blog here.

Seventh Circuit Holds that EEOC Can Pursue Employers’ Other Businesses For Violations Of Federal Employment Law By Dissolved Entities

Posted in EEOC Litigation

By Christopher M. Cascino and Gerald L. Maatman, Jr.

In EEOC v. Northern Star Hospitality, Inc., No. 14-1660, 2015 WL 353997 (7th Cir. Jan. 29, 2015), the U.S. Court of Appeals for the Seventh Circuit held that companies under common ownership can be liable as successor entities to companies that are incapable of paying judgments in federal employment actions if there is continuity between the operations and workforce of the entity that is incapable of paying the judgment and another of the employer’s businesses. Employers need to be aware that the EEOC and the plaintiff’s bar can use this theory to try to reach other corporations that the employers own, even if the EEOC and these plaintiffs cannot pierce the corporate veil to reach those corporations.

Case Background

Dion Miller, an African-American, was a cook for Northern Star Hospitality, Inc. d/b/a Sparx Restaurant (“Sparx” or “Hospitality”). On October 1, 2010, when Miller arrived at Sparx to begin his shift, a co-worker told him to look in the kitchen cooler. In the cooler was a one-dollar bill with a noose drawn around President Washington’s neck and a sketch of a hooded Klansman on horseback with “KKK” written on the hood. Also in the cooler was a picture of the late Gary Coleman.

Miller had a co-worker take a photograph of the display in the cooler and lodged a complaint with the restaurant’s general manager. The general manager learned that two of Miller’s superiors – the kitchen manager and kitchen supervisor – admitted that they were responsible for the display. As a result of the complaint, the kitchen supervisor was given a warning, with the kitchen manager receiving no discipline at all.

After Miller’s complaint, the kitchen manager and supervisor began to criticize Miller’s performance. Miller was then terminated less than one month after the display was put up.

On March 27, 2012, the EEOC filed suit against Hospitality on Miller’s behalf, claiming that he was the victim of racial harassment and that he was wrongfully terminated for opposing that harassment. On September 7, 2012, the EEOC amended its complaint to add Northern Star Properties, LLC (“Properties”) and North Broadway Holdings, Inc. (“Holdings”) and claimed that they also were liable for this conduct. By this time, Sparx had closed and Hospitality had dissolved. Sparx was replaced by a Denny’s Restaurant franchise owned by Holdings, while Properties owned the building where Sparx and the Denny’s Restaurant were located. Hospitality, Properties, and Holdings were all owned by the same individual.

After trial, the jury awarded Miller $15,000 in compensatory damages for wrongful termination while denying him punitive damages. The EEOC petitioned the district court to award Miller front and back pay, as well as a tax award to off-set income tax liability on the back pay award.  The district court granted the EEOC’s request for back pay and awarded Miller an additional $43,300.50, plus $6,495 to off-set his resulting tax liability. Because Hospitality no longer existed and thus could not pay these damages, the EEOC sought to have Properties and Holdings pay these damages either on a successor liability theory or via a pierce of Hospitality’s corporate veil. The district court granted the EEOC’s request under both theories. The defendants appealed.

The Seventh Circuit’s Ruling

The Seventh Circuit began its analysis by noting that “successor liability is ‘the default rule . . . to enforce federal labor or employment laws.’” Northern Star Hospitality, 2015 WL 363997 at *3 (quoting Teed v. Thomas & Betts Power Solutions, LLC, 711 F.3d 763, 769 (7th Cir. 2013)). This is because “[w]ithout [successor liability], ‘the victim of the illegal employment practice is helpless to protect his rights against an employer’s change in the business.’” Northern Star Hospitality, 2015 WL 363997 at *3 (quoting Musikiwamba v. ESSI, Inc., 760 F.2d 740, 746 (7th Cir. 1985)).

The Seventh Circuit laid out “a five-factor test for successor liability in the federal employment-law context: (1) whether the successor had notice of the pending lawsuit; (2) whether the predecessor could have provided the relief sought before the sale or dissolution; (3) whether the predecessor could have provided relief after the sale or dissolution; (4) whether the successor can provide the relief sought; and (5) whether there is continuity between the operations and work force of the predecessor and successor.” Northern Star Hospitality, 2015 WL 363997 at *3.

The Seventh Circuit found that the first factor was satisfied, reasoning that Holdings had notice of the lawsuit because both Holdings and Hospitality were owned by the same individual. Id. With respect to the second factor, the Seventh Circuit determined that, because Hospitality paid a number of its bills before its dissolution, as well as several bills that would benefit Holdings, it could have paid the judgment prior to its dissolution. Id. at *4. It held that, since Hospitality no longer existed, Hospitality could no longer pay the judgment, thus satisfying the third factor. Id. It found that the fourth factor was satisfied since Holdings was a going concern and thus could pay the judgment entered in favor of Miller. Id.

With respect to the fifth factor, the Seventh Circuit ruled that there was a continuity between the operations and workforce of Hospitality and Holdings because “[Holdings] moved into a building prepared for it by Hospitality to the specifications of the Denny’s Corporation, hired more than half of the employees previously employed by Hospitality, hired Hospitality’s management team, the members of which had been trained by Denny’s at Hospitality’s expense, and used the same work rules for the employees that Hospitality had used at Sparx. In other words, Holdings carried on the restaurant business at 1827 North Broadway, albeit with a different name and theme.” Id. Having concluded that all the factors were satisfied, the Seventh Circuit held that Holdings was liable as a successor to Hospitality. Id. It held this even though Holdings did not exist at the time of the alleged wrongful conduct. Id.

Having decided that Holdings was liable as a successor to Hospitality, the Seventh Circuit declined to review whether the district court was correct when it decided to pierce the corporate veil of Hospitality to reach Properties and Holdings. Id. at *5. It further declined to consider whether Properties was also a successor entity of Hospitality. Id. at *4.

Implications For Employers

Employers need to be aware that, under the holding of EEOC v. Northern Star Hospitality, liability under federal employment laws can follow them even if the company that purportedly violated those laws no longer exists or has assets. This is true even without a piercing of the corporate veil.

Employers who are concerned about federal discrimination or wage and hour liability in a dissolving or otherwise expiring company should take steps to make sure that they establish that there is no continuity between the operations and workforce of the dissolving entity and any of the employer’s other businesses. Employers should make sure that the dissolving entity does not pay for anything that will be used by a successor entity or the employer’s other businesses. Employers should further establish new work rules for successor entities. Finally, employers should also consider not hiring the employees of the dissolving entity to work for the successor entity or the employers’ other businesses. Whether one or some combination of these proposed steps would, as a matter of law, prevent successor liability will need to be determined in future litigation. Stay tuned.

Readers can also find this post on our Workplace Class Action blog here.

Another Message To The EEOC On Wellness Plans: Targeting Incentives Is Inconsistent With The Affordable Care Act

Posted in Regulatory / Guidance Issuance

By Paul H. Kehoe

On January 29, 2015, the U.S. Senate Committee on Health, Education, Labor & Pensions held a hearing on employer wellness plans. While bipartisan sentiment may be difficult to find in Washington, it is clear that both Republican and Democrat Senators view wellness plans favorably, recognize the crucial role that wellness plans play in lowering health care costs, and are concerned with the Equal Employment Opportunity Commission’s litigation challenging wellness plans, especially in the absence of an articulated policy by the EEOC.

The issue is fairly straightforward. Under the Affordable Care Act (“ACA”), and its implementing regulations issued by the Departments of Labor, Treasury and Health and Human Services, employers may offer financial incentives to employees up to 30% of their health care premiums for participating in and/or reaching certain health outcomes in a wellness plan (and up to 50% for smoking cessation programs). Read more here. Under the Americans With Disabilities Act (“ADA”), medical examinations and/inquiries (including biometric screening) are not permitted unless such inquiries are either job related and consistent with business necessity or voluntary.

Late last year, the EEOC filed litigation against Honeywell International seeking a preliminary injunction to stop it from implementing its wellness plan, which required employees to undergo biometric testing. Employees who chose not to participate forfeited a contribution to a health savings account of up to $1,500, were assessed a $500 surcharge, and were potentially subjected to a $1,000 nicotine surcharge. Ultimately, the EEOC’s theory was that Honeywell’s incentives offered through its wellness program made participation non-voluntary under the ADA even if the incentives complied with the ACA and its implementing regulations. The EEOC lost the first round of motions in the case (here is our post on that litigation). Given the seemingly inconsistent position between the ACA, regulations issued by three Cabinet-level agencies, and the EEOC’s litigation position, some employers have limited their wellness programs and related incentives, or have even chosen not to offer them.

From both sides of the aisle, the tenor of the hearing was clear – Congress permitted incentives for wellness plans that now the EEOC is litigating against. Senator Alexander (R-TN) remarked (link here) that “EEOC is sending a confusing message to employers – reliance on Obamacare’s authorization of wellness programs does not mean you won’t be sued.” Ranking Member Murray (D-WA) said “[I]t has been exciting to see businesses nationwide to respond to incentives included in the [ACA].” In addition, Sen. Mikulski (D-MD) noted that she was “very frustrated to hear that we are now arguing over the EEOC giving regs and rules… [G]iven the uncertainty of the law, the wellness programs are going to pull back.”

These sentiments follow a clear articulation by the White House on December 3, 2014 that the EEOC’s position “could be inconsistent with what we know about wellness programs and the fact that we know that wellness programs are good for both employers and employees.”

Implications For Employers

The Senate HELP Committee clearly expects the EEOC to issue regulations on the issue. Indeed, such regulations have been included on the EEOC’s most recent Regulatory Agenda. However, all stakeholders like to ask for clarity unless the clarity they receive is not the clarity that they want. As such, when proposed regulations are published, it will be critical for employers interested in offering wellness plans to consider submitting comments to reflect their support of wellness plan incentives up to the limits authorized by Congress. We will keep you updated on any additional developments regarding wellness plans and forthcoming EEOC proposed regulations.

Readers can also find this post on our Workplace Class Action blog here.

Showdown At The Fifth Circuit Continues: The EEOC Files Its Opposition Brief In Texas’ Challenge To Criminal Background Guidance

Posted in EEOC Litigation

By Gerald L. Maatman Jr. and Howard M. Wexler

Last year, the U.S. District Court for the Northern District of Texas dismissed a high profile lawsuit brought by the State of Texas against the EEOC regarding the its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII.”  The District Court held that Texas lacked standing to maintain its suit because it did not allege that any enforcement action had been taken against it in relation to the EEOC’s guidance.

Texas filed an appeal with the U.S. Court of Appeals for the Fifth Circuit seeking to overturn the dismissal of its novel lawsuit.

On January 8, 2015, the EEOC filed its opposition brief in the Fifth Circuit and it is a “must read” for all employers caught in the crosshairs of the EEOC’s aggressive litigation approach concerning its criminal background guidance.

Case Background

In April 2012, the EEOC issued guidance urging businesses to avoid a blanket rule against hiring individuals with criminal convictions, reasoning that such rules could violate Title VII if they create a disparate impact on particular races or national origins. Like various other states, Texas has enacted statutes prohibiting the hiring of felons in certain job categories. In November 2013, Texas took the unprecedented step of suing the EEOC, seeking to enjoin the enforcement of this guidance, which Texas has nicknamed the “Felon Hiring Rule.”

The District Court dismissed Texas’ lawsuit due to lack of subject matter jurisdiction. Because Texas did not allege that any enforcement action had been taken against it by the Department of Justice (as the EEOC cannot bring enforcement actions against states) in relation to the Guidance, the District Court held that there was not a “substantial likelihood” that Texas would face future Title VII enforcement proceedings from the Department of Justice arising from the Guidance. As standing to bring suit cannot be premised on mere speculation, the District Court held that Texas lacked the necessary standing to maintain its suit against the EEOC.

EEOC’s Opposition Brief

In its Fifth Circuit brief, the EEOC sets forth several reasons why the District Court correctly dismissed Texas’ the suit for a lack of subject matter jurisdiction. Specifically, the EEOC asserts:

  • The guidance document is not judicially reviewable because it “has no legal consequences [as it is not a final agency action], nor does it impose any obligations on Texas, its-state agencies, or other employers.”
  • Texas lacks standing as it has not demonstrated that is has already, or will suffer any injury based on the Guidance.  To this end, the EEOC labels Texas’ concerns as “purely speculative.”
  • Texas’ challenge is not ripe for review because “because the Guidance has not caused Texas any injury, nor is injury imminent, there is no sufficiently ripe case or controversy upon which to base Article III jurisdiction.”

Id. at 11-13.

Next up in the case will be Texas’ reply brief, and then the Fifth Circuit will set the case for oral argument.

Implications For Employers

The EEOC continues to hang its hat on the argument that federal courts lack jurisdiction to hear such a case because the guidance is not legally binding and does not constitute a final agency action. This case remains “one to watch” given the stakes involved and the extent to which the EEOC has “gone to the mat” defending its criminal background guidance document. We will be sure to keep our readers informed as this case makes its way through the appeals process. Stay tuned!

Readers can also find this post on our Workplace Class Action blog here.

U.S. Supreme Court Hears Oral Argument In Mach Mining v. EEOC

Posted in EEOC Litigation

By Gerald L. Maatman, Jr.

This morning the U.S. Supreme Court heard oral arguments in Mach Mining v. EEOC.

Mach Mining v. EEOC may be one of the most important cases on EEOC litigation issues in years. The stakes are high for employers and workers alike (see pre-argument media reports here).

The precise issue the case presents is whether federal courts can review and enforce the EEOC’s statutory obligation to try to negotiate an end to an employer’s alleged unlawful employment practices before suing for a judicial remedy; in this context, it concerns the parameters of the Commission’s obligation to engage in good faith conciliation as required by Title VII.

We were there at the SCOTUS today (as Seyfarth filed an amicus brief on behalf of the employer – a copy is here), and witnessed the lively questioning by the Justices. Here is our analysis of the course of the arguments (a copy of the hearing transcript is here).

A Thumbnail Sketch Of The Key Facts Of The Case

Title VII requires that before filing suit, the EEOC to “endeavor to eliminate” alleged unlawful employment practices by “informal methods of conference, conciliation, and persuasion.” It may only file suit if it “has been unable to secure . . . a conciliation agreement acceptable to the Commission.”

In this case, Mach Mining and the Commission spent nearly two years litigating whether the EEOC’s alleged failure to conciliate in good faith was a sufficient ground for dismissing the case. Following discovery and disputes over the scope and significance of the EEOC’s investigation and conciliation efforts, the EEOC moved for summary judgment on the issue of whether the alleged failure to conciliate was an affirmative defense to its suit. The District Court denied the motion, but certified the question for interlocutory review. The U.S. Court of Appeals for the Seventh Circuit reversed. It rejected the company’s defense notwithstanding its recognition that its decision made it the first federal circuit to do so. Other federal circuits have adopted differing approaches to reviewing the sufficiency of conciliation efforts, with some circuits (the Second, Fifth, and Eleventh) undertaking a multi-part inquiry into the sufficiency of the process, and others (the Fourth, Sixth, and Tenth) requiring instead that the Commission’s efforts meet a minimal level of good faith. The SCOTUS accepted the case to determine this circuit split.

The Employer’s Position

Mach Mining’s briefing pointed to Title VII’s statutory language, its legislative history and statutory scheme, as well as public policy, to support its arguments that the EEOC’s obligation to conciliate should be subject to judicial review. In the defense’s view, the statutory language creates a mandatory condition precedent to litigation. Title VII’s legislative history reflects that originally, the EEOC’s only enforcement authority was the ability to engage in conciliation; cooperation and voluntary compliance remained the preferred means for achieving the goal of equal employment opportunity even after the statute was amended in 1972 to authorize the EEOC to bring suit. Mach Mining’s briefing further argued that pre-conditions to suit such as the conciliation requirement are presumptively enforceable absent clear congressional intent to the contrary, and that no such congressional intent is evident here.

Mach Mining also attacked the Seventh Circuit’s opinion below that Title VII’s confidentiality provision – which prohibits anything said or done during conciliation to be made public or used as evidence in a subsequent proceeding absent written consent – precludes review. In Mach Mining’s view, disputes over the sufficiency of the conciliation process can be resolved while preserving confidentiality (for example, by placing the relevant evidence under seal). Mach Mining cited to other contexts in which federal courts and other adjudicative bodies have reviewed conciliation obligations, including the National Labor Relations Act’s requirements that employers bargain in good faith.  Mach Mining also offered out a number of principles that, it suggested, could provide a basis for objective review of the sufficiency of the EEOC’s conciliation efforts.

The Government’s Position

The EEOC’s briefing asserted opposite conclusions from the same statutory language, history, and context cited by the defense. In the government’s view, the statute’s plain language does not specify any particular process for agency conciliation and leaves the adequacy of the conciliation process to the Commission’s sole discretion. Moreover, the EEOC contended that Title VII’s confidentiality provision precludes judicial review of what transpired during the conciliation negotiations. In the EEOC’s view, analogous statutory schemes also preclude review. For example, the EEOC’s informal conciliation process would not be reviewable under principles established under the Administrative Procedure Act. Moreover, it argued that judicial review of the adequacy of conciliation efforts would undermine effective enforcement efforts because, if employers believe that litigation is likely, they would have an incentive to treat every communication during conciliation as a potential exhibit in a dispute over the adequacy of conciliation. Judicial review also would chill full and frank settlement discussions. The EEOC posited that if the SCOTUS were to endorse judicial review of conciliation, employers would have incentives to raise inadequate conciliation argument defenses as a matter of course. Those arguments would burden the federal courts with mini-trials on this collateral issue, and would delay, and sometimes avoid, adjudications on the merits.

Today’s SCOTUS Oral Argument

Both sides encountered lively questioning from the Justices at this morning’s hearing.

If a questioning scorecard is indicative of the issues, it broke out this way by our rough tally:

Questions To Mach Mining – 31 in the opening argument and 7 questions in the rebuttal argument [questions by Justice – Ginsburg (10), Kagan (8), Scalia (6), Sotomayor (6), Kennedy (4), Breyer (3), and Roberts (1)]

Questions To The EEOC – 40 in the opposition argument [questions by Justice – Scalia (13), Roberts (12), Breyer (5), Kennedy (4), Sotomayor (3), Kagan (2), and Ginsburg (1)]

The most pressing questions fell on the Government and its position that the EEOC’s actions are not judicially reviewable. As Chief Justice Roberts asked, “Can the employer get judicial review if the EEOC lies about conducting conciliation”? When counsel for the EEOC assured the SCOTUS that such would never happen, the Chief Justice retorted, “well, that assumes the EEOC is always right…’ and that he “was very troubled by the EEOC’s position” in saying “just trust us….”  Justice Breyer also cast criticism on the Government’s position, remarking that “I thought it was hornbook law that agency conduct was judicially reviewable.” And Justice Scalia was even more direct, insofar as he asserted that the EEOC’s argument – that “you want to be exempt from judicial review” – “is extraordinary.”

The Justices also pressed both sides to explain the indicia or rudiments of the review a federal judge might conduct of the conciliation process. Justices Kagan, Ginsberg, and Sotomayer were particularly troubled by the confidentiality concerns attendant review of settlement negotiations. Justices Breyer and Kennedy also questioned how searching any review might be given the broad discretion afforded the EEOC under the statute.

Employers have criticized the Commission’s position in systemic litigation of conciliation by “take-it-or-leave-it” demands (i.e., “we are suing on behalf of a group of workers, and give us millions of dollars and we will distribute it as we deem appropriate…”). This issue also came up in the SCOTUS argument. In this context, Justice Roberts asked “how can the EEOC conduct conciliation without providing the names and damages” of allegedly injured workers? The Government argued that the Letter of Determination typically gives that information, and that any review of the conciliation process would prompt mini-trials that detract from the “main event” of the case – i.e., to try the issue of discrimination. With respect to that suggestion, Justice Roberts remarked that the EEOC’s position failed to take account of Title VII”s preference for conciliation before litigation, and settlement as a priority over litigation.

What’s Next

A future SCOTUS ruling should resolve a split in the lower federal courts about whether an employer can secure the dismissal of a suit on the basis that the EEOC failed to engage in good-faith conciliation before filing suit and what the parameters of that duty may look like in terms of the rudiments of the conciliation process.

Reading the tea leaves at the Supreme Court is fraught with hazard. The themes of the Justices’ questioning, however,  left no doubt but that most of the Justices seem to ascribe to the notion that the Commission’s conduct ought to be reviewable. We expect a decision in a month or two, so stay tuned.

Readers can also find this post on our Workplace Class Action blog here.

Year-Starting Stumbles: The EEOC’s Aggressive Tactics Shot Down Twice In The First Week Of 2015

Posted in EEOC Litigation

By Christopher J. DeGroff, Matthew J. Gagnon, and Gerald L. Maatman, Jr.

As we reported in our recent Annual EEOC Report (found here), the EEOC prides itself on its aggressive litigation theories and strategies.  But just one week into 2015, the EEOC’s envelope-pushing tactics have already been shot down twice.  In  EEOC v. Performance Food Group, Inc., No. 1:13-CV-01712 (D. Md. Jan. 6, 2015), the U.S. District Court for the District of Maryland denied the EEOC’s efforts to impose harsh sanctions on an employer that the agency believed was late in complying with its discovery obligations.  And in EEOC v. Royal Caribbean Cruises, Ltd., No. 13-13519 (11th Cir. Jan. 6, 2015), the EEOC failed yet again to enforce an overbroad subpoena after having lost on that issue on three separate occasions: first before the Magistrate Judge, then before the District Court Judge, and then again on appeal before an Eleventh Circuit panel.

If these decisions are any indication, it will be another year in which the agency pushes the limits of the legal envelope in terms of tactical advantage, leaving it to the Courts to police the boundaries of what is reasonable.  Here is our take of these two early 2015 cases and what employers can learn from them:

EEOC v. Performance Food Group, Inc., No. 1:13-CV-01712 (D. Md. Jan. 6, 2015)

In EEOC v. Performance Food Group, Inc., the EEOC sought sanctions against a foodservice distribution company in a gender discrimination case for allegedly failing to meet discovery deadlines.  Specifically, the EEOC argued that the company had failed to produce paper applications for some of its facilities and certain employee data that the agency had subpoenaed from the company’s third-party vendors.  The company argued that sanctions were unwarranted because it had provided most of the requested information within the time frame set by the Court and had been acting in good faith to produce the remaining documents and information.  According to the company’s filings, it was working to gather and produce all requested information and had kept the agency informed of its progress.  The company also produced approximately 300,000 pages of additional documents along with and immediately after filing its response brief to the EEOC’s motion.  The EEOC was unimpressed by these efforts and asked the Court to impose severe sanctions.  In addition to asking the Court to require the company to pay the EEOC’s attorneys’ fees for the filing of the motion, it also requested that the Court impose a daily monetary penalty for each day that the company fails to produce the requested documents.  The agency even criticized the company’s delayed production, arguing that the document “dumps” were disorganized and that they made it impossible to ascertain whether the company had complied with its discovery obligations.

The District Court of Maryland flatly rejected the EEOC’s motion.  The Court acknowledged that the company’s document production was late, but concluded from its own review of the record that sanctions were not warranted.  The Court cautioned the employer, however, noting that while it understood that the document production would be voluminous and would cover an extensive period of time and many different facilities, it still expected the company to comply with its discovery obligations in a timely manner.  The Court also appeared to warn the EEOC, noting that in the case of anticipated delays in production, it expected that counsel would engage in an open and cooperative dialogue to resolve the dispute and would only bring it to the attention of the Court if it was necessary to do so.

Employers should read the Performance Food Group case as a cautionary tale:  the EEOC can and will take unreasonable – and at times draconian – positions in discovery disputes, even in the face of reasonable efforts by an employer.  This case highlights the EEOC’s troubling view that business records and evidence are ready-made for litigation; even information and records that were never contemplated to be produced in later government-initiated litigation.

EEOC v. Royal Caribbean Cruises, Ltd., No. 13-13519 (11th Cir. Jan. 6, 2015)

In EEOC v. Royal Caribbean Cruises, Ltd., the Eleventh Circuit denied for the second time the EEOC’s attempt to enforce a subpoena against Royal Caribbean that could only charitably be called “overbroad.”  This termination case arose out of a single charge of disability discrimination.  The EEOC’s subpoena sought, among other things, a list of all employees who were discharged and applicants who were not hired, including relevant identifying information as well as employment applications and other related documents.  At the District Court level, the Magistrate Judge recommended that the subpoena be denied because the information sought was not relevant to the charge and that compliance with the disputed portions of the subpoena would be unduly burdensome.  The District Court affirmed and adopted that recommendation.  The EEOC appealed in August, 2013.  On November 6, 2014, a panel of the Eleventh Circuit upheld the District Court’s decision.  The EEOC petitioned for rehearing en banc on December 19, 2014.  That petition was denied on January 6, 2015.

The Eleventh Circuit acknowledged that certain courts have construed the EEOC’s administrative subpoena power quite broadly.  But the Court reasoned that it could not be construed so broadly as to make the requirement that the subpoena be relevant to the underlying charge a mere “nullity.”  The court faulted the EEOC for not making it clear how the requested information bore on the subject matter of the individual complaint.  This was especially true here, where the employer actually stipulated that it had terminated the charging party due to his medical condition.  The Eleventh Circuit reasoned that it would not be necessary to introduce statistical data to determine whether a facially neutral explanation for an adverse employment action was merely a pretext for discrimination.  Nor did the court credit the EEOC’s argument that it should be entitled to expand its investigation to uncover other potential violations and victims of discrimination.  Although the Court allowed that such information would be “related” to the charge, it would not countenance expanding the investigation to include information that is “related” but not necessarily “relevant” to the charge.  This case joins several other instances (that can be reviewed here, here, and here) where the EEOC has doggedly pursued subpoenas.  As reported here, the EEOC stepped up its enforcement actions in FY 2014, and we expect this trend to continue in 2015.

Implications For Employers

These decisions demonstrate that the EEOC is far from giving up on the aggressive litigation tactics that have defined EEOC litigation over the past few years.  Although these are two favorable decisions for employers, the agency will undoubtedly win some of these disputes.  Employers would be well served to keep abreast of these developments so that they do not fall victim to these types of strategies in the future.

Readers can also find this post on our Workplace Class Action blog here.

2014’s Top 5 Most Intriguing Decisions In EEOC-Initiated Litigation (And A Preview Of Our Annual EEOC Litigation Report)

Posted in EEOC Litigation

By Christopher DeGroff, Matthew Gagnon, and Gerald L. Maatman, Jr.

Every year at this time we like to offer our loyal readers a pre-publication preview of our annual report on developments and trends in EEOC-initiated litigation. That book, entitled EEOC-Initiated Litigation: Case Law Developments In 2014 And Trends To Watch For In 2015 is set for distribution in early January 2015. This publication focuses on EEOC-related litigation and explores the key drivers of the EEOC’s enforcement and litigation activity in FY 2014, as well as our examination of what to expect in terms of enforcement litigation in 2015 and beyond. This publication will be offered for download as an eBook. To order a copy, please click here. 

As we look back at the last year, certain EEOC-initiated cases catch our eye as intriguing; intriguing either for their impact on the legal landscape, or for the fact that they offer a glimpse at the often puzzling and, at times, downright frustrating agency agenda.

With that, let’s take a look at the 5 most intriguing cases from 2014:

1.    EEOC v. BMW Manufacturing Co., LLC, Case No. 13-CV-1583, 2014 U.S. Dist. LEXIS 169849 (D.S.C. Dec. 2, 2014).   

BMW scored yet another win for employers in the EEOC’s long-running challenge to employers’ use of criminal and credit background checks in hiring and other employment decisions. As with other cases pursued by the agency under similar theories, the EEOC filed suit against BMW claiming the company’s criminal conviction background check policy had a disparate impact on black employees and applicants and was not job-related or consistent with business necessity. The EEOC has suffered some significant defeats pursuing this theory, including a stinging loss in the Sixth Circuit in the case, EEOC v. Kaplan Higher Education Corp., in which the Sixth Circuit harshly criticized the EEOC for using a “homemade” methodology for determining race to compile its statistical evidence. As we previously noted, the Sixth Circuit threw out the EEOC’s case after concluding that the agency’s methodology for determining race was “crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.” It was a stunning rebuke of the EEOC’s method for proving disparate impact in these types of cases.

Aside from the expert evidence, another concern for the Court in the Kaplan case and other similar cases has been the fact that the EEOC also uses criminal and credit history background checks in its own hiring practices. Naturally, it is difficult for the EEOC to argue that the use of those checks is not job-related and consistent with business necessity when it engages in the same practices itself. That was the issue that was decided against the agency yet again in EEOC v. BMW Manufacturing Co. BMW sought discovery into the EEOC’s personnel policies relating to the use of background checks. The Magistrate Judge originally ruled in favor of the agency, holding that BMW failed to explain how that information would prove that its own criminal conviction policy was job-related or consistent with business necessity. But District Court Judge Herlong disagreed, finding that the EEOC had failed to establish why its discovery objections were proper. Unless and until the EEOC changes its own personnel policies, the fact that the agency also uses credit and criminal history checks in its hiring decisions will continue to be a stumbling block as it tries to pursue other employers under this theory.

2.    State of Texas v. EEOC, Case No. 5:13-CV-255 (N.D. Tex. Aug. 20, 2014).

The EEOC’s focus on the use of credit and criminal history has also come under political scrutiny and criticism, including a case brought by the State of Texas to enjoin the enforcement of the EEOC’s guidance on this issue. As we previously blogged about here, on April 25, 2012, the EEOC issued its Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. Texas brought suit in the U.S. District Court for the Northern District of Texas in November 2013 seeking to enjoin the enforcement of that guidance, arguing that it interfered with Texas statutes that prohibit the hiring of felons in certain job categories.

As we recently discussed here, the Court dismissed the suit, holding that Texas lacked standing to challenge the guidance because the state had not alleged that there had been any enforcement action taken against it by the Department of Justice in relation to the EEOC’s guidance. This rendered the state’s attempts to establish standing mere speculation because it could not show that there was a “substantial likelihood” that Texas would face Title VII enforcement proceedings. Texas has appealed that decision to the Fifth Circuit and the briefing in that case is underway. The core of the state’s argument is that because the EEOC’s guidance is in direct conflict with state regulations and statutes, and because the EEOC’s guidance was expressly intended to preempt state law hiring policies, that should confer Article III standing on the state to defend its laws. This will be an interesting case to watch as the EEOC continues to struggle to gain traction in its push to restrict the use of criminal and credit history in employment decisions. Regardless, it certainly earns a spot on our list of the top 5 intriguing cases of 2014.

3.     EEOC v. Honeywell International, Inc., Case No. 14-CV-4517, 2014 U.S. Dist. LEXIS 157945 (D. Minn. Nov. 6, 2014).

On November 6, 2014, the EEOC lost its bid for a preliminary injunction against Honeywell International, Inc. that would enjoin the company from imposing penalties against employees who refuse to participate in the biometric screening component of the company’s corporate wellness program. The U.S. District Court for the District of Minnesota denied the EEOC’s request for a preliminary injunction because, among other things, the agency had failed to establish that irreparable harm would result if the injunction were not issued.

This case is “intriguing” because it reveals what may become a new focus for the EEOC on these types of wellness programs. Honeywell’s program allowed employees and their families the option of participating in a wellness program that was designed to inform participants about their health status and encourage improvements in some specific health goals. Employees who chose to participate would be subjected to biometric testing, and would receive certain financial incentives, including contributions to their Health Savings Accounts. Those who chose not to participate were subject to financial surcharges. The EEOC alleged that this program violated the Americans with Disabilities Act and the Genetic Information Non-discrimination Act because it discriminated on the basis of disability and the manifestation of disease or disorder in family members. This case will be one to watch as it develops because, as the District Court noted in its decision denying the injunction, there is considerable uncertainty about how the EEOC’s theory will interact with the ADA’s safe harbor provisions and the Affordable Care Act, which encourages employers to adopt these types of programs. You can read more about this interesting new development here.

4.    EEOC v. Sterling Jewelers Inc., 3 F. Supp. 3d 57 (W.D.N.Y. 2014).

On March 10, 2014, Judge Richard J. Arcara of the U.S. District Court for the Western District Of New York adopted Magistrate Judge McCarthy’s January 2, 2014 Report, Recommendation, And Order in EEOC v. Sterling Jewelers Inc.to dismiss the largest pattern or practice case in the country with prejudice. As we previously discussed here, the Court’s decision was based on the EEOC’s failure to investigate the expansive, nationwide pattern or practice case that it eventually brought. In that case, 19 female employees had filed charges with the EEOC. Those charges were assigned to a single investigator in New York. The EEOC brought suit in September 2008 alleging that Sterling “engaged in unlawful employment practices throughout its stores nationwide.” Sterling challenged, among other things, that the EEOC never investigated the expansive allegations that it put in its complaint.

The Court agreed with Sterling, rejecting the EEOC’s argument that it could not scrutinize the scope of the EEOC’s pre-lawsuit investigation. According to the Court, while courts should not review the sufficiency of the investigation, they could and should make a determination concerning whether an actual investigation occurred, and the scope of that investigation. Because the Court found no evidence that the EEOC investigated its claims on a nationwide basis, it held that the agency had not satisfied its pre-suit obligations. This case is now up for appeal before the Second Circuit.

5.    Tie: EEOC v. CVS Pharmacy, Inc., Case No. 14-CV-863, 2014 U.S. Dist. LEXIS 142937 (N.D. Ill. Oct. 7, 2014) and EEOC v. CollegeAmerica Denver, Inc., Case No. 14-CV-1232, 2014 U.S. Dist. LEXIS 167333 (D. Colo. Dec. 2, 2014).

Our case #5 is actually a duet of related cases filed a country apart. This year, the EEOC asserted a new theory of liability based on language in employers’ separation agreements that the agency believes stands as an impediment to an employee’s right to file charges with the EEOC and participate in its investigations. In EEOC v. CVS Pharmacy, Inc. and EEOC v. CollegeAmerica Denver, Inc., the EEOC brought claims alleging similar theories of discrimination arising out of terminated employees’ separation agreements. You can read more about those decisions here and here. In essence, the EEOC claims that, among other things, the confidentiality and non-disparagement provisions found in those agreements deters the filing of charges and interferes with employees’ ability to communicate voluntarily with the EEOC and other federal and state agencies. This is an entirely new attack on employers’ use of those agreements.

Both of these cases were ultimately decided on issues relating to the EEOC’s failure to conciliate the claims prior to bringing suit, rather than the merits of the allegations regarding separation agreements. So that issue remains a live concern for the EEOC about which there has yet to be a judicial determination. That makes these decisions two of the most interesting of the year. Not so much for what they held, but for what they may portend concerning the future of the EEOC’s focus in 2015 and beyond.

Interesting cases one and all. Once again, it was an exciting year of developments for EEOC-initiated litigation. We expect that 2015 will bring its own share of surprises and intriguing decisions. For additional reading, see our picks for the last few years in our previous blog postings here and here. We look forward to keeping our readers on top of all of these twists and turns in government-initiated litigation. Happy New Year to all of our followers!

Readers can also find this post on our Workplace Class Action blog here.