Category: EEOC Litigation

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

Duane Morris Takeaways: In EEOC v. Cambridge Transportation., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 118857 (D. Minn. July 8, 2024), Judge Nancy E. Brasel of the U.S. District Court for the District of Minnesota accepted U.S. Magistrate Judge Dulce J. Foster’s Report and Recommendation (see EEOC v. Cambridge Transportation, Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 121147 (D. Minn. June 10, 2024)) to impose civil contempt sanctions against Cambridge Transportation Inc. for its failure to comply with an EEOC subpoena.  The EEOC sought documents in its administrative charge investigation into Title VII discrimination allegations on behalf of a former Cambridge Transportation, Inc. worker. 

The Court ordered payment to the EEOC of $100 per day for each day Cambridge Transportation, Inc. remains out of compliance beginning on June 7, 2024.  Over one month later, Cambridge remains out of compliance based on the docket.  This ruling is a warning admonisiton for employers facing EEOC subpoenas and the seriousness for any alleged non-compliance with the Commission’s investigation process.

Case Background

On October 19, 2023, the EEOC petitioned for an Application for and Order to Show Cause Why Administrative Subpoena Should Not Be Enforced (the “Application”) against Respondent Cambridge Transportation, Inc. (“Cambridge”).  (See United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, ECF No. 1.)  The EEOC’s subpoena duces tecum sought information from Cambridge regarding a charge of discrimination under Title VII of the Civil Rights Act of 1964.  (See id.)  In the underlying charge, Charging Party Becky Blechinger alleged that Cambridge “discriminated against her on the bases of her sex (female), race (white), national origin (United States) and disability by paying a higher rate of compensation to men of Somalian national origin,” who worked at Cambridge.  (See id., ECF No. 2, at 2.)

On November 1, 2023, the Court issued an order to show cause for the EEOC’s Application.  (See id., ECF No. 7.)  On November 21, 2023, the EEOC provided a status report that reflected it had not effectuated service on Cambridge.  (See id., ECF No. 9)

On December 19, 2023, the EEOC filed a Motion to Stay Proceedings.  (See id., ECF No. 12.)  Therein, the EEOC stated Cambridge responded and acknowledged receipt of the Court’s order to show cause and further indicated that Cambridge intended to produce the documents identified in the EEOC’s Application by December 26, 2023.  (See id.)  The following day the Court stayed the case.  (See id., ECF No. 13.)

On January 25, 2024, the EEOC filed another status report with a request due to Cambridge’s failure to comply with the subpoena. Thereafter, the Court entered an order for hearing on the EEOC’s Application.  (See id., ECF Nos. 14 & 15.)  On February 22, 2024, Cambridge attended the hearing via telephone through its non-attorney registered agent.  (See id., ECF No. 18.)

On February 27, 2024, the Court granted the EEOC’s Application and determined that Cambridge must comply with the subpoena or otherwise the Court may find Cambridge in civil contempt and impose a daily fine for each day Cambridge remains out of compliance.  (See id., ECF No. 20.)

On May 14, 2024, the EEOC provided a status report to the Court and reiterated that Cambridge failed to comply with the subpoena and requested the Court impose a civil fine of $800 per day, for each day past May 14, 2024, that Cambridge remains non-compliant.  (See id., ECF No. 23.)

On May 20, 2024, the Court ordered a hearing on the EEOC’s Application and required Cambridge to retain counsel to enter an appearance on its behalf to show cause why sanctions should not be imposed for failure to comply with the Court’s February 27 order.  (See id., ECF No. 25.)  On June 7, 2024, the hearing occurred and Cambridge did not appear.  (See id., ECF No. 27.)

The Magistrate’s Report and Recommendation and the District Court Judge’s Finding

On June 10, 2024, Magistrate Judge Dulce J. Foster issued his Report and Recommendation.  (See United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 121147 (D. Minn. June 10, 2024).  The report detailed the continued failures of Cambridge to respond to the Agency’s subpoena and efforts to enforce its subpoena.  (See id., at *1-6.)

The Court opined Cambridge had “ample time to retain counsel, for its alleged counsel to enter an appearance and to ensure its counsel either would be available to attend the show cause hearing or move to reschedule it” and “despite having months,” it had “faile[d] to do so and made no efforts to explain that failure or seek more time to comply.”  (See id., at *5.)  As a result, the Court found Cambridge waived all of its defenses to the EEOC’s motion and request for sanctions.  (See id., at *5-6.)

The Court reiterated its authority that it “may hold a person who, having been served, fails without adequate excuse to obey the subpoena or an order related to it.”  (See id, at *6) (quoting Fed. R. Civ. P. 45(g).)  The Court found Cambridge’s continued non-compliance with the subpoena warranted contempt and imposition of monetary sanctions.  (See id.)  The Court’s recommendation was not made “lightly, but Cambridge’s intransigent refusal to cooperate” left the Court with few other options.  (See id.)

On the requested $800 per day fine from the EEOC, the Court reasoned at this stage that it was not justified at this stage.  (See id.)  The Court instead recommended an initial daily fine of “$100 per day for each day Cambridge remains noncompliant with the subpoena beginning June 7, 2024, the date of the show cause hearing, and continuing until Cambridge satisfactorily complies.”  (See id., at *7.)  The Court further held “additional sanctions and penalties may be warranted in the future” if Cambridge’s failure to comply continues.  (See id.)

The District Court Judge found no clear error in the Magistrate Judge Foster’s recommendation and report.  (United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 118857, at * 1 (D. Minn. July 8, 2024).)  In so holding, the Court adopted the report in full, and found Cambridge in civil contempt and ordered payment of $100 per day for each day Cambridge remains out of compliance with the EEOC’s subpoena, beginning on June 7, 2024.  (Id.)  The Court left open whether any additional sanctions and penalties may apply.

Implications For Employers

This recommendation and report, and resulting Court order, illustrates the length to which the EEOC will go to enforce its investigation of allegations of discrimination under Title VII of the Civil Rights Act of 1964.  Companies should recognize the EEOC’s enforcement efforts have teeth, and heed the Court’s response that imposed a daily fine based on total non-compliance.

Companies should take measures to ensure compliance with any EEOC request for information and respond accordingly, and promptly, to any investigation including subpoena requests.  Otherwise, Companies may find themselves footing a $100 bill for every day of non-compliance and possibly expose themselves to further civil contempt sanctions.

By Gerald L. Maatman, Jr., Jennifer A. Riley, Tiffany E. Alberty and George J. Schaller

Duane Morris Takeaways: In Equal Employment Opportunity Commission v. Lakeside Plastics, Inc., No. 1:22-CV-01149 (E.D. Wis. June 3, 20244),  Judge William C. Griesbach of the U.S. District Court for the Eastern District of Wisconsin granted Defendant’s motion for summary judgment and denied the EEOC’s motion for partial summary judgment.  The Court reasoned that the single use of a racial slur in the workplace without direction to an African-American employee was not sufficient to show severe and pervasive harassment for a hostile work environment claim.  The Court also held that a supervisor is not a similarly-situated comparator to a subordinate, regardless if they were subject to the same standards and engaged in similar conduct, dismissing the EEOC’s wrongful termination claim.     

Case Background

The EEOC filed suit on behalf of Brian Turner, an African-American worker, for alleged violations under Title VII of the Civil Rights Act of 1964 (“Title VII”) against Lakeside Plastics, Inc. (“Lakeside”).  Id. at 1.  The EEOC alleged Turner was discriminated against when he was subject to a hostile work environment and his employment with Lakeside was terminated based upon his race, or alternatively that Turner’s employment termination was in retaliation for engaging in protected activity.  Id.

Turner was employed by temporary staffing firm QPS Employment Group (“QPS”) and began his employee assignment at Lakeside on June 6, 2010, as a Production Technician I.  Id. at 3.  On three separate occasions, Turner asserted that he experienced verbal harassment from another production technician named Curt Moraski.  Id. at 5-6.

First, during work Turner and Moraski discussed being from Milwaukee and in their conversation Moraski commented racial slurs about his time in the area.  Id. at 5.  Turner reported this conversation to one of his team leads.  Id.  Second, in an offsite incident, Turner alleged he was traveling home when Moraski pulled up, threated Turner, and directed racial slurs at Turner.  Id.  Finally, after the offsite incident, Turner reported to Lakeside that he did not feel comfortable working around Moraski.  Id. at 6.  Lakeside assigned Turner to label boxes for the day with Moraski; no issues arose at that time. Id.  

On July 1, 2019, Lakeside ended Turner’s assignment based on “holistic considerations,” including a review of his attendance records and a note from team lead, Max Berndt, that demonstrated Turner’s poor performance, poor attendance, inability to take direction, and inability to get along with others.  Id. at 7-8.   That same day QPS informed Turner that he was terminated from his Lakeside assignment.  Id. at 8.   

Shortly thereafter, Lakeside received a complaint from Alex Adams, a white employee, made about Moraski “threatening [Adams].”  Id. at 8-9.  Lakeside also received complaints from other employees about Moraski’s behavior.  Id. at 8.  Moraski denied making any threats against anyone.  Id. at 9.  Moraski was subsequently terminated on Aug 1, 2019, due to his violation of Lakeside’s workplace violence policy.  Id.

On Aug. 1, Lakeside advised a QPS representative that Moraski threatened additional employees, aside from Turner, around the time of Turner’s employment.  Id. at 9.  QPS inquired whether Turner could return to work at Lakeside, to which Lakeside responded that it was open to rehiring Turner.  Id.

Following discovery, Lakeside brought a motion for summary judgment on all of the EEOC’s claims and the EEOC filed a cross-motion for partial summary judgment as to Lakeside’s affirmative defenses.  Id. at 1.

The Court’s Decision

The Court granted Lakeside’s motion for summary judgment on the grounds that Lakeside did not subject Turner to a hostile work environment, did not terminate Turner because of his race, and did not retaliate against Turner for his complaints of harassment.

The EEOC asserted that Lakeside discriminated against Turner by subjecting him to a hostile work environment based on his race.  Id. at 10.  The EEOC argued that Moraski’s exchanges with Turner, at both on-site and off-site locations, created a hostile work environment.  Id.  Central to the EEOC’s assertions was that “harassment involving the N-Word is sufficiently severe to create a hostile work environment.”  Id. at 12.  The Court reasoned that “a single, isolated event can be found to create a hostile work environment,” but the EEOC must present evidence “which a factfinder could reasonably conclude that the harassing conduct was severe or pervasive.”  Id. 

In this instance, the Court disagreed that the EEOC showed Moraski’s alleged use of racial slurs was sufficiently severe or pervasive.  Id.  The Court determined Moraski “did not direct” racial slurs at Turner during the conversation at Lakeside and the racial slurs directed at Turner off-site were reported to Turner’s lead, who immediately took preventative measures by assigning Turner to a new work location.  Id. at 12.  Similarly, Moraski’s instruction on labeling boxes did not create “a reasonable inference that any hostility Turner encountered was connected to his race.”  Id. at 13.

The Court opined that “Moraski’s conduct was undoubtedly offensive and inappropriate, and he was ultimately terminated by Lakeside based on complaints of similar behavior … but with no racially derogatory component.”  Id.  Given the totality of the circumstances, the Court concluded that Moraski’s conduct was not severe or pervasive such that a jury could reasonably conclude that Lakeside’s work environment was “permeated with discriminatory intimidation, ridicule, and insult.”  Id.  Therefore, the Court granted Lakeside’s summary judgment motion as to the EEOC’s hostile work environment claim.

The EEOC next asserted that Lakeside terminated Turner because of his race.  Id. at 14.  The Court reviewed Turner’s termination under the “holistic approach” standard relied on by the EEOC and focused on whether a reasonable jury could conclude that Turner “suffered the adverse employment action because of his … protected class.”  Id.  The Court agreed with Lakeside’s legitimate business reason for terminating Turner based on “poor attendance, an inability to take direction, and an inability to get along with others.”  Id.   In so holding, the Court determined that Lakeside took a holistic approach in reviewing Turner’s performance and took Turner’s attendance into consideration despite the fact that no one recommended to human resources that Turner be terminated based on his attendance.  Id. at 15.  Accordingly, the Court granted Lakeside’s motion for summary judgment on the EEOC’s wrongful termination claims.

The Court also granted Lakeside’s motion for summary judgment on the EEOC’s alternative retaliation claim and held that Lakeside had an “independently sufficient reason to terminate Turner’s assignment” through Turner’s “violations of the attendance policy on three days.”  Id. at 17-18.  The Court further found that the EEOC could not establish retaliation on the basis that Lakeside refused to rehire Turner, because Lakeside was open to rehiring Turner, although a position was not extended.  Id. at 18.

Implications For Employers

Employers that are confronted with EEOC-initiated litigation involving allegations of race discrimination should recognize this opinion draws a fine line on what courts may consider pervasive in terms of the frequency, location, and direction of discriminatory comments.

Further, from a practical standpoint, employers should ensure workplace policies are in place for employees to report any instance of discrimination, including race discrimination, and provide procedures for employers to promptly investigate those allegations.

 

By Gerald L. Maatman, Jr. and Christian J. Palacios

Duane Morris Takeaways:  On April 25, 2024, a group of seventeen (17) state attorneys’ general sued the EEOC for its April 19, 2024 Final Rule (the “Final Rule”) outlining the Commission’s regulations regarding the newly enacted Pregnant Workers Fairness Act of 2022 (“PWFA”).  The case – captioned States of Tennessee et al. v. Equal Employment Opportunity Commission, Case No. 2:24-CV-00084 (E.D. Ark. Apr. 25, 2024) – is filed in the U.S. District Court for the Eastern District of Arkansas and alleges the EEOC’s Final Rule violates the Administrative Procedure Act (the “APA”) and the U.S. Constitution based on the fact that it defines a “related medical condition” to include an abortion.  This new lawsuit may shape up to be a significant challenge to the EEOC’s authority to enforce its newest federal anti-discrimination statute in its enforcement toolkit.

Background

The PWFA requires employers to provide a reasonable accommodation to qualified employees or applicants that have known limitations related to, affected by, or arising out of pregnancy, childbirth, or “related medical conditions,” unless the accommodations will cause the employer undue hardship.  See 42 U.SC. § 2000gg(4). Modeled after the Americans with Disabilities Act (the “ADA”), the PWFA contains the familiar language of requiring “reasonable accommodations” absent a showing of “undue hardship” and the law officially went into effect on June 27, 2023. On April 19, 2024, the EEOC issued its four hundred and eight (408) page Final Rule and guidance implementing the PWFA. The Commission voted 3-2, along party lines, to pass the Final Rule and the regulation officially goes into effect on June 18, 2024.

Under the Final Rule, the Commission describes “related medical conditions” to include “lactation, miscarriage, stillbirth, having or choosing not to have an abortion, preeclampsia, gestational diabetes, and HELLP (hemolysis, elevated liver enzymes and low platelets syndrome).”  29 C.F.R. 1636 at 17. The Final Rule expressly states that “it does not regulate the provision of abortion services or affect whether and under what circumstances an abortion should be permitted. The PWFA does not require any employee to have—or not to have—an abortion, does not require taxpayers to pay for any abortions, and does not compel health care providers to provide any abortions.”  Id. at 29.

The Complaint

On April 25, 2024, ten (10) days after the EEOC issued its final regulations, a coalition of states with Republican-led attorneys general, including the AG’s of Tennessee, Arkansas, Alabama, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Missouri, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Utah and West Virginia commenced a lawsuit in the Eastern District of Arkansas against the EEOC on the basis that its Final Rule included abortion to be a related medical condition.  The complaint begins with declaring that although the PWFA passed with bipartisan support, “in a new rule, a bare 3-2 majority of unelected commissioners at the Equal Employment Opportunity Commission (EEOC) seeks to hijack these new protections for pregnancies by requiring employers to accommodate workers’ abortions-something Congress did not authorize.” Compl. at 1. The Complaint further claims that if the Rule stands, plaintiff states, and others, would be compelled to “facilitate workers’ abortions or face federal suit-even those elective abortions of healthy pregnancies that are illegal under state law.” Id.

The fifty-one (51) page Complaint alleges a variety of violations of the APA and the U.S. Constitution. With respect to the APA violations, the attorneys general assert, amongst other things, that the EEOC’s final rule contravenes the text of the PWFA, conflicts with federal statutory prohibitions on abortion funding, and is arbitrary and capricious.  The Complaint’s constitutional objections to the EEOC’s final rule include allegations that that the Final Rule violates principles of federalism, state sovereignty, the First Amendment, Article II and the separation of powers doctrine.  The Complaint concludes by asking the Court, amongst other requested relief, to enter a preliminary injunction against the Commission, or any other agency or federal employee, from enforcing or implementing the Final Rule’s abortion-accommodation, pending the Court’s final judgement on the plaintiffs’ claims, and vacating and setting aside the Final rule as unlawful. Id. at 46.

Implications

In the last several years, the APA has been a popular vehicle for states to challenge rules promulgated by administrative agencies. The EEOC in particular is no stranger to having its enforcement authority challenged by both private and public entities.  Nevertheless, it remains to be seen whether the state AGs will ultimately be successful in requiring the Commission to roll back its own guidance with respect to the abortion-related accommodations currently present within its Final Rule.  If the plaintiffs are successful, it could serve as a basis for challenging the Commission’s ability to enforce and promulgate future rules relating to the other federal antidiscrimination statutes the EEOC enforces.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Ryan T. Garippo

Duane Morris Takeaways:  On May 9, 2024, a Seventh Circuit panel held that the Equal Employment Opportunity Commission (“EEOC”) failed to prove the existence of a hostile work environment based on racial discrimination in EEOC v. Village At Hamilton Pointe LLC, No. 22-2806, 2024 WL 2074326 (7th Cir. May 9, 2024).  While the EEOC is likely to continue to bring such claims, especially since such cases constitute one of its prime areas of focus, the decision in EEOC v. Village At Hamilton Pointe LLC further illuminates the high burden to prevailing on a hostile work environment claim.

Case Background

The EEOC brought claims on behalf of fifty-two African-American employees who were employed by the Village at Hamilton Pointe, LLC (“Hamilton Pointe”) and an affiliated entity.  Both entities operate a “long-term care facility” that provides “nursing, rehabilitation, and assisted living services.”  Id. at *1.  Although specific allegations differed as to each claimant, the EEOC generally alleged the existence of a pervasive or severe hostile work environment at Hamilton Pointe.

In support of its claims, the EEOC argued that Hamilton Pointe had instituted a racial preference policy.  The EEOC introduced evidence that African-American employees were called “racial slurs on multiple occasions” by residents. The EEOC alleged that rather than discouraging such conduct, Hamilton Pointe took steps to facilitate the discrimination.  For example, the EEOC introduced evidence into the record that certain shifts would contain instructions, such as “no blacks allowed,” when scheduling employees.

On September 20, 2020, the district court entered a partial grant of summary judgment in favor of Hamilton Pointe on fifteen employees’ claims, and held as a matter of law that there was no “severe or pervasive harassment because of [the employees’] race.”  Id..  The EEOC then took another class of plaintiffs’ claims to trial, did not prevail as to the majority of this group of claimants, and only one was awarded damages by the jury.  Id. at *1.  The EEOC’s appeal of the partial summary judgment grant ensued and led to this decision by the Seventh Circuit.

Seventh Circuit Ruling

In an opinion of 82 pages, Judge Kenneth Ripple, writing for the Seventh Circuit panel, summarized the state of hostile work environment law and concluded that the EEOC “must show that the alleged harassment was so severe or pervasive that it altered the conditions of his employment.”  Id. at *3.  And, under the circumstances presented by the case, the Seventh Circuit concluded that “the evidence of record does not support, under established principles of law, a case of racial harassment that was so severe or pervasive as to alter the conditions of employment for any of these claimants.”  Id. at *28.

To reach its conclusion, the Seventh Circuit needed to distinguish its previous decision in Chaney v. Plainfield from claimant’s allegations.  612 F. 3d 908,915 (7th Cir. 2010).  In Chaney, it held that an employer’s policy of honoring residents’ racial preferences in assigning caregivers was grounds for a hostile work environment claim.  Notably, however, the employer in Chaney “did not deny that it maintained a policy of fulfilling patients’ racial preferences.”  Id. at *7.  The Seventh Circuit then concluded that this case “therefore must be distinguished from Chaney,” for a variety of fact-specific reasons each unique to each claimant.

Although the Seventh Circuit did not explicitly overrule Chaney, it took stock of three decisions from another federal circuit reaching the opposite conclusion.  246 F. 3d 758, 759 (5th Cir. 2001).  Specifically, it noted the Fifth Circuit’s decision in Cain v. Blackwell that affirmed a grant of summary judgment on a hostile work environment claims based on sexual harassment directed at a home caregiver by a patient.  Similar rulings were reached in EEOC v. Nexion Health at Broadway, Inc., 199 F. App’x 351, 352 (5th Cir. 2006), and Gardner v. CLC of Pascagoula, LLC, 915 F. 3d 320, 326 (5th Cir. 2019).

The Seventh Circuit explained that the Fifth Circuit case law does not create a categorical bar on hostile work environment claims arising from harassment by patients, but rather, “whether a reasonable health care worker in such an environment would consider the patient’s behavior to have made the work hostile or abrasive, taking into consideration the special circumstances necessarily involved with caring for patients with these afflictions.”  Village At Hamilton Pointe LLC, 2024 WL 2074326, at *7-8.  Although not explicitly stated, the Seventh Circuit seemed to favorably endorse the Fifth Circuit’s reasoning going forward.  In light of these background principles, the Seventh Circuit did not find that the claims here (such as the use of racial epithets and racial preferences by patients) rose to the level of severe or pervasive conduct to warrant hostile work environment liability.  Accordingly, it affirmed the district court’s grant of summary judgment.

Implications For Employers

All charges of racial discrimination are matters that employers should take seriously.

Moreover, the EEOC can be a relentless opponent and we do not expect this opinion to deter the agency from pursuing similar claims in the future.  Indeed, this case is only one example of the EEOC pushing for favorable results in federal circuit courts across the country.  In this case, for example, the agency litigated its claims for seven years prior to the Seventh Circuit’s affirmance.

For today, however, the EEOC’s efforts in the Seventh Circuit were stalled.  Corporate counsel should take note of these developments and continue to monitor EEOC activity in this space for future updates.

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

Duane Morris Takeaway: Thank you to all the loyal blog readers and followers who attended yesterday’s Mid-Year Review Of EEOC Litigation And Strategy webinar! We had more attendees than ever before join partners Alex Karasik, Jerry Maatman and Jennifer Riley for the live panel discussion to analyze the EEOC’s latest strategic priorities and review the first six months of lawsuit filings in the Commission’s fiscal year 2024. The virtual program was a must see for corporate counsel, human resource professionals and business leaders, and provided valuable insights into the EEOC’s latest enforcement initiatives and strategies designed to minimize the risk of drawing the Commission’s scrutiny.

If you were unable to attend the webinar, it is now available on our podcast channel! Click to watch below and we will be sure to keep readers updated on important EEOC trends and developments throughout the year!

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

Duane Morris Takeaways: In Mobley v. Workday, Inc., Case No. 23-CV-770 (N.D. Cal. April 9, 2024) (ECF No. 60), the Equal Employment Opportunity Commission (“EEOC”) filed a Motion for Leave to File an Amicus Brief in Support of Plaintiff and in Opposition to Defendant’s Motion to Dismiss. This development follows Workday’s first successful Motion to Dismiss, about which we previously blogged here, after which the Court allowed Plaintiff a chance to amend his complaint. 

For employers utilizing Artificial Intelligence in their hiring practices, this notable case is worth monitoring. The EEOC’s decision to insert itself in the dispute demonstrates the Commission’s commitment to continued enforcement of anti-discrimination laws bearing on artificial intelligence use in employment. 

Case Background

Plaintiff, an African American male over the age of forty alleged that he suffered from anxiety and depression and brought suit against Workday claiming that its applicant screening tools discriminated against applicants on the basis of race, age, and disability.  Plaintiff further alleged that he applied for 80 to 100 jobs, but despite holding a bachelor’s degree in finance and an associate’s degree in network systems administration, he did not get a single job offer.  Id., 1-2 (ECF No. 45).

Workday moved to dismiss the Complaint in part arguing that Plaintiff did not allege facts to state a plausible claim that Workday was liable as an “employment agency” under the anti-discrimination statutes at issue.

On January 19, 2024, the Court granted the defendant’s motion to dismiss, but with leave for Plaintiff to amend, on the ground that plaintiff failed to plead sufficient facts regarding Workday’s supposed liability as an employer or “employment agency.”  Shortly thereafter, Plaintiff filed his Amended Complaint.  Id. (N.D. Cal. Feb. 20, 2024) (ECF No. 47.)

On March 12, 2024, Workday filed its Motion to Dismiss Amended Complaint, asserting that Workday is not covered by the statutes at issue – Title VII, the Americans with Disabilities Act (“ADA”), and/or the Age Discrimination in Employment Act (“ADEA”) – because Workday merely screens job seekers rather than procuring them.  Id., (ECF No. 50.)  On April 2, 2024, Plaintiff filed his opposition (id., ECF No. 59) and, on April 12, 2024, Workday filed its reply.  Id., (ECF No. 61.)

The motion is fully briefed and set for hearing on May 7, 2024.

The EEOC’s Motion for Leave to File an Amicus Brief

On April 9, 2024, before Workday filed its Reply, the EEOC filed a Motion for Leave to File an Amicus Brief in Support of Plaintiff and in Opposition to Defendant’s Motion.  Id., (ECF Nos. 60 & 60-1.)  The EEOC noticed its Motion for hearing on May 7, 2024.  Id., (ECF No. 60.)

The EEOC describes Mobley as a case that “implicate[s] whether,” Title VII, the ADA, and the ADEA, “cover[s] entities that purportedly screen and refer applicants and make automated hiring decisions on behalf of employers using algorithmic tools.”  Id., at 1 (ECF No. 60-1.)  The Commission argues that Plaintiff’s Amended Complaint satisfies federal pleading standards “with respect to all three theories of coverage alleged.”  Id., at 4.

First, with respect to Workday as an employment agency, the EEOC notes that Title VII, the ADA, and the ADEA, all prohibit discrimination by employment agencies.  Under each statute, the term “employment agency” includes “any person regularly undertaking with or without compensation to procure employees for an employer.”  Id.  The EEOC maintains courts generally construe “employment agency” based on “‘those engaged to a significant degree’ in such procurement activities ‘as their profession or business,’” and the focus on the degree to which an entity engages in “activities of an employment agency.”  Id.

The EEOC argues, among these activities, screening and referral activities are classically associated with employment agencies.  Id., at 5.  The Commission asserts that “[Plaintiff] has plausibly alleged that Workday’s algorithmic tools perform precisely the same screening and referral functions as traditional employment agencies—albeit by more sophisticated means.”  Id., at 6.  In contrasting Workday’s position, the EEOC urged the Court to find Workday’s arguments that “screening employees is not equivalent to procuring employees,” and that Workday does not “actively recruit or solicit applications” as unpersuasive.  Id., at 7.

Second, the EEOC argues leading precedent weighs in favor of Plaintiff’s allegations that Workday is an indirect employer.  Taking Plaintiff’s allegations as true, the EEOC contends that “Workday exercised sufficient control over [Plaintiff’s] and others applicants’ access to employment opportunities to qualify as an indirect employer,” and “Workday purportedly acts as a gatekeeper between applicants and prospective employers.”  Id., at 11. 

The EEOC argues Workday’s position on sufficient control misses the point.  Workday’s assertion that it “does not exert ‘control over its customers,’ who ‘are not required to use Workday tools and are free to stop using them at any time,” is not the inquiry.  Id., at 12.  Rather, the relevant inquiry is “whether the defendant can control or interfere with the plaintiff’s access to that employer,” and the EEOC notes that the nature of that control or interference “will always be a product of each specific factual situation.”  Id.

Finally, the EEOC maintains that Plaintiff plausibly alleged Workday is an agent of employers. The EEOC also maintains that under the relevant statutes the term “employer” includes “any agent of” an employer and several circuits have reasoned that an employer’s agent may be held independently liable for discrimination under some circumstances.  Id. 

In analyzing Plaintiff’s allegations, the EEOC argues that Plaintiff satisfies this requirement, where Plaintiff “alleges facts suggesting that employers delegate control of significant aspects of the hiring process to Workday.”  Id., at 13.  Accordingly, the EEOC concludes that Plaintiff’s allegations are sufficient and demonstrate “Workday’s employer-clients rely on the results of its algorithmic screening tools to make at least some initial decisions to reject candidates.”  Id., at 14.

On April 15, 2024, the Court ordered any opposition or statement of non-opposition to the EEOC’s motion for leave shall be filed by April 23, 2024.  Id.  (ECF No. 62.)

Implications For Employers

With the EEOC’s filing and sudden involvement, Employers should put great weight on EEOC enforcement efforts in emerging technologies, such as AI.  The EEOC’s stance in Mobley shows that this case is one of first impression and may create precedent for pleading in AI-screening tool discrimination cases regarding the reach of “employment decisions,” by an entity – whether directly, indirectly, or by delegation through an agent.

The Mobley decision is still pending, but all Employers harnessing artificial intelligence for “employment decisions” must follow this case closely.  As algorithm-based applicant screening tools become more common place –the anticipated flood of employment discrimination lawsuits is apt to follow.

 

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

Duane Morris Takeaways: The EEOC’s fiscal year (“FY 2024”) spans from October 1, 2023 to September 30, 2024. Through the midway point of FY 2024, EEOC enforcement litigation filings have been noticeably down. In the first six months of FY 2023, there were 29 new lawsuits filed by the Commission, while only 14 lawsuits were filed through the midway point of FY 2024.

Traditionally, the second half of the EEOC’s fiscal year – and particularly in the final months of August and 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 fiscal year. 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 2024 is that the Atlanta and Philadelphia District Offices already filed three lawsuits each. Houston, Indianapolis, and New York each have two lawsuit filings, and Dallas and Chicago have one each. That means that many of the district offices have yet to file a lawsuit at all in FY 2024. But for employers in the Atlanta and Philadelphia metropolitan areas, these early tea leaves suggest that a higher likelihood of pending charges may turn into federal lawsuits by the end of Summer to next Fall.

Analysis Of The Types Of Lawsuits Filed In First Half Of FY 2024

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. However, in FY 2024, nearly every filing has contained Title VII claims, with 12 of the 14, or 87% alleging these violations. This is a major increase over past years — in FY 2023, Title VII claims in 59% of all filings, 69% in FY 2022, and 62%. ADA cases were alleged in three lawsuits filed, for 21% of the cases, a decrease from the EEOC’s FY 2023 filings of 31%, 18% in FY 2022, and 36% in FY 2021. There was also an ADEA claim in one of the lawsuits and Pregnancy Discrimination Act claim in another.

The graph set out 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.

The industries impacted by EEOC-initiated litigation have also remained consistent in FY 2024. The chart below details that hospitality, healthcare, and retail employers have maintained their lead as corporate defendants in the last 18 months of EEOC-initiated litigation.

Notable 2024 Lawsuit Filings

Gender Identity Discrimination

In EEOC v. Sis-Bro, Inc., Case No. 24-CV-968 (S.D. Ill. Mar. 28, 2024), the EEOC brought suit alleging that the farm violated federal law when it allowed an employee to be harassed because of her sex and gender identity after she began transitioning genders. The EEOC contended that the employee was subjected to frequent, derogatory comments about the employee’s gender identity; the co-owner refused to call the targeted employee by her name and referred to her by her former name; repeatedly told her she was “a guy”; and criticized her use of employer-provided health insurance and leave for gender affirming care, in violation of Title VII of the Civil Rights Act.

Disability Discrimination

In EEOC v. Atlantic Property Management, Case No. 24-CV-10370 (D. Mass. Oct. 4, 2023), the EEOC filed an action on behalf of a new hire who the company allegedly rescinded a job offer following the employee’s cancer diagnosis. The EEOC alleged that the individual was offered employment as an executive administrative assistant to the president and vice president of the two companies. Shortly after the offer of employment, the employee was diagnosed with breast cancer. Her doctor confirmed she was able to perform all aspects of her position, but she would need to receive treatment weekly resulting in a need for some limited time off from work. When she provided her doctor’s note to the companies, the president decided to withdraw her job offer without any discussion with the employee, which the EEOC alleged violated the ADA.

Race / National Origin Discrimination

In EEOC v. Bob’s Tire Company, Case No. 24-CV-10077 (D. Mass. Jan. 10, 2024), the EEOC filed an action alleging that the company violated Title VII of the Civil Rights Act by subjecting employees to egregious and constant harassment, including the owner telling Hispanic employees to “go back to [their] country”; calling Guatemalan employees “f—ing Guatemalans”; donning a U.S. Immigration and Customs Enforcement hat to intimidate Hispanic employees; and calling employees homophobic slurs. Additionally, the EEOC contended that employees were also harassed by a co-worker because of their sex, race, and national origin, and at least one employee complained to the owner, who retaliated against this complaining employee by mocking him for being in a romantic and/or sexual relationship with the harassing co-worker.

These filings illustrate that the EEOC will likely continue to prioritize sex, disability, and race discrimination claims in the second half of FY 2024.

March 2024 Release Of Enforcement Statistics

On March 12, 2024, the EEOC published its fiscal year 2023 Annual Performance Report (FY 2023 APR), highlighting the Commission’s recovery of $665 million in monetary relief for over 22,000 workers, a near 30% increase for workers over Fiscal Year 2022. 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.

As we blogged about here, the Commission reported having one of the most litigious years in recent memory in FY 2023, with 142 new lawsuits filed, marking a 50% increase from FY 2022. Among these new lawsuits, 86 were filed on behalf of individuals, 32 were non-systemic suits involving multiple victims, and 25 were systemic suits addressing discriminatory policies or affecting multiple victims. The EEOC also touted that it obtained $22.6 million for 968 individuals in litigation, while resolving 98 lawsuits and achieving favorable results in 91% of all federal district court resolutions.

These numbers show the EEOC is still aggressively litigating discrimination claims, and despite the slow start in FY 2024, we anticipate the EEOC will turn up the jets in the second half of the fiscal year.

Strategic Priorities

The Commission also reported significant progress in its “priority areas” for 2023, which included combatting systemic discrimination, preventing workplace harassment, advancing racial justice, remedying retaliation, advancing pay equity, promoting diversity, equity, inclusion and accessibility (“DEIA”) in the workplace, and, significantly, embracing the use of technology, including artificial intelligence, machine learning, and other automated systems in employment decisions.

In 2023, the EEOC resolved over 370 systemic investigations on the merits, resulting in over $29 million in monetary benefits for victims of discrimination. The Commission also reported that its litigation program achieved a 100% success rate in its systemic case resolutions, obtaining over $11 million for 806 systemic discrimination victims, as well as substantial equitable relief.  Further, the Commission made outreach and education programs a priority in 2023, and specifically sought to reach vulnerable workers and underserved communities, including immigrant and farmworker communities, hosting over 680 events for these groups and partnering with over 1,120 organizations, reaching over 107,000 attendees.

These statistics confirm the Commission’s prowess, dictating that employers should take heed in the coming months as the EEOC seeks to match these gaudy figures.

Other Notable Developments

Beyond touting its monetary successes, and litigation accomplishments, the FY 2023 APR also highlights the newly enacted Pregnant Workers Fairness Act (“PWFA”), which provides workers with limitations related to pregnancy, childbirth, or related medical conditions the ability to obtain reasonable accommodations, absent undue hardship to the employer.

The Commission began accepting PWFA charges on June 27, 2023 (the law’s effective date) and has conducted broad public outreach relating to employers’ compliance obligations under the new law.

Takeaways For Employers

By all accounts, FY 2023 was a record-breaking year for the EEOC. As demonstrated in the report, the Commission has pursued an increasingly aggressive and ambitious litigation strategy to achieve its regulatory goals.  The data confirms that the EEOC had a great deal of success in obtaining financially significant monetary awards.

Although the early numbers are lagging as compared with last year, we anticipate that the EEOC will continue to aggressively pursue its strategic priority areas in FY 2024.  There is no reason to believe that the annual “September surge” is not coming, in what could be another precedent-setting year.  We will continue to monitor EEOC litigation activity on a daily basis, and look forward to providing our blog readers with up-to-date analysis on the latest developments.

Finally, we are thrilled to announce that will be providing a webinar on May 13, 2024, to further analyze the above data.  Employers will gain insight on what they should be doing to ready themselves for the remainder of FY 2024.  Save the date and stay tuned!

By Ryan T. Garippo, Nicolette J. Zulli, and Gerald L. Maatman, Jr.

Duane Morris Takeaways:  On March 29, 2024, in EEOC v. Phoebe Putney Memorial Hospital, Inc., No. 1:17-CV-201 (M.D. Ga. Mar. 29, 2024), Judge Leslie Gardner of the U.S. District Court for the Middle District of Georgia held that even minimal evidence for the EEOC’s claims may be sufficient to find that its failed lawsuit is not frivolous. Consequently, employers may be forced to pay their own attorneys’ fees even where the claims against them are lost at trial by the Commission. The decision in EEOC v. Phoebe Putney Memorial Hospital, Inc., is well worth a read by corporate counsel facing government enforcement litigation.

Case Background

In 2015, Phoebe Putney Memorial Hospital, Inc. (“Phoebe”) hired Wendy Kelley (“Kelley”) as a medical records analyst for a shift that typically ran from Monday through Friday. Kelley, however, understood that she needed to work weekends from time to time.  Hence, when another employee went on maternity leave, Phoebe asked Kelley to cover some Saturday shifts. Instead, Kelley met with her doctor the next day to discuss an ongoing generalized anxiety disorder diagnosis.

Among other things, Kelley’s doctor recommended that she “take Saturdays and Sundays off work when she had to take an increased dose [of medication] at the end of a stressful workweek.”  Id. at 6. As a result, Kelley submitted a request under the Americans with Disabilities Act (“ADA”) and asked not to work weekends. Phoebe explained that it is “a hospital and [it is] open on the weekend” and it could not accommodate the request. Id. at 8. Phoebe did, however, offer Kelley two days off in a row to give her time to take her medication. At the time, it appeared that this solution would work for everyone. Kelley then submitted another request for time off — this time for two weeks straight — citing her generalized anxiety disorder. Phoebe denied that request and explained that it could not cover her shifts. Kelley then refused to come into work. Accordingly, Phoebe terminated Kelley’s employment.

The Equal Employment Opportunity Commission (“EEOC”), on behalf of Kelley, filed a lawsuit alleging a violation of the ADA. The EEOC asserted that Phoebe fired Kelley because of a perceived disability. Ultimately, Phoebe filed a motion for summary judgment, which was denied, and the EEOC went to trial on Kelley’s claims. The jury sided with Phoebe on the basis that “Kelley’s request for accommodation was not made in good faith,” among other findings.  Id. at 1.  This verdict prompted Phoebe to file a motion for attorneys’ fees and costs that argued the entire lawsuit was frivolous.

The Court’s Decision

Judge Gardner denied Phoebe’s request for its attorneys’ fees and costs.

The Court explained that attorneys’ fees in ADA cases can be awarded only if the claim itself is frivolous. Courts consider three factors to make such a determination, including “(1) whether the plaintiff established a prima facie case; (2) whether the defendant offered to settle; and (3) whether the trial court dismissed the case prior to trial or held a full-blown trial on the merits” along with other considerations in the Eleventh Circuit. Sullivan v. Sch. Bd. Of Pinellas Cnty., 773 F. 2d 1182, 1189 (11th Cir. 1985) (citations omitted). Additionally, even if a plaintiff’s evidence is “weak,” she may be able to defeat a request for attorneys’ fees if there is “any evidence to support [her] claims.” Id.

Based on these principles, the Court held that Kelley’s testimony, even if weak or unpersuasive, was sufficient to establish her prima facie case for the EEOC’s claim of an ADA violation. The Court relied on that testimony to deny summary judgment. The Court stated as long as Kelley had “any evidence” for her claim, the lawsuit was not frivolous. That testimony, along with some medical records, qualified as such evidence. Further, the Court explicitly noted that Phoebe “did not offer to settle” and, therefore, the Court could not determine that this factor cut in Phoebe’s favor. Id. at 8.

Implications Of The Decision

The EEOC is an aggressive litigant. This decision demonstrates that even when the Commission loses its claims, companies nevertheless may have to foot the bill for their attorneys’ fees. Establishing an entitlement to attorneys’ fees is an uphill climb.

By Haley Ferise, Kathryn Brown, and Gerald L. Maatman, Jr.

Duane Morris Takeaways: On March 26, 2024, in EEOC v. Ferrellgas LP, No. 23-1719 (6th Cir. Mar. 26, 2024), the Sixth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Michigan to enforce an EEOC subpoena over an employer’s objections. Although the employer raised both procedural and substantive grounds to challenge the pre-lawsuit subpoena, but both the District Court and the Sixth Circuit rejected those arguments. The ruling ought to be a required read for corporate counsel facing EEOC subpoenas issued as part of pre-lawsuit administrative investigations.  

Case Background

April Wells, a Black woman, was a driver for a propane distribution company. She alleged in a discrimination charge filed with the Equal Employment Opportunity Commission that she was subjected to sex discrimination based on (i) her over qualification for the position for which she was hired as compared to that for which she applied, (ii) her compensation that was allegedly lower than that of her male counterparts, and (iii) her termination. She later amended the complaint to include race discrimination claims.

The EEOC began its investigation of Wells’ claims by sending the company two requests for information (RFIs). The employer refused to fully respond to the RFIs on grounds that the scope was overbroad. As is its usual approach, in October 2022, the EEOC issued a subpoena for information the company’s hiring practices. The company objected that the subpoena was unsigned, overly broad, unduly burdensome, and not relevant to the matters arising from the charge. A month later, the EEOC sent a second subpoena, in response to which the employer reiterated its objections.

In December 2022, the EEOC applied for an order to show cause as to why the subpoena should not be enforced, which was granted with a deadline of February 24, 2023. The company responded that (i) the EEOC improperly served the subpoena on the wrong corporate entity and therefore the company had not forfeited its right to challenge the subpoena, (ii) the EEOC could not show the relevance of its subpoena, and (iii) gathering and producing the information sought would be “unduly burdensome.” Id. at 4. The District Court rejected all of the company’s arguments, and it subsequently appealed.

The Sixth Circuit Decision

On appeal, the Sixth Circuit affirmed.

On appeal, the employer raised a new issue of improper service, claiming that the EEOC was required to mail the subpoena to the company itself or utilize another method enumerated in the National Labor Relations Act (NLRA), as the EEOC is authorized to do under Title VII. The Sixth Circuit found that, after directing the EEOC to communicate with its defense counsel, the company could not defeat service via its outside counsel that complied with its own request and that the company’s strict interpretation of the NLRA was erroneously narrow.

In response to the company’s argument that EEOC’s addressing its subpoena to the wrong corporate entity rendered the subpoena invalid, the Sixth Circuit ruled that such an error did not prevent the employer from raising its objections sooner and that the error was harmless, thereby not “preclud[ing] the district court from enforcing the subpoena.” Id.at 7.

At the same time, the Sixth Circuit rejected the EEOC’s argument that the employer had forfeited the right to object to the subpoena because of the company’s allegations the “the EEOC … failed to properly serve a facially valid subpoena.” Therefore, it addressed the company’s substantive objections. The Sixth Circuit reasoned that the District Court did not “abuse its discretion in rejecting” the employer’s arguments that the subpoena was “overbroad and unduly burdensome.” Id. at 11-12. The Sixth Circuit explained that Wells’ charge of discrimination did in fact concern hiring practices in light of her allegations related to discriminatory remarks in the interview process and that, even if the charge did not directly concern hiring practices, information about hiring processes “could cast light on whether [the employer] discriminated against other job applicants.” Id. at 12-13.

Finally, the Sixth Circuit agreed with the District Court that the company did not meet its burden in demonstrating that compliance with the subpoena presented an undue hardship.

Implications Of The Decision

Employers facing administrative subpoenas from the EEOC should be aware that clerical errors or even questionable service likely will not be sufficient to defeat the subpoenas. A better practice is to raise substantive objections to such subpoenas in a timely and formal manner.