Overview

The Equal Employment Opportunity Commission's statutory conciliation duty is an often overlooked element of federal discrimination proceedings. While it is unquestioned that the EEOC has a statutory obligation to attempt conciliation before filing a discrimination lawsuit, questions remain regarding the extent of that duty. According to a recent federal court decision, however, the EEOC's obligation is anything but extensive.

In a decision issued on March 12, 2013, the U.S. District Court for the District of Nevada in EEOC v. Wedco, Inc., addressed what appears to be a novel question before the federal courts: Must the EEOC continue conciliation efforts when an employer does not make a counteroffer for settlement of a discrimination claim? In Wedco, an African-American employee filed an EEOC charge alleging racial discrimination and harassment under Title VII. Following an investigation, both the EEOC and Nevada Equal Rights Commission issued determinations finding probable cause for harassment and discrimination.

Before filing suit, the EEOC made efforts to settle the charge with the employer. Over a period of four months, the employer and EEOC exchanged various correspondence, which culminated in a September 2011 offer by the EEOC to settle the matter for approximately $128,000 in damages. The EEOC requested that the employer respond to the settlement offer, but the employer failed to do so; instead, it merely continued to request factual support for the discrimination claims. As a result, the EEOC filed suit in federal court.

In rejecting the employer's motion to dismiss, the court expressly found that the EEOC fulfilled its statutory conciliation duty by making the settlement offer in September 2011. While acknowledging that the EEOC "must attempt conciliation in good faith," the Wedco court emphasized that the agency "is not an administrative law judge whose function it is to mediate between a complainant and a respondent." The court instead compared the EEOC's function to that of a prosecutor and held that it is free to begin conciliation "with a 'high-ball' demand."

Importantly, the court found that the EEOC's "high-ball" initial offer in Wedco did not defeat a finding of good faith. Instead, the court found it significant that the employer refused to make any counteroffer, reasoning that if the employer "was unsatisfied with the EEOC's offer ... it could have made a counteroffer for a token sum." By refusing to make a counteroffer, the employer justified the EEOC's "termination of conciliation attempts as futile." Accordingly, the court held that the EEOC satisfied its statutory duty and was not required to continue its efforts at conciliation.

In light of Wedco, employers appearing before the EEOC should reassess how they respond to the agency's offer to settle a discrimination charge. Importantly, an employer should never ignore an EEOC settlement offer, even if it is for an amount the employer considers outrageous. Instead, if an employer receives what it believes is an unreasonably high settlement demand from the EEOC, the employer should consider making some counteroffer, even if for a minimal amount. This ensures that the EEOC will make a full and good faith attempt at conciliation before resorting to judicial remedies.