Introduction

“It is imperative that the [Equal Employment Opportunity Commission] make the identification, investigation, and litigation of systemic discrimination a top priority.” Thus read the recommendation of the Equal Employment Opportunity Commission’s (“EEOC”) Systemic Task Force. While the EEOC always pursued claims of systemic discrimination on some level, in recent years the EEOC has focused on systemic discrimination in a more concerted way. The result: a rising number of investigations where the EEOC seeks to uncover “pattern or practice” discrimination or combat broad-based discrimination. Increased budget appropriations for the EEOC portend an even further increase in such efforts. This QuickCounsel gives an overview of systemic discrimination investigations.

General Overview of Systemic DiscriminationThe EEOC Systemic Discrimination

Task Force defines systemic discrimination as “pattern or practice, policy and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company, or geographic location.” See EEOC Systemic Task Force report. That is, systemic discrimination cases encompass a variety of cases that go beyond charges of discrimination filed by single charging parties. They may be “class” cases, in which the EEOC simply seeks relief on behalf of a number of individuals. They may also take the form of a so-called “pattern-or-practice” case, or a case in which the EEOC attempts to prove that the discrimination in question was more than a mere occurrence of isolated or sporadic discriminatory acts, but rather has been a “regular policy or procedure” followed by an employer. A company’s “standard operating procedure qualifies as a “regular policy or procedure.” Int’l Broth. of Teamsters v. United States, 431 U.S. 324 (1977); 42 U.S.C. § 2000e-6.

While pattern-or-practice cases necessarily involve intentional discrimination, systemic discrimination is also broad enough to encompass cases of disparate impact, which is sometimes referred to as “unintentional discrimination.” Disparate impact cases involve a claim that a facially neutral employment practice—such as a test, height requirement, or criminal background check policy—has an adverse impact on a protected class and cannot be justified by business necessity. 42 U.S.C. § 2000e-2(k); Griggs v. Duke Power Co., 401 U.S. 424 (1971). The classic example of a disparate impact case involves the use of a test to screen applicants and a claim that African Americans, Hispanics or another protected group fails the test at a disproportionately higher rate than Caucasians. See, e.g., Lewis v. City of Chicago, 130 S. Ct. 2191 (2010).

The common thread in systemic discrimination cases is that they can quickly become “bet the company” cases. When the EEOC seeks to recover on behalf of many employees, the stakes can be high, including the damages for which a company may be liable, the reputational harm caused, and the costs associated with defending against a far-reaching EEOC investigation.

What to Expect from an EEOC Pattern-or-Practice or Systemic Discrimination Investigation

Pattern-or-practice and systemic discrimination investigations have several common features, all of which make response more difficult than a garden-variety claim filed by a single charging party.

No Mediation

First, the EEOC routinely resists mediating systemic discrimination cases. This represents a significant difference from single-charging party claims in which the EEOC routinely encourages the parties to engage in mediation prior to investigation. The norm in such cases is for the EEOC not to offer mediation, and the lack of interest in mediation may be an early clue that the employer is the subject of a systemic investigation.

Broad Requests for Information

Second, the EEOC routinely issues broad requests for information, for example requesting nationwide information when the charge in question appears to address local issues or requesting information about protected bases not covered by the charge. The EEOC is also armed with subpoena power, 42 U.S.C. § 2000e-9, and an employer’s failure to respond to an informal request for information may lead to an equally broad subpoena. Raising the stakes even higher, the EEOC routinely files enforcement actions in the federal district courts when employers fail to respond to its subpoenas. Adding insult to injury, the EEOC usually publicizes these enforcement actions, bringing a previously private investigation into the public light.

Employers face an uphill battle when attempting to challenge an EEOC subpoena, even if the subpoena is extremely broad and potentially burdensome. The standard for enforcing an EEOC subpoena is simply that the information sought is relevant to the charge under investigation. This standard is very broad, and courts are loath to refuse enforcement of a subpoena from the EEOC. Employers should consider trying to work with the EEOC informally to narrow requests for information before the EEOC issues a subpoena.

On-Site Investigations and Interviews

Third, in addition to requesting extensive documentary evidence, the EEOC may also conduct an on-site visit in the course of a systemic investigation. Unlike an on-site visit performed in the course of investigating a single charge, the EEOC may seek to interview large numbers of employees during an on-site visit performed while investigating a charge of systemic discrimination. Generally speaking, company lawyers may be present while the EEOC interviews members of management. They do not, however, have a right to be present in interviews of rank-and-file employees. That said, any employee may inform the EEOC investigator that he wishes to have the company’s lawyer present during the interview, and company lawyers are not prohibited from informing employees of this right. Although employees may not elect to have counsel present, informing them of this option preserves the possibility that the company’s lawyers will have an opportunity to observe what is happening during the EEOC’s interviews of rank-and-file employees and, possibly, to limit overreaching by the EEOC.

Conciliation

If the EEOC determines that there is “reasonable cause” to believe that discrimination has occurred, it is required to engage in a conciliation process. Conciliation is a confidential settlement process through which the parties may negotiate to resolve the charge. It differs from traditional mediation in that the EEOC may insert itself into any negotiations between the employer and the charging party based on its view of the appropriate remedy for the discrimination it believes has occurred. For example, it may seek to convince the employer to agree to a course of training for its employees or to agree to end a particular employment practice, such as an allegedly discriminatory test or policy. The main advantage of conciliation is the fact that it guarantees confidentiality; nothing that occurs during conciliation may be revealed by the parties or the EEOC, including the fact or amount of any settlement reached. If conciliation fails and the EEOC pursues litigation, the possibility of a confidential settlement disappears. Instead, the EEOC routinely publicizes settlements reached in litigation. Accordingly, employers faced with a “cause” finding should strongly consider conciliating with the EEOC in the hopes of obtaining a confidential settlement.

EEOC Targets: Recent Litigation

It is difficult for companies to know what practices are being targeted by the EEOC for systemic investigations. That said, a review of recent lawsuits and subpoena enforcement actions filed by the EEOC gives some hints as to the types of employment practices that seem to draw particular attention from the EEOC:

In addition, passage of the Lilly Ledbetter Fair Pay Act of 2009 may raise the possibility that the EEOC will pursue increasing numbers of equal pay investigations.

Preventing Systemic Discrimination Investigations and Liability

The best strategy for dealing with pattern-or-practice or systemic discrimination investigations is to avoid becoming a target. This section details a number of preventative measures and best practices that may ward off systemic discrimination investigations.

Get a Grip on Pending Charges and Identify Potential Systemic Cases

Due to the dramatic effect systemic discrimination claims may have on your business, it is beneficial to have advance notice of the EEOC’s decision to target you for a systemic investigation so that you can prepare your defense accordingly. Although the EEOC will not often tell a company directly that it is pursuing a sytemic investigation, there are several warning signs. The first warning sign may be the EEOC’s refusal to mediate when a charge is filed. The EEOC routinely refuses to mediate when it plans to pursue a systemic investigation, so this may be the first hint of the EEOC’s intent. Other “red flags” include multiple charges with similar allegations filed in a short period of time, allegations in an individual charge of discrimination suggesting that a group of employees may have been impacted, and the EEOC sending questionnaires or surveys to a company’s employees concerning specific practices or policies. If any of these signs apply to your pending charges, you may be in store for a sytemic investigation, and you should plan your defense accordingly.

Do a Proactive Labor and Employment Audit

Given the EEOC’s increased focus on systemic discrimination, employers should also consider taking proactive steps to protect themselves and attempt to avoid becoming a target of a systemic investigation. One prophylactic measure is to conduct a self-audit of certain personnel decisions and policies that are popular areas for claims of systemic discrimination (with you as the company’s attorney directing the investigation to maintain the privileged nature of the audit). By closely examining issues such as hiring, testing, pay practices, promotion patterns, performance evaluation systems and termination patterns, companies can identify and remedy many vulnerabilities. Detailed audit checklists for general employment audits and audits of pay practices for compliance with the Ledbetter Fair Pay Act can help guide you.

Review “Hot Button” Practices

Certain policies and practices are perennial targets of EEOC systemic investigations, including aptitude tests, criminal background checks, credit checks, inflexible no-fault-type attendance policies and grooming policies. While such policies and practices are not per se illegal, they can be problematic if they are not job-related and consistent with business necessity. Just using the practices can make a company a target for an EEOC investigation. All of these practices have been the subjects of recent EEOC lawsuits, and the EEOC’s interest in targeting them will likely continue. If your company has any of these policies or practices in place, you should review their use and consider changing them.