With the end of the EEOC's fiscal year looming on September 30, 2011, employers across the country are feeling the government's urgency to achieve its year-end goals. The last six to eight weeks of the EEOC’s fiscal year - what we call the “Red Zone” - reveals an EEOC that is a beehive of activity on the litigation front. Surprise requests for information in systemic investigations, abrupt conciliation demands (and equally sudden issuances of notices of conciliation failures), and vague but broad “cause” letters of determination coming seemingly out of the blue are blasting out of the EEOC at a frantic pace. Understanding what the EEOC focuses upon during the Red Zone will help employers make sense of what may seem like some very odd behavior by this agency.

The EEOC's Agenda

There are at least three important elements driving the EEOC as it winds down FY2011. First, one of the EEOC’s most important initiatives for 2011 was to clear the number of backlogged charges. As the fiscal year closes, the EEOC is rapidly attempting to get these older charges off of its books. Not surprisingly, another measure of the EEOC’s effectiveness is the dollars collected through either litigation or settlement. The EEOC trumpets these figures to justify its budget requests and its efficacy over the past year. On a related point, the EEOC has made it clear since launching its Systemic Initiative in 2005 that it plans to use bigger and higher profile cases to execute on its agenda. As the EEOC highlighted in its 2011-2012 budget request, the "priority for agency resources continues to be litigation of systemic cases ...” Page 3 of the EEOC's submittal explicitly asserts that it desires to "prioritize spending for the Systemic Initiative…[since] systemic cases generate substantial media and other public notice, [and] they help to deter other employers from engaging in similar prohibited conduct." The EEOC's submittal also declared at page 23 that it expects to file more lawsuits in 2011 and 2012, and to increase the number of systemic lawsuits on its docket.

The Effects On Employers

The EEOC’s Fiscal Year Report will not issue until November of 2011, so much of what is happening in the Red Zone is anecdotal, but we do see trends reaching back over the last several years during this critical time period.

Conciliation Bonanza

During this period, employers often receive quick and significant conciliation demands, sometimes after months or even years of being dormant. Once the onion skin is peeled back from the posturing, the terms of ultimate agreements on conciliation agreements can be far more reasonable than other times of the year, with the EEOC willing to play ball on shorter agreement terms, reduced requests for monetary relief, and programmatic relief that is significantly less onerous than one sees in most EEOC Consent Decrees. Employers looking for a fire sale on certain charges should think carefully about a conciliation request made in the Red Zone, as those same terms may vanish after the close of the fiscal year.

Letters Of Determination And Right To Sue Letters

Formal conciliation is not technically supposed to happen until the EEOC has made a cause determination. Nonetheless, employers across the country are receiving surprise letters of determination, sometimes with only the vaguest explanation (if there is an explanation at all). They are often sent just moments before a demand for conciliation. As noted above, sometimes this fast-tracked conciliation can represent an opportunity for employers, but in other circumstances, these conciliation demands come as take-it-or-leave-it propositions, with very little flexibility on the terms. Employers pushing back on certain provisions or languages are often the recipients of a notice that conciliation has failed, again with little or no explanation. If conciliation is deemed to have failed, the result is often a right to sue letter, often leading employers to wonder why it engaged in the exercise of conciliation in the first place. The answer to that question, however, is the threat of litigation, as discussed below.

Meteoric Increase In Federal Filings

It is not always a story of happy resolution of charges or even more welcomed right to sue letters. At the time of this posting, the EEOC has filed 46 federal lawsuits since August 1, 2011. This is a stunning number, given that the total number of merits lawsuits in all of 2010 combined was 250. The math translates to the EEOC filing almost a third of its lawsuits in the Red Zone.

The sheer number of lawsuits alone is not the only interesting trend. For example, we see that during this peak filing period, nearly 40% of the filings allege ADA violations. Compared to the 2010 numbers, where only 16% of the total filings alleged disability discrimination, this is an insight into how the EEOC is targeting ADA violations at the close of its fiscal year. On the other hand, the number of Title VII filings is down from 77% in 2010 to just 48% of the Red Zone cases. Filings under other theories track roughly along the lines of last year. Critically, a full dozen of the EEOC’s 46 recent cases have class-like allegations involving multiple claimants and/or pattern or practice theories, making good on the EEOC’s promise to bring more systemic cases.  Of course, a rush to the courthouse has cost the EEOC in the past. We have reported on several cases in 2011 where Courts have lost patience with EEOC tactics (see posts here, here, and here). The sheer number of cases filed in the Red Zone in 2011, however, suggests the EEOC has not become gun-shy in light of these stinging decisions.

The last few weeks of the EEOC’s fiscal year is a period of both opportunity and frustration for employers. The government operates under a different set of rules and motivations than private litigants, and that reality is certainly reflected in the Red Zone. Understanding what motivates the EEOC, particularly in this sensitive time frame, will help employers craft the most advantageous strategy.