Author: Alex W. Karasik

By Gerald J. Maatman, Jr., Alex W. Karasik, and Derek Franklin

Duane Morris Takeaways:  On September 29, 2023, the EEOC issued a new Proposed Enforcement Guidance on Harassment in the Workplace (the “Guidance”).  The Guidance provides insights into how employers can handle evolving workplace realities and developing trends with harassment claims. Notably, the Guidance addresses how digital technology and social media postings can contribute to a hostile work environment.  It also addresses the U.S. Supreme Court’s 2020 landmark decision in Bostock v. Clayton County, where Supreme Court held that discrimination based on sexual orientation or gender identity constitutes sex-based discrimination under Title VII of the Civil Rights Act of 1964 (“Title VII”).  The Guidance is open to public comment through November 1, 2023; if issued in final form, it will mark the first update to the EEOC’s official harassment guidance in nearly 25 years.

For employers, the Guidance is a “must read” in terms of preventing future workplace harassment claims.

Workplace Harassment In The Digital Landscape

The Guidance spotlights how social media postings and other online content can contribute to hostile work environments, even if it occurs outside of the workplace and is not work-related.  For instance, the Guidance cites the following examples of conduct occurring in an employee’s “virtual work environment” that employers can be liable for: “[a] sexist comments made during a video meeting, [b] racist imagery that is visible in an employee’s workspace while the employee participates in a video meeting, or [c] sexual comments made during a video meeting about a bed being near an employee in the video image.”

In addition to discussing conduct occurring in a “virtual work environment,” the Guidance also clarifies that conduct occurring in non-work-related contexts can contribute to a hostile work environment if it impacts the workplace.  This includes electronic communications through phones, computers, and social media.  For example, the Guidance cautions that, if an employee’s private social media posting subjects a co-worker to racial epithets, and other co-workers discuss the posting at work, then that posting “can contribute to a racially hostile work environment.”

Harassment Based On Sexual Orientation And Gender Identity

Another notable aspect of the Guidance is that it incorporates the U.S. Supreme Court’s 2020 landmark decision in Bostock v. Clayton County, 140 S. Ct. 1731, 1747 (2020), which held that Title VII’s prohibition of sex-based discrimination encompasses discrimination based on sexual orientation and gender identity.

While Bostock concerned an allegedly discriminatory employment discharge and did not involve harassment, the EEOC states in the Guidance that the Supreme Court’s reasoning “logically extends to claims of harassment.”  The Guidance therefore dictates that “sex-based harassment includes harassment on the basis of sexual orientation and gender identity, including how that identity is expressed.”

The Guidance lists several examples of conduct that can constitute this type of harassment, including: “[a] epithets regarding sexual orientation or gender identity; [b] physical assault; [c] harassment because an individual does not present in a manner that would stereotypically be associated with that person’s gender; [d] intentional and repeated use of a name or pronoun inconsistent with the individual’s gender identity (misgendering); or [e] the denial of access to a bathroom or other sex-segregated facility consistent with the individual’s gender identity.”

The EEOC also includes a hypothetical fact pattern in the Guidance depicting harassment based on gender identity.  In that hypothetical, supervisors and co-workers of a fast food employee who identifies as female commonly referred to the employee using her prior male name and pronouns, asked questions about her sexual orientation and anatomy, and asserted that she was not female.  In addition, customers “intentionally misgendered” the employee and “made threatening statements to her,” which the employer only responded to by reassigning the employee to a workstation where customers could not see her.  These facts, according to the EEOC, established harassment based on gender identity and, therefore, sex-based discrimination under Title VII.

Takeaways For Employers

The Guidance is a “must read” resource for employers to navigate potential harassment concerns.  It provides employers with an opportunity to revise their policies and protocols to better reflect the current legal landscape and the evolution of digital technology.  The Guidance also highlights the EEOC’s emphasis on enforcing Title VII’s prohibition of harassment based on sexual orientation and gender identity.

Employers should review their policies and practices to ensure they adequately protect against, and provide avenues to report, potential harassment that takes place virtually.  Likewise, employers may wish to consider incorporating examples of harassment given by the EEOC when implementing harassment prevention measures.

By Gerald L. Maatman, Jr., Alex W. Karasik, George J. Schaller, and Jennifer A. Riley

Duane Morris Takeaways:  In FY 2023, the EEOC’s litigation enforcement activity showed that any previous slowdown due to the COVID-19 pandemic is well in the rearview mirror, as the total number of lawsuits filed by the EEOC increased from 97 in 2020 to a whopping total of 144 in FY 2023. Per tradition, September 2023 was a busy month for EEOC-Initiated litigation, as this month marks the end of the EEOC’s fiscal year. This year, 67 lawsuits were filed September, up from the 39 filed in September of FY 2022.

Overall, the FY 2023 lawsuit filing data confirms that EEOC litigation is back in full throttle, with no signs of slowing down. Employers should take heed. Amplifying that activism, the Commission issued a press release at the end of the fiscal year touting its increased enforcement litigation activity, a somewhat unprecedented media statement that the EEOC has never issued in previous years.

Lawsuit Filings Based On EEOC District Offices

In addition to tracking the total number of filings, we closely monitor which of the EEOC’s 15 district offices are most actively filing new cases over the year and throughout September. Some districts tend to be more aggressive than others, and some focus on different case filing priorities. The following chart shows the number of lawsuit filings by EEOC district offices.

In FY 2023, Philadelphia District Office had by far the most lawsuit filings with 19, followed by Indianapolis and Chicago with 13 filings, and New York and Los Angeles each with 10 filings. Charlotte, Atlanta, Dallas, Phoenix, and Memphis had 9 each,  Houston had 8, Miami, Birmingham, and St. Louis had 7 each, and San Francisco had 5 filings.

The most noticeable trend of FY 2023 is the filing deluge in Philadelphia (19 lawsuits), compared to FY 2022 where Philadelphia District Office filed 7 lawsuits. Similarly, Indianapolis ramped up its filings compared to the 7 filings from FY 2022.  Like FY 2022, Chicago remained steady near the top of the list again with 13 filings.  Los Angeles, had a slight increase, based on the 8 filings it had in FY 2022.  Going another direction, Miami filings slightly fell compared to its 8 filings in FY 2022.   Finally, both New York and Charlotte increased their filings from FY 2022, with New York substantially increasing from 7, and Charlotte moderately increasing from 7 filings.

The balance across various District Offices throughout the country confirms that the EEOC’s aggressiveness is in peak form, both at the national and regional level.

Lawsuit Filings Based On Type Of Discrimination

We also analyzed the types of lawsuits the EEOC filed, in terms of the statutes and theories of discrimination alleged, in order to determine how the EEOC is shifting its strategic priorities.

When considered on a percentage basis, the distribution of cases filed by statute remained roughly consistent compared to FY 2023 and FY 2022. Title VII cases once again made up the majority of cases filed, making up 68% of all filings (down from the 69% filings in FY 2022, and significantly above 61% in FY 2021). ADA cases also made up a significant percentage of the EEOC’s September filings, totaling 34%, in line with 29.7% in FY 2022, although down from the 37% in FY 2021. There were also 12 ADEA cases filed in FY 2023, after 7 age discrimination cases filed in FY 2022.

The graphs below show the number of lawsuits filed according to the statute under which they were filed (Title VII, Americans With Disabilities Act, Pregnancy Discrimination Act, Equal Pay Act, and Age Discrimination in Employment Act) and, for Title VII cases, the theory of discrimination alleged.

Lawsuits Filings Based On Industry

The graphs below show the number of lawsuits filed by industry.  Three industries were the primary targets of lawsuit filings in FY 2023:  Restaurants with 28 filings, Retail with 24 filings, and Healthcare with 24 filings.  Not far off those industries are Manufacturing with 15 filings; Construction with 7 filings; Automotive, Security, and Transportation with 6 filings each; and Technology with 5 filings.

Hospitality and Healthcare employers should be keenly aware of the EEOC’s enforcement of alleged discriminatory practices in these sectors.  But in reality, employers in nearly any industry are vulnerable to EEOC-initiated litigation., as detailed by the below graph.

Looking Ahead To Fiscal Year 2024

Moving into FY 2024, the EEOC’s budget includes a $26.069 million increase from 2023, and focuses on six key areas including advancing racial justice and combatting systemic discrimination on all protected bases; protecting pay equity; supporting diversity, equity, inclusion, and accessibility (DEIA); addressing the use of artificial intelligence in employment decisions and preventing unlawful retaliation.

The EEOC also announced goals for its own Diversity, Equity, Inclusion, and Accesibility (DEIA) program where it seeks to achieve four goals, including workplace diversity, employee equity, inclusive practices, and accessibility. Additionally, the EEOC continues to polish its FY 2021 software initiatives addressing artificial intelligence, machine learning, and other emerging technologies in continued efforts to provide guidance.  Finally, the joint anti-retaliation initiative among the EEOC, the U.S. Department of Labor, and the National Labor Relations Board will continue to address retaliation in American workplaces.

Key Employer Takeaways

In sum, FY 2023 was a year of new leadership and structural changes at the EEOC.  With a significantly increased proposed budget, it is more crucial than ever for employers pay close attentions in regards to the EEOC’s strategic priorities and enforcement agendas.  We anticipate these figures will grow by next year’s report, so it is more crucial than ever for employers to comply with discrimination laws.

By Gerald L. Maatman, Jr., Alex W. Karasik, and George J. Schaller

Duane Morris Takeaways: On August 22, 2023, the EEOC announced the approval its Strategic Plan (“SP”) for Fiscal Years 2022-2026.  The Strategic Plan can be accessed here.  The SP furthers the EEOC’s mission of preventing and remedying unlawful employment discrimination and advancing equal employment opportunity for all.  The SP focuses on: (1) Enforcement; (2) Education and Outreach; and (3) Organizational Excellence. The SP also provides performance measures for each strategic goal.  For corporate counsel involved in employment-related compliance and EEOC litigation, the new SP is required reading.

The EEOC’s Strategic Priorities

1. Enforcement

The EEOC continues to promote equitable employment initiatives through its enforcement authority.  The SP highlights the EEOC’s primary mission of preventing unlawful employment discrimination through its administrative and litigation enforcement mechanisms, and adjudicatory and oversight processes.  The main strategic focus for employing these mechanisms is through fair and efficient enforcement based on the circumstances of each charge or complaint while maintaining a balance of meaningful relief for victims of discrimination.

As to enforcement, the SP provides a broad overview of the EEOC’s efforts to allocate its resources to ensure its efforts in stopping unlawful employment discrimination.  To that end, the EEOC indicates that it will continue its targeting of systemic discrimination through training staff on systemic cases and devoting additional resources to systemic litigation enforcement.  The SP included several performance measures for achieving enforcement goals, including measures on conciliation and litigation resolution, favorably resolving lawsuits, and increasing capacity for systemic investigations.

2. Education and Outreach

The SP prioritizes education and outreach for deterring employment discrimination before it occurs.  The SP focuses on providing education and outreach programs, projects, and events as cost-effective tools for enforcement.  Primarily these programs are aimed at individuals who historically have been subjected to employment discrimination.  Part of the EEOC’s education and outreach involves expanding use of technology through social media, ensuring the EEOC website is more user-friendly and accessible, and leveraging technology to reach the agency’s audience.

These efforts to improve on education and outreach are aimed at promoting public awareness of employment discrimination laws while maintaining information and guidance for employers, federal agencies, unions, and staffing agencies.  The SP provides an in-depth list of measuring education and outreach by utilizing technology to expand the EEOC’s audience and ensuring accessible delivery of information through events, programs, and up-to-date website accessibility and functionality.

3. Organizational Excellence

The SP makes clear that organizational excellence is the cornerstone of achieving the EEOC’s strategic goals.  The SP confirms that the EEOC aims to improve on its culture of accountability, inclusivity, and accessibility.  In addition, the EEOC seeks to continue protecting the public and advancing civil rights in the workplace by ensuring its resources are allocated properly to strengthen intake, outreach, education, enforcement, and service.

The EEOC’s organizational excellence strategic goal has two prongs, including improving the training of EEOC employees and enhancing the EEOC’s infrastructure.  For employees, the EEOC seeks to foster enhanced diversity, equity, inclusion, and accessibility in the workplace, maintain employee retention, and implement leadership and succession plans.  Relative to the agency’s infrastructure, the SP embraces the increased use of technology through analytics, and management of fiscal resources promote the agency’s mission of serving the public.

Implications For Employers

The EEOC’s SP is an important publication for employers since it previews immediate action areas.  The SP’s focus on systemic discrimination, conciliation, and litigation, and increasing the Commission’s capacity for litigating alleged systemic violations shows the EEOC is ramping up to improve handling all aspects of charges.  The EEOC’s increased focus on technology and employment discrimination awareness similarly shows accessibility will continue to be a pillar of the agency.  Accordingly, prudent employers should be mindful of these strategic priorities, and prepare themselves for continued EEOC enforcement.

By Alex W. Karasik, Gerald L. Maatman, Jr. and George J. Schaller

Duane Morris Takeaways: InEqual Employment Opportunity Commission v. ITutorGroup, Inc., et al., No. 1:22-CV-2565 (E.D.N.Y. Aug. 9, 2023), the EEOC and a tutoring company filed a Joint Settlement Agreement and Consent Decree in the U.S. District Court for the Eastern District of New York, memorializing a $365,000 settlement for claims involving hiring software that automatically rejected applicants based on their age. This is first EEOC settlement involving artificial intelligence (“AI”) software bias. As we previously blogged about here, eradicating discrimination stemming from AI software is an EEOC priority that is here to stay. For employers who utilize AI software in their hiring processes, this settlement highlights the potential risk of legal and monetary exposure when AI software generates hiring decisions that disparately impact applicants from protected classes.

Case Background

Defendants iTutorGroup, Inc., Shanghai Ping’An Intelligent Education Technology Co., LTD, and Tutor Group Limited (collectively “Defendants”) hired tutors to provide English-language tutoring to adults and children in China.  Id. at *3.  Defendants received tutor applications through their website.  The sole qualification to be hired as a tutor for Defendants is a bachelor’s degree.  Additionally, as part of the application process, applicants provide their date of birth.

On May 5, 2022, the EEOC filed a lawsuit on behalf of Wendy Pincus, the Charging Party, who was over the age of 55 at the time she submitted her application.  The EEOC alleged that Charging Party provided her date of birth on her application and was immediately rejected.  Accordingly, the EEOC alleged that Defendants violated the Age Discrimination in Employment Act of 1967 (“ADEA”) for programming its hiring software to reject female applicants over 55 years old and male applicants over 60 years old.  Id. at *1. Specifically, the EEOC alleged that in early 2020, Defendants failed to hire Charging Party, Wendy Pincus, and more than 200 other qualified applicants age 55 and older from the United States because of their age.  Id.

The Consent Decree

On August 9, 2023, the parties filed a “Joint Notice Of Settlement Agreement And Requested Approval And Execution Of Consent Decree,” (the “Consent Decree.”).  Id.  The Consent Decree confirmed that the parties agreed to settle for $365,000, to be distributed to tutor applicants who were allegedly rejected by Defendants because of their age, during the time period of March 2020 through April 2020.  Id. at 15.  The settlement payments will be split evenly between compensatory damages and backpay.  Id. at 16.

In terms of non-monetary relief, the Consent Decree also requires Defendants to provide anti-discrimination policies and complaint procedures applicable to screening, hiring, and supervision of tutors and tutor applicants.  Id. at 9.  Further, the Consent Decree requires Defendants to provide training programs on an annual basis for all supervisors and managers involved in the hiring process.  Id. at 12-13.  The Consent Decree, which will remain in effect for five years, also contains reporting requirements and record-keeping requirements.  Most notably, the Consent Decree contains a monitoring requirement, which allows the EEOC to inspect the premises and records of the Defendants, and conduct interviews with the Defendant’s officers, agents, employees, and independent contractors to ensure compliance.

Implications For Employers

To best deter EEOC-initiated litigation involving AI in the hiring context, employers should review their AI software upon implementation to ensure applicants are not excluded based on any protected class.  Employers should also regularly audit the use of these programs to make sure the AI software is not resulting in adverse impact on applicants in protected-category groups.

This significant settlement should serve as a cautionary tale for businesses who use AI in hiring and are not actively monitoring its impact.  The EEOC’s commitment to its Artificial Intelligence and Algorithmic Fairness Initiative is in full force.  If businesses have not been paying attention, now is the time to start.

By Gerald L. Maatman, Jr., Alex W. Karasik, and Shaina Wolfe

Duane Morris Takeaways: In EEOC v. American Security Associates, Inc., No. 1:21-CV-3870 (N.D. Ga. May 23, 2023), a federal district court in Georgia denied an employer’s motion to dismiss a constructive discharge claim, holding that comments made by the company’s owner regarding how Plaintiff can expect future sexual harassment were sufficient to establish a pervasive environment of intolerable working conditions. Employers who are defending against EEOC-initiated constructive discharge claims can learn valuable lessons from this ruling in terms of how courts may assess comments about harassment that is threatened in the future.

Case Background

The EEOC filed suit on behalf of a former female security officer (the “Claimant”) who worked for Defendant American Security Associates, Inc. (“ASA”). In April 2017, one of the Claimant’s male co-workers sexually harassed her by making lewd sexual statements and touching her in an unwelcome and inappropriate manner. After reporting this conduct to her supervisor and one of ASA’s owners, in June 2017, ASA reportedly reduced her hourly pay rate from $12 per hour to $10 per hour. ASA allegedly told the Claimant that she should expect harassment because of her appearance, and refused to remedy the situation. Id. at 1-2. The Claimant ultimately resigned, alleging that she was being required to accept future harassment as a condition of her employment.

After the Claimant filed an administrate charge, and the EEOC ultimately a filed lawsuit on her behalf, ASA moved to dismiss. On April 27, 2022, the Magistrate Judge issued a non-final Report and Recommendation (“R&R”), in which he recommended the District Judge grant in part and deny in part ASA’s motion to dismiss. In relevant part, the Magistrate Judge recommended that the EEOC amend the complaint to set forth the factual basis for the constructive discharge allegations.

On October 26, 2022, the Magistrate Judge issued an additional R&R recommending that the District Judge grant ASA’s motion to dismiss the constructive discharge claim because it failed as a matter of law. Id. at 5. The Magistrate Judge determined that the EEOC failed to allege that the Claimant was subjected to an ongoing, active pattern of sexual harassment, and therefore failed to meet a necessary element of that claim. Id. at 5-6. On November 9, 2022, the EEOC filed timely Rule 72 objections to the R&R.

The Court’s Decision

On Rule 72 review, the Court sustained the EEOC’s objections to the R&R and denied ASA’s motion to dismiss. First, the Court explained that to state a claim for constructive discharge, the Commission must allege facts to plausibly show that the conditions of employment were so unbearable that a reasonable person would be compelled to resign. Id. at 10. As to this point, the Court found that the Magistrate Judge improperly drew his conclusions from facts alleged in the original complaint, and not the amended complaint, which was the operative pleading.

The EEOC also contended that the R&R subjected the amended complaint to a heightened pleading standard because it failed to consider allegations in the light most favorable to the EEOC. Id. at 12. The Court held that that Magistrate Judge heavily relied on the unsupported assumption that the Claimant was not being actively subjected to any harassment at the time of her resignation. The Court also disagreed with the R&R’s holding that speculation about future harassment from co-workers was “insufficient” to amount to the “intolerable conditions” standard. Id. at 13. The Court opined that the Magistrate Judge again relied on facts not alleged in the amended complaint.

Finally, the Court held that statements made by ASA’s owner established a severe and pervasive environment of intolerable working conditions. Id. at 14-15. The Court determined that the Claimant’s frequent complaints to various supervisors did not deter the offensive behavior. After the Claimant complained to the owner, his responsive comments implied that the Claimant was almost certain to receive future sexual harassment, and potentially, physical attacks. The Court thus held that the Claimant’s psychological well-being is a term, condition or privilege of employment within the meaning of Title VII. Therefore, the Court sustained the EEOC’s objections to the R&R, and denied ASA’s motion to dismiss.

Implications For Employers

For employers that are confronted with EEOC-initiated litigation, this ruling is instructive from both procedural and substantive perspectives. Procedurally, this ruling makes clear that courts should consider the allegations from an operative complaint when evaluating a motion to dismiss. Substantively, employers should take note that the Court relied heavily on comments that the owner made about potential future harm, which ultimately was part of the Court’s basis for not dismissing the constructive discharge claim.

By Alex W. Karasik and Gerald L. Maatman, Jr.

Duane Morris Takeaways:  On May 18, 2023, the EEOC released a technical assistance document, “Assessing Adverse Impact in Software, Algorithms, and Artificial Intelligence Used in Employment Selection Procedures Under Title VII of the Civil Rights Act of 1964,” (hereinafter, the “Resource”) to provide employers guidance on preventing discrimination when utilizing artificial intelligence. For employers who are contemplating whether to use artificial intelligence in employment matters such as selecting new employees, monitoring performance, and determining pay or promotions, this report is a “must-read” in terms of implementing safeguards to comply with civil rights laws.

Background

As the EEOC is well-aware, employers now have a wide variety of algorithmic decision-making tools available to assist them in making employment decisions, including recruitment, hiring, retention, promotion, transfer, performance monitoring, demotion, dismissal, and referral. Employers increasingly utilize these tools in an attempt to save time and effort, increase objectivity, optimize employee performance, or decrease bias. The EEOC’s Resource seeks to inform employers how to monitor the newer algorithmic decision-making tools and ensure compliance with Title VII.

To set the parameters for the Resource, the EEOC first defines a few key terms:

• Software: Broadly, “software” refers to information technology programs or procedures that provide instructions to a computer on how to perform a given task or function.
• Algorithm: Generally, an “algorithm” is a set of instructions that can be followed by a computer to accomplish some end.
• Artificial Intelligence: In the employment context, using AI has typically meant that the developer relies partly on the computer’s own analysis of data to determine which criteria to use when making decisions. AI may include machine learning, computer vision, natural language processing and understanding, intelligent decision support systems, and autonomous systems.

Taken together, employers sometimes utilize different types of software that incorporate algorithmic decision-making at a number of stages of the employment process. Some of the examples provided by the EEOC in terms of how employers can utilize artificial intelligence include: resume scanners that prioritize applications using certain keywords; employee monitoring software that rates employees on the basis of their keystrokes; “virtual assistants” or “chatbots” that ask job candidates about their qualifications and reject candidates who do not meet pre-defined requirements; video interviewing software that evaluates candidates based on their speech patterns and facial expressions; and testing software that provides “job fit” scores for applicants or employees regarding their personalities, aptitudes, cognitive skills, or perceived “cultural fit,” which is typically based on their performance on a game or on a more traditional test.

“Questions And Answers” About AI

After summarizing the pertinent provisions of Title VII, the heart of the EEOC’s Resource is presented in a question and answer format. First, the EEOC defines a “selection procedure” to be any “measure, combination of measures, or procedure” if it is used as a basis for an employment decision. Employers can assess whether a selection procedure has an adverse impact on a particular protected group by checking whether use of the procedure causes a selection rate for individuals in the group that is “substantially” less than the selection rate for individuals in another group. If there is an adverse impact, then use of the tool will run afoul of Title VII unless the employer can demonstrate that, pursuant to Title VII, such use is “job related and consistent with business necessity.”

The EEOC then posits the critical question of whether an employer is responsible under Title VII for its use of algorithmic decision-making tools even if the tools are designed or administered by another entity, such as a software vendor. This is an important issue since many companies seek the assistance of third-party technologies to facilitate some of their employment-decision processes. The EEOC indicates that “in many cases, yes,” employers are responsible for the actions of their agents, such as third-party vendors. Ultimately, if the employer is making the final employment decision, the buck would likely stop with the employer in terms of Title VII liability .

The EEOC also defines the term, “selection rate,” which refers to the proportion of applicants or candidates who are hired, promoted, or otherwise selected. The selection rate for a group of applicants or candidates is calculated by dividing the number of persons hired, promoted, or otherwise selected from the group by the total number of candidates in that group. By virtue of including this definition in the Resource, a reading of the tea leaves suggests that the EEOC will be monitoring selection rates to determine whether there is an adverse impact in employment decisions that were catalyze from the use of artificial intelligence.

In terms of what is an acceptable selection rate, the EEOC relies on the “four-fifths rule,” which is a general rule of thumb for determining whether the selection rate for one group is “substantially” different than the selection rate of another group. The rule states that one rate is substantially different than another if their ratio is less than four-fifths (or 80%). For example, if the selection rate for Black applicants was 30% and the selection rate for White applicants was 60%, the ratio of the two rates is thus 30/60 (or 50%). Because 30/60 (or 50%) is lower than 4/5 (or 80%), the four-fifths rule dictates that the selection rate for Black applicants is substantially different than the selection rate for White applicants, which may be evidence of discrimination against Black applicants.

The EEOC does note that the, “four-fifths rule” is a general suggestion, and may not be appropriate in every circumstance. Some courts have also found this rule to be inapplicable. Nonetheless, employers would be prudent to ask whether artificial intelligence vendors deployed the “four-fifths rule” in their algorithms. Statistics matter here.

Finally, the EEOC posits the issue of what an employers should do when they discover that the use of an algorithmic decision-making tool would result in an adverse impact. The EEOC explains that one advantage of algorithmic decision-making tools is that the process of developing the tool may itself produce a variety of comparably effective alternative algorithms. Accordingly, employers’ failure to adopt a less discriminatory algorithm that may have been considered during the development process could give rise to liability. Employers should thus take heed to document the steps they take to utilize non-discriminatory algorithms.

Implications For Employers

The use of artificial intelligence in employment decisions may be the new frontier for future EEOC investigations. While these technologies can have tremendous cost-benefits, the risk is undeniable. Inevitably, some employer using AI will be the subject of a test case in the future.

Employers should monitor the results of their own use of artificial intelligence. This can be accomplished by conducting self-analyses on an ongoing basis, to determine whether employment practices are disproportionately having a negative impact on certain protected classes.

As the EEOC notes, employers can proactively change the practices going forward. Given the agility of the artificial intelligence software, employers who do find the technologies’ “employment decisions” to be problematic can and should work with vendors to remedy such defects.

We encourage our loyal blog readers to stay tuned as we continue to report on this exciting and rapidly evolving area of law.

By Alex W. Karasik, Gerald L. Maatman, Jr. and Jennifer A. Riley

Duane Morris Takeaways: The EEOC’s fiscal year 2023 (“FY 2023”) spans from October 1, 2022 to September 30, 2023. Through the midway point of FY 2023, EEOC enforcement litigation filings have been fairly status quo with a total of 29 new lawsuits filed in the first six months. Traditionally, the second half of the EEOC’s FY, and particularly in the final month of September, are when the majority of filings occur. Even so, an analysis of the types of lawsuits filed, and the locations where they are filed, is informative for employers in terms of what to expect during the fiscal year-end lawsuit filing rush in September.

Cases Filed By EEOC District Offices

In addition to tracking the total number of filings, we closely monitor which of the EEOC’s 15 district offices are most active in terms of filing new cases over the course of the FY. Some districts tend to be more aggressive than others, and some focus on different case filing priorities. The following chart shows the number of lawsuit filings by EEOC district office.

The most noticeable trend of the first six months of FY 2023 shows that the Charlotte District Office already filed five lawsuits. The Los Angeles and San Francisco District Offices each filed 13 lawsuits in FY 2022. In the first half of FY 2023, however, there was only one filed in Los Angeles, and three in San Francisco. The Birmingham and Dallas District Offices have yet to file a single lawsuit in FY 2023.

Analysis Of The Types Of Lawsuits Filed In First Half Of FY 2023

We also analyzed the types of lawsuits the EEOC filed throughout the first six months, in terms of the statutes and theories of discrimination alleged, in order to determine how the EEOC is shifting its strategic priorities. The chart below shows the EEOC filings by allegation type.

The percentage of each type of filing has remained fairly consistent over the past several years. Title VII cases again made up the majority of cases filed the first half of FY 2023, with 59% of all filings, (lower than the 69% in FY 2022, but similar to the 62% in FY 2021 and 60% in FY 2020). ADA cases also made up a significant percentage of the EEOC’s FY 2023 filings thus far, at 31%, an increase from the 18% in FY 2022, although down from the 36% in FY 2021. There were also four ADEA cases filed in the first half of the FY.

The graph below shows the number of lawsuits filed according to the statute under which they were filed (Title VII, Americans With Disabilities Act, Pregnancy Discrimination Act, Equal Pay Act, and Age Discrimination in Employment Act) and, for Title VII cases, the theory of discrimination alleged.

Notable 2023 Lawsuit Filings

Gender Identity Discrimination

After the 2020 U.S. Supreme Court’s decision in Bostock v. Clayton County, 140 S. Ct. 1731 (2020), which held that federal law prohibits employment discrimination against LGBTQ workers on the basis of sexual orientation or transgender status, we expected to see more aggressive EEOC-initiated litigation in this area. Two lawsuits involve claims of discrimination on the basis of sexual orientation and transgender status. In the first, EEOC v. TC Wheeler, Case No. 23-CV-286 (W.D.N.Y. Mar. 30, 2023), the EEOC alleged that management and employees harassed a transgender male employee because of his gender identity, including telling the employee that he “wasn’t a real man,” and asking invasive questions about his transition. The EEOC further alleged that other employees also made anti-transgender comments and continually referred to the employee by using female pronouns.

In EEOC v. Sandia Transportation, Case No. 23-CV-274 (D.N.Mex. Mar. 31, 2023), the EEOC alleged that the defendant discriminated against lesbian female employees on the basis of their sexual orientation. The EEOC contended that the owner of the company stated that women did not belong in the workplace, that he “hated dealing with women,” and referred to them in a number of derogatory terms.

Both of these lawsuits suggest that the EEOC will be filing more lawsuits seeking to protect against harassment of employees based on their sexual orientation or because of their gender.

Vaccine-Related Litigation

Given the prevalence of vaccine-related debates that emerged during the COVID-19 pandemic, we anticipated there would be a surge of exemption cases coming through the EEOC’s charge intake system. In EEOC v. Children’s Hospital of Atlanta, Case No. 22-CV-4953 (N.D. Ga. Dec. 15, 2022), the EEOC alleged that the pediatric healthcare system violated federal law when it fired a maintenance assistant for requesting a religious exemption to its influenza vaccination policy. The EEOC contended that the defendant terminated the employee for failing to receive the vaccination, despite his request for a religious exemption to the defendant’s flu vaccination requirements based on sincerely held religious beliefs. The EEOC noted that the defendant previously granted the employee religious exemptions in 2017 and 2018, but denied the request in 2019 and subsequently terminated his employment. We anticipate a significant uptick in vaccine-related litigation as the smoke clears from the global pandemic.

Race Discrimination

Several events involving race discrimination over the last few years have made this issue a continued priority for the EEOC. So far, the Commission filed a few notable lawsuits involving race discrimination. In EEOC v. First Advantage Background Services Corp., Case No. 23-CV-958 (N.D. Ill. Feb. 16, 2023), the defendant allegedly used  background check information to make discriminatory hiring decisions on the basis of race. In EEOC v. Bilal & Aaya Subway, Inc., Case No. 23-CV-129 (E.D.N.C. March 16, 2023) the EEOC filed a lawsuit alleging that three Subway franchises subjected employees to racial discrimination when their owner regularly made racist statements about Black people and terminated workers because they were Black. The EEOC asserted that the harassment was severe and pervasive, that the owner criticized traditionally Black hairstyles, and fired an employee with dreadlocks.

These filings indicated that the EEOC will continue to litigation race discrimination claims on a priority basis throughout the remainder of the fiscal year.

March 2023 Release Of Enforcement Statistics

On March 13, 2023, the EEOC published its fiscal year 2022 Annual Performance Report (FY 2022 APR), highlighting the Commission’s recovery of $513.7 million in monetary relief for more than 38,000 victims of employment discrimination, including nearly $40 million as a direct result of litigation resolutions.

This annual publication from the EEOC is noteworthy for employers in terms of recognizing the EEOC’s reach, understanding financial exposure for workplace discrimination claims, and identifying areas where the EEOC may focus its litigation efforts in the coming year.

It is a must read for corporate counsel, HR professional, and business leaders.

Strategic Priorities

Addressing systemic discrimination has long been a top priority for the EEOC. In FY 2022, the EEOC resolved over 300 systemic investigations on the merits, obtaining more than $29.7 million in monetary benefits. The EEOC also resolved 10 systemic lawsuits, obtaining over $28 million in relief for nearly 1,300 individuals and significant equitable relief. To ensure the systemic lawsuit cupboard was not left bare, the EEOC filed 13 new systemic lawsuits.

Advancing racial justice was another strategic priority for the EEOC in FY 2022. The FY 2022 APR notes that the EEOC resolved 18 lawsuits alleging race or national origin discrimination, for approximately $4.6 million in relief benefiting 298 individuals.  In addition, nine of the new 13 systemic lawsuits include claims of race or national origin discrimination. The EEOC also conducted 468 race and color outreach events, which reached 52,675 attendees. This includes 143 racial justice events reaching 9,064 attendees.

Finally, in recent years the EEOC has indicated that the use of artificial intelligence (“AI”) and algorithmic fairness in employment decisions is a strategic priority. In addition to providing AI training to systemic enforcement teams in the EEOC’s field offices, the EEOC hosted 24 AI and algorithmic fairness outreach events for 1,192 attendees. The EEOC’s efforts culminated with one lawsuit filing in this area. Of note, the EEOC prepared two ADA-related guidance publications relative to the use of artificial intelligence.

We anticipate that the EEOC will continue to focus on these strategic priorities in the remaining months of FY 2023.

Other Notable Developments

Beyond touting its monetary successes, the FY 2022 APR also highlights the EEOC’s efforts in the community. The EEOC conducted 3,302 outreach and training events, providing more than 225,906 individuals nationwide with information about employment discrimination and their rights and responsibilities in the workplace. Among these outreach programs were 399 events for small businesses, which were attend by approximately 18,878 individuals. Finally, 369 outreach events concerned the intersection of COVID-19 and employment discrimination laws. These COVID-19 programs had 26,041 attendees.

The EEOC also expanded its digital footprint, as the EEOC’s website had 10.8 million users. This marks a 3% increase over fiscal year 2021. There were 16 million user sessions, a 4.4% increase over fiscal year 2021. The EEOC had over 29 million page views, a 4.4% increase over fiscal year 2021, and there was a 3% increase in mobile traffic on the website. This data suggests that potential charging parties and other various constituents are more actively engaging with the Commission through its online platforms.

Takeaways For Employers

The first six months of the EEOC’s FY 2023 started with changes in leadership and a focus on new strategic initiatives. With a vastly increased proposed budget, it is more crucial than ever for employers to take heed in regards to the EEOC’s strategic priorities and enforcement agendas.

Stay tuned to our blog for future updates regarding the EEOC’s litigation activities.