By Gerald L. Maatman, Jr., Emilee N. Crowther, and Christian J. Palacios
Duane Morris Takeaways: In EEOC v. U.S. Drug Mart, Inc., No. 23-50075, 2024 WL 64766, at *1 (5th Cir. Jan 5, 2024), the Fifth Circuit refused to resurrect an EEOC lawsuit alleging that a Texas pharmacy created a hostile work environment under the Americans with Disabilities Act (the “ADA”) by reprimanding an asthmatic employee for wearing a mask during the beginning of the COVID-19 pandemic. This case illustrates the Fifth Circuit’s high evidentiary standards associated with establishing the existence of a hostile work environment, especially with regards to demonstrating that the conduct was “sufficiently severe or pervasive to alter the conditions of the victim’s employment.” Id.
Background
The charging party, David Calzada, was a pharmacy technician at U.S. Drug Mart (d/b/a Fabens Pharmacy). Id. Mr. Calzada suffered from asthma, and elected to wear a face mask to work on March 26, 2020. Id. However, after arrival, the store manager informed Mr. Calzada that mask-wearing violated the pharmacy’s policy, and instead of removing his mask, Mr. Calzada left for the day. Id. A few days later, when Mr. Calzada returned to work, his supervisors informed him that the pharmacy’s polices were updated and he was now permitted to wear a mask and gloves at work. Id. However, during the meeting, Mr. Calzada was repeatedly belittled by the head pharmacist and at one point called a “disrespectful stupid little kid.” Id. Mr. Calzada quit the same day. Id.
Mr. Calzada subsequently filed a charge of discrimination with the EEOC. Id. The EEOC brought suit against U.S. Drug Mart on his behalf, alleging the Texas pharmacy created a hostile work environment and constructively discharged Calzada based on the conduct of the store manager and head pharmacist. Id. The district court granted summary judgment in favor of U.S. Drug Mart in October of 2022. It determined that “an isolated instance of verbal harassment is generally not sufficient to support a hostile work environment claim.” EEOC v. United States Drug Mart, Inc., No. EP-21-CV-00232, 2022 WL 18539781, at *8 (W.D.Tex. 2022). The EEOC appealed on January 31, 2023.
The Fifth Circuit’s Ruling
The Fifth Circuit, in affirming the district court’s summary judgment decision, held that the EEOC was unable to establish a prima facie case for a hostile work environment claim because it was unable to prove that the head pharmacist’s harsh words were “sufficiently severe or pervasive to alter the conditions of the victim’s employment.” EEOC, 2024 WL 64766, at *2. The Fifth Circuit observed that although the head pharmacist’s behavior was “certainly brusque,” it fell well short of the Fifth Circuit’s fairly high standard for “severe” conduct. Id. The Fifth Circuit noted that the EEOC’s constructive discharge claim failed for the same reason, because proving constructive discharge required an even “greater degree of harassment than that required by a hostile work environment claim.” Id. Accordingly, the Fifth Circuit affirmed the district court’s grant of summary judgment in favor of the employer.
Implications For Employers
The COVID-19 pandemic was accompanied by a variety of novel legal theories and questions of first impression. One thing that remains the same, however, is the high evidentiary standard that plaintiffs need to satisfy to prove their hostile work environment claims, specifically with respect to the element of “severe and pervasive” conduct.
By Gerald L. Maatman, Jr., Emilee N. Crowther, and Christian J. Palacios
Duane Morris Takeaways: In EEOC v. 1901 South Lamar, LLC, No. 1:23-CV-539, 2024 WL 41202, at *1 (W.D. Tex. Jan. 3, 2024), U.S. District Judge Robert Pitman adopted U.S. Magistrate Judge Susan Hightower’s recommendation to deny Defendants’ three Motions to Dismiss an EEOC pregnancy discrimination lawsuit. As Magistrate Judge Hightower’s recommendation illustrates, even smaller entities that would ordinarily not satisfy Title VII’s numerosity requirement cannot escape the EEOC’s grasp if they collectively operate as a single, integrated enterprise.
Case Background
Defendants 1901 South Lamar, LLC d/b/a Corner Bar (“Corner Bar”), Revelry Kitchen & Bar, LLC (“RK&B”), and Revelry on the Boulevard, LLC (“ROTB”) (collectively, “Defendants”) hired Kellie Connolly (“Connolly”) in September 2020 to work at the Corner Bar in Austin, Texas. Id. at *1. On January 31, 2021, Connolly informed the Defendants she was pregnant. Id. Two months later, after Connolly became visibly pregnant, the Defendants allegedly reduced her work hours. Id. On June 25, 2021, Connolly’s manager terminated her employment, stating that “she was becoming ‘too much of a liability’” and that they would part ways “until after the baby.” Id.
The EEOC filed suit against the Defendants alleging they discriminated against Connolly on the basis of her pregnancy in violation of Title VII. Id. In seeking to dismiss the lawsuit, the Defendants argued: (i) Corner Bar was not an “employer” under Title VII because it employed fewer than 15 employees during the relevant time period, and (ii) the Defendants were not an integrated single employer enterprise under Title VII. Id. at *2.
The Court’s Decision
Magistrate Judge Hightower was unpersuaded by the Defendant’s arguments. As a preliminary matter, Magistrate Judge Hightower held that Title VII’s numerosity requirement was not jurisdictional, and could therefore not serve to support Defendant’s Motion to Dismiss for lack of subject- matter jurisdiction.
The Magistrate Judge then applied a four-factor test to determine whether these separate entities were a “single, integrated enterprise” under Title VII and concluded that the factors weighed in favor of the EEOC. In particular, the Court found the following facts supported the EEOC’s “integrated business enterprise” allegations: (i) Defendants all shared bartending staff and inventory, (ii) utilized a single Director of Operations to handle all human-resources related services, (iii) jointly marketed their businesses, and (iv) utilized a disciplinary form that bore the logo of each of the Defendants. Id. at *3. Accordingly, the Magistrate Judge found that these facts could support a finding of centralized control of labor relations and recommended the District Court deny Defendants’ Motion to Dismiss. Id. at *4.
The Defendants challenged the order by way of Rule 72 objections. On January 3, 2024, District Court Judge Robert Pitman rejected the Rule 72 objections, and accepted and adopted the Magistrate Judge’s report and recommendation.
Implications For Companies
As the ruling in EEOC v. 1901 South Lamar, LLC, illustrates, even employers with fewer than 15 employees that would ordinarily be exempt from Title VII’s requirements may be sued by the EEOC, provided they have sufficiently integrated affiliates that would collectively put them over Title VII’s numerosity threshold.
By Gerald L. Maatman, Jr. and Christian J. Palacios
Duane Morris Takeaways: In EEOC v. Princess Martha, LLC, et al., Case No. 8:22-CV-2182, 2023 U.S. Dist. LEXIS 219651 (M.D. Fla. Dec. 11, 2023), Judge Charlene Honeywell of the U.S. District Court for the Middle District of Florida ruledthat a real estate acquisition firm could not avoid a disability discrimination suit filed by the EEOC, despite the fact that the real estate firm was not named in the original charge of discrimination. The EEOC initially only sent two of the three defendants the operative charge of discrimination, but throughout the course of the investigation the Commission discovered that the real estate acquisition firm was a joint employer, and subsequently sent the real estate firm notice and amended its complaint accordingly. This case illustrates the dangers of joint employer liability for highly integrated corporate entities, and the judicial latitude the EEOC is often afforded to amend its complaints after charging a named party.
Background
In August of 2021, a woman was offered a job at Princess Martha, a Florida retirement community, but her job offer was rescinded after she failed a drug test on account of the medications she took to treat her Post Traumatic Stress Disorder. She promptly filed a charge of discrimination with the EEOC alleging Princess Martha’s hiring practices violated the Americans with Disabilities Act of 1990.
The EEOC sent Princess Martha notice of the charge on November 23, 2021. During the course of its investigation the Commission determined that Princess Martha had a joint employer relationship with TJM Properties, whom it sent notice to on May 26, 2022. After determining that TJM Properties and Princess Martha violated the ADA, and after an unsuccessful conciliation attempt, the EEOC filed a lawsuit against both TJM Properties and Princess Martha on September 21, 2022. The Commission subsequently amended its complaint by adding TJM Property Management to the suit, alleging TJM Property Management received proper notice of the lawsuit because of its interrelated relationship as a single or integrated enterprise and/or joint employer status with the other defendants.
TJM Properties and TJM Property Management moved to dismiss the lawsuit on two grounds: First they argued that the EEOC had failed to exhaust its administrative remedies, including adequately putting the TJM entities on notice and giving them the opportunity to conciliate. Second, they argued that the EEOC’s complaint failed to establish a single/integrated enterprise or joint employer relationship existed between the TJM entities and Princess Martha.
The Court’s Ruling
In ruling in favor of the EEOC, the Court made short work of the defendants’ first argument. TJM Properties participated in the conciliation process and was explicitly notified by the Commission that it was a joint employer to Princess Martha. TJM Property Management similarly received notice due to its interrelated nature with the other defendants, and the TJM entities shared a principal place of business and the same mailing address. Furthermore, the Court pointed to an agreement existed between the defendants that required TJM Property Management to assist in coordinating legal matters with Princess Martha.
With respect to the defendants’ second argument, the Court noted that typically only parties named in EEOC charges could be charged in suits, but courts used a five-factor test to determine whether a non-named party could be sued. Applying the factors to the case, the Court determined that all three defendants were “highly integrated.” Id. at * 8. All three entities shared a mailing address, and the managing members of Princess Martha were also active in the management of TJM. Additionally, the human resources director for Princess Martha was a TJM Properties employee, and all three entities shared a common owner. Because of this, the Court concluded that despite the fact that the EEOC had not named TJM Property Management in the original suit, the highly integrated nature of the defendants made the Commission’s amended complaint appropriate.
Implications For Employers
As the ruling in EEOC v. Princess Martha, LLC illustrates, many courts are reluctant to strictly interpret an EEOC complaint, and the Commission can likely amend its lawsuit if, during the course of its investigation, it discovers that named defendants have highly integrated relationships with non-named entities. Therefore, companies with closely adjacent corporate affiliates should take extra care if they receive a charge of discrimination from the EEOC, as the Commission may later amend its complaint to include a non-named corporate entity.
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., Gregory Tsonis, and Brittany Wunderlich
Duane Morris Takeaways: On August 21, 2023, Judge Barbara Rothstein of the U.S. District Court for the Western District of Washington granted the EEOC’s motion for reconsideration, reversing its decision granting summary judgment to defendant Telecare Mental Health Services of Washington, Inc.’s (“Telecare”) in a disability discrimination case entitled EEOC v. Telecare Mental Health Services of Washington, Case No. 2:21-CV-1339 (W.D. Wash. Aug. 21, 2023). Despite giving the EEOC multiple opportunities to submit evidence rebutting Telecare’s argument that the claimant was not qualified for the position to which he applied, and the EEOC’s failure to do so prior to its motion for reconsideration, the Court ultimately found from the EEOC’s belated evidence that a disputed material fact existed that must be resolved by a jury. The ruling demonstrates the difficulty in achieving summary judgment in an discrimination case, as well as the reluctance of courts to bar discrimination claims entirely. For employers handling EEOC litigation, this ruling is instructive, as successful motions for reconsideration are rare, and reversals of summary judgment even rarer.
The court noted that when ruling on Telecare’s motion for summary judgment, it gave the EEOC multiple opportunities to submit evidence rebutting Telecare’s argument that the claimant was not qualified for the position in which he applied. The court further chastised the EEOC for submitting such evidence for the first time in its motion for reconsideration, calling the EEOC’s failure “particularly egregious.” Despite the EEOC submitting such evidence for the first time in its motion for reconsideration, the district court ultimately reinstated the claimant’s claim after finding that an issue of material disputed fact existed.
Case Background
In 2019, claimant Jason Hautala applied for a position as a registered nurse at a Telecare facility that assisted the mentally ill. While Telecare extended an offer of employment to the claimant, the offer was conditioned on the requirement that Hautala pass a physical examination to determine his fitness for the position. Telecare ultimately rescinded its offer because the claimant had a permanent leg injury, which made him unable to perform the basic functions of a registered nurse.
The EEOC filed suit on behalf of Hautala under the Americans with Disabilities Act (ADA) claiming that Telecare discriminated against him because of his disability. Telecare moved for summary judgment, arguing in part that Hautala was not a “qualified individual” for the position under the ADA based on comments he made that reflected a negative attitude towards the mentally ill. Telecare alleged Hautala made statements including “in my youth, I used to enjoy a crazy person takedown, but as I get older, I enjoy these things less and less” and “fighting off meth heads isn’t as much fun in my 50s as it was in my 30s.” Id. at 3. In support of its motion, Telecare submitted evidence that compassion toward patients with mental illness was an essential job function, and that Telecare would not hire someone who referred to patients as “crazy” or “meth heads.” The EEOC, in its opposition brief, failed to address Telecare’s argument or offer any contrary evidence.
The Court gave the EEOC a second chance to present evidence rebutting Telecare’s argument, requesting supplemental briefing on Telecare’s argument that Hautala was not a “qualified individual” for the position. Despite the second opportunity to rebut Telecare’s position, the EEOC offered no contrary evidence and argued only that the comments, “as after-acquired evidence, could not be considered as a post hoc justification” for Telecare’s failure to hire Hautala. Id. at 4.
Accordingly, the Court granted Telecare’s motion for summary judgment, holding that the EEOC failed to allege facts sufficient to support its prima facie case of discrimination under the ADA. In particular, the Court found that the claimant was not a qualified individual for the nursing position he applied for given Telecare’s undisputed evidence that Hautala had made the “troubling” and “inappropriate” comments, that compassion for patients suffering from mental illness was a necessary qualification for the position, and that the comments “conclusively demonstrated a lack of such compassion.” Id.
The EEOC’s Motion For Reconsideration
The EEOC subsequently filed a motion for reconsideration of the summary judgment ruling in Telecare’s favor. In doing so, the EEOC for the first time provided evidence that Telecare was aware of Hautala’s views towards the mentally ill, and argued that a material issue of fact required reinstating Hautala’s ADA claims.
The EEOC contended that it was entitled to reconsideration because subjective criteria (i.e., whether the claimant possessed the requisite compassion for the job) could not be considered as part of its prima facie case. In rejecting this argument, the Court found the McDonnel Douglas burden-shifting framework inapplicable because Telecare admitted it did not hire Hautala based upon his disability, nor was the subjective criteria at issue “hotly contested” like the criteria in the EEOC’s cited precedent.
However, the Court found the EEOC’s second argument for reconsideration more convincing. The EEOC argued that there was a disputed issue of fact as to whether Telecare knew of the claimant’s view on mentally ill patients during the application process, thereby contradicting Telecare’s argument that Hautera’s comments were disqualifying for the position. The EEOC submitted as evidence an email from Telecare’s employees following Hautera’s interview in which they acknowledged Hautera’s comments, but nonetheless “advanced Hautala in the application process.” Id. at 9. As a result, in order to “avoid the potential for manifest error” and “in the interests of justice,” the Court concluded that summary judgement on the issue of whether Hautala was a qualified individual was not appropriate and that “[d]enying Claimant Hautala a chance to have his substantive disability discrimination claims heard based on the EEOC’s failure to timely present the issue is a potential injustice that is easily avoided.” Id. The Court, however, made clear that it was “not absolving” the EEOC “of its obligation to prove that Hautala was a qualified individual with a disability,” only that a factual dispute exists as to whether Telecare “would actually have considered the comments disqualifying.” Id. at 10.
Though the Court ultimately reinstated the EEOC’s claim, Judge Rothstein chastised the EEOC for not citing this evidence in its summary judgment briefing, noting that the EEOC’s failure to cite to such evidence was “particularly egregious” given that the Court gave the EEOC a second chance to do so. Noting that the parties filed over 1,000 pages of exhibits in support for their motions, the Court chastised the EEOC for failing to cite the evidence in its summary judgment briefs and noted that “[j]udges are not like pigs, hunting for truffles buried in briefs’ or on the record.” Id. at 9.
Implications For Employers
This decision demonstrates the reluctance of courts to bar discrimination claims asserted by the EEOC even after severe and “egregious” missteps in litigation. This latitude afforded to the EEOC, coupled with the resources available to the government in EEOC-initiated actions, requires close coordination with experienced counsel to defeat discrimination lawsuits at the pleading stage. Employers faced with such claims should work closely with their counsel to ensure a comprehensive litigation strategy that maximizes the potential for defeating claims before the necessity of going to trial.
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
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.
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.
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 fileda 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 Zev Grumet-Morris
Duane Morris Takeaways: In EEOC v. Charter Communications, LLC, Case No 22-1231, 2023 U.S. App. LEXIS 19528 (7th Cir. July 28, 2023), the Seventh Circuit reversed and remanded a district court’s grant of summary judgment in favor of the employer in an EEOC enforcement lawsuit, holding that an employee was possibly entitled to a modified work schedule as an accommodation to make his commute safer.
This is a significant ruling in the context of EEOC-initiated ADA litigation, as employers may potentially see an increase in litigation related to denials of commute-related accommodation requests.
Case Background
The Charging Party, James Kimmons (“Kimmons’”), alleged that his employer, Charter Communications (“Defendant”) violated the Americans with Disabilities Act (“ADA”) by refusing to accommodate his request for a temporary modified work schedule. Kimmons, who suffers from cataracts, sought a temporary schedule modification allowing him to begin and end his workday two-hours earlier in order to avoid nighttime driving. While originally granting the 30-day request, Defendant ultimately declined to extend this accommodation for an additional 30-days while Kimmons sought closer living arrangements.
Kimmons filed a charge of discrimination with the EEOC. After conciliation efforts failed, the EEOC filed a lawsuit on Kimmons’ behalf. The district court granted summary judgment for Defendant, repeating the oft-cited understanding that employees are responsible for their own commute to and from the workplace. The district court further held that Kimmons’ disability did not affect his ability to perform the essential functions of his job. Id. at *6.
The EEOC thereafter appealed to the Seventh Circuit.
The Seventh Circuit’s Decision
The Seventh Circuit reversed the district court’s grant of Defendant’s motion for summary judgment. In reaching this conclusion, the Seventh Circuit opined that the main question was whether the employee was entitled to a modified work schedule as an accommodation to make his commute safer. The Seventh Circuit concluded that the answer is “maybe.” Id. at *6.
As a threshold question, the Seventh Circuit examined the threshold question of whether an employee’s work-schedule was inherently outside the scope of the ADA. Relying on decisions within its jurisdiction and those of its sister courts, the Seventh Circuit declined to offer a bright line rule. Instead, it concluded that the inquiry was fact-intensive and necessarily unbefitting for summary judgment resolution. Specifically, while acknowledging that “getting to and from work is in most cases the responsibility of an employee, not the employer,” the Seventh Circuit reasoned that an employee’s disability could interfere with that commute, thereby entitling him to a work-schedule accommodation “if commuting to work is a prerequisite to an essential job function, such as attendance in the workplace, and if the accommodation is reasonable. Id. at *3.
Further, the Seventh Circuit determined that a trier of fact could find Kimmons’ travel to his workplace a prerequisite essential to his job duties, which demanded regular attendance. Moreover, whether or not Kimmons’ cataracts constituted a disability was a question of fact, it was not unreasonable to believe it negatively impacted his evening commutes. And because Defendant failed to establish how Kimmons’ schedule modification imposed an undue burden on its operations, the accommodation was not inherently unreasonable sufficient to warrant dismissal of the litigation. While businesses are not compelled to exhaust every avenue to improve trivial comforts of its disabled workforce, the Seventh Circuit emphasized that it will consider the precise accommodation at issue when evaluating these efforts. Id. at *21
Finally, the Seventh Circuit opined that it, “do[es] not intend to endorse an interpretation of the ADA where ‘no good deed goes unpunished.’” Id. at *23. The Seventh Circuit additionally clarified that the employer need not provide the exact accommodation the employee requests. However, the Seventh Circuit held that a qualified individual’s disability substantially interferes with his ability to get to work and attendance at work is an essential function, an employer may sometimes be required to provide a commute-related accommodation, if reasonable under the circumstance. Id. at *26. Accordingly, the Seventh Circuit reversed the district court’s grant of Defendant’s motion for summary judgment and remanded to the district court.
Implications For Employers
This is a novel ruling in that it opens the possibility for employers to be held liable for accommodations related work scheduled based on commuting concerns. While the Seventh Circuit made abundantly clear that it did not want to establish a bright-line rule, this decision demonstrates that in some situations, employers could potentially be responsible for granting accommodation requests related to work schedules and commutes. Employers should thus continue to closely consider all accommodation requests, even those that may seem outside of the scope of day-to-day job duties.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Jeffrey Zohn with their discussion of recent developments at the EEOC including the Commission’s current enforcement priorities, the nomination of Kalpana Kotagal as the new commissioner, and what employers can expect under the current leadership structure.
Episode Transcript
Jerry Maatman: Blog readers, welcome to our Friday installment of the Class Action Weekly Wire. My name is Jerry Maatman of Duane Morris and I’m joined today by my colleague, Jeffrey Zohn, for this week’s episode. Welcome, Jeff!
Jeffrey Zohn: Thanks, Jerry. It’s great to be here, and I’m especially honored to be here because in today’s episode we get to mix it up where I got to interview you and ask you some questions about what’s going on with the Equal Employment Opportunity Commission, also known as the EEOC.
Jerry: Sounds good, fire away with those questions.
Jeff: All right so we’ll start out with an easier one for you – can you first explain about how the EEOC is structured in terms of its governance – who’s in charge, and how can one become part of the EEOC leadership?
Jerry: The EEOC is a creature of statute, it is in theory to be a bipartisan commission with leadership consisting of a chair, a vice chair, and three commissioners – and those five set policies for the EEOC, approve policy statements and enforcement guidance. A general counsel is also appointed by the President and reports to those commissioners, and typically the party in power that holds the White House will have a three to two advantage in terms of the composition of the five – the chair, the vice chair, and the three commissioners.
Jeff: Now of those five commissioners, are they all currently in place?
Jerry: Well, the EEOC has been dealing, like many government agencies, with recovering from the pandemic and from the election and so it has been operating for quite a while with only four commissioners – two Republicans and two Democrats. Although the EEOC and public pronouncements would not say things are deadlocked, people looking at the EEOC from the outside would suggest that there is an ideological deadlock with two Republican policy makers not agreeing with two Democratic policy makers, but in the last two weeks the Senate approved President Biden’s nomination of the fifth commissioner Kalpana Kotagal – she has yet to be sworn in, but will be sworn in any day now, and that will then allow the EEOC to have a full complement of policy makers and the five Commissioners, and will tip the balance in favor of kind of Democratic views of the policies and enforcement guidance memorandum of the EEOC.
Jeff: That sounds like a major development and something that could possibly bring some pretty significant changes to the EEOC.
Jerry: For employers it’s definitely, in the practical world in which we live, going to have a cause and effect that’s very different than what we’ve seen for the last two years, I think on several levels. The first level will be the issuance of policy guidance where the EEOC opines on how it interprets various statutes – and with a three to two majority with the Democrats, in my experience, what I’ve seen are very expansive interpretations of obligations that employers have under anti-discrimination laws and a broadening of the way the EEOC views rights of workers. Its views are not binding on federal courts, but its views are important, and its views activate the manner in which its investigators, district offices, and regional trial attorneys view the world and enforce the statute – and so there’s going to be a definite change, and the EEOC will act in a more activist manner to fulfill its policy mandates but it will do so with a tilt towards Democratic labor policies.
The second area where there will be a change most commentators believe, and I’m of the same opinion, that lawsuits – or investigations that have been in the queue for approval as lawsuits – will be approved and will begin to be filed. So the last couple of years EEOC-authorized lawsuits where the Commission sues in the public interest, on behalf of the United States against employers, on behalf of groups of employees – have been anywhere between about 85 and 105 lawsuits, and so its fiscal year starts on October 1 and goes to September 30. So we’re halfway through or a little past halfway through in the fiscal year, but I think what we’re going to see is an accelerated filing of lawsuits – especially what are known as systemic lawsuits that are bigger, brought on behalf of various groups of employees, hundreds sometimes thousands of employees, and so one way to look at the impact of the third Democratic commissioner is it will unleash the potential that the EEOC has in terms of litigation enforcement and I expect it to flex its muscle and bring more of those cases.
Jeff: So narrowing in a little bit more on Ms. Kotagal, the fifth appointment, the third Democrat – Jerry you’ve been one of the most distinguished lawyers in this field for a while, can you give us any background information on her?
Jerry: Well she is a very talented lawyer who also thinks expansively about this area and has handled big plaintiff-side employment discrimination class actions, she comes from the Cohen Milstein firm – probably one of the best if not the top plaintiff-side civil rights and employment discrimination law firm – she’s one of the key partners there. I’ve handled a myriad of cases against her, she’s an excellent lawyer, and has in the past few years been involved in movements: both the #MeToo movement and a movement that started in Hollywood, where Hollywood contracts for production of movies were created with a clause that would allow for hiring and use of a more diverse set of cast members and production personnel, and so she’s very interested in opening the doors of employment, she’s interested in bringing test cases to challenge policies, and she’s a champion of protected minority groups – so I expect her to utilize her expertise and bring it to the EEOC and to push the envelope, so to speak, in terms of what the EEOC does in enforcing employment discrimination laws
Jeff: It certainly sounds like her influence is going to be is going to be rapid and significant.
Jerry: I think so. I think the main thing on the EEOC’s agenda in terms of regulatory guidance will be the new Pregnant Workers Fairness Act where the EEOC will issue regulations and fill in the gaps, so to speak, of that law which is an amendment to the Pregnancy Discrimination Act that President Biden signed this year, and look for that to be kind of a signal of where the EEOC is going, and I expect it will be a very expansive document that will push the envelope even on that law to create more rights for workers who are pregnant and more obligations for employers – so that would be the first signal I would be looking for if I were an employer.
Jeff: Beyond that, are there any other EEOC developments that you think are worth talking about right now?
Jerry: I think the most relevant for most employers is the issue of systemic litigation that the EEOC has talked about it, but the number of systemic lawsuits that have been filed have been limited, and because the new commissioner’s background is on what I would call impact litigation, bringing cases to promote change, I think you’re going to be seeing test cases I think you’re going to be seeing cases brought on large against large employers, industry leaders to try and make a point and try and enforce the statute in a way that sends a signal to smaller players in the industry. So I think the EEOC is going to get back into the business of bringing large lawsuits against large employers that are very newsworthy.
Jeff: I think that should be the flashing red lights for the big companies to keep an eye on because that’s going to be impacting them directly. Definitely now is a great time for employers out there to make sure that they are compliant with all these requirements and the things that we think the EEOC is going to be going after.
Jerry: Absolutely, I think change is inevitable and the watchword is compliance compliance compliance is what employers need to be focused on at this point in terms of an activist EEOC.
Jeff: That is definitely a great advice, and I really appreciate all of the insights you had today, Jerry.
Jerry: Thanks all our loyal blog readers for joining us for this week’s Friday podcast. Signing off, this is Jeff and Jerry. Have a great day
By Gerald L. Maatman, Jr., Alex W. Karasik, and George J. Schaller
Duane Morris Takeaways: In EEOC v. Werner Enterprises, Inc., No. 8:18-CV-00329, 2023 U.S. Dist. LEXIS 95981 (D. Neb. May 31, 2023), a federal district court in Nebraska denied an employer’s partial motion to reconsider the Court’s prior denial of its motion for summary judgment, holding that facially discriminatory policies can be demonstrated through evidence other than hiring policy documents.
For employers facing EEOC-initiated lawsuits involving ADA claims in the hiring process, this decision is instructive in terms of the evidence courts will consider at the summary judgment stage, particularly training documents that may be discriminatory on their face.
Case Background
The EEOC filed suit on behalf of a hearing-impaired truck driver applicant (the “Claimant”) who submitted an application with Defendant Werner Enterprises, Inc. (“Werner”). The Claimant, along with other hearing-impaired applicants, allegedly were subject to a different workflow for applications. The EEOC claimed an internal training document provided by Werner instructed its recruiters to provide a different workflow for applications from hearing-impaired drivers – if the recruiter was “aware of an FMCSA waiver or a hearing issue, then the recruiter was directed ‘do not Pre-Approve the application.’” Id. at *3. Instead, the recruiter would send the hearing-impaired applicants completed application “to the manager basket,” and management would decide to move forward or not. Id. Therefore, the EEOC contended Werner’s pre-approval procedure adversely affected hearing-impaired applicants.
After the Claimant filed an administrative charge, and the EEOC ultimately filed a lawsuit on his behalf, Werner moved for summary judgment. It argued that its training document at issue “does not unlawfully classify applicants because of their disability.” Id. at *4. Instead, Werner maintained diverting applications from hearing-impaired applicants was to verify that an applicant had a valid exemption from physical qualification standards. Id.
The Court rejected Werner’s argument and reasoned that the training document does instruct recruiters to treat hearing-impaired applicants differently from other applicants. Id. at *4-5. Subsequently, Werner filed a motion to reconsider the denial of its motion for summary judgment.
The Court’s Decision
The Court denied Werner’s motion for reconsideration.
In Werner’s motion for summary judgment, it asserted that the EEOC’s claim of a “facially discriminatory” hiring policy could only be based on a single training document without considering other evidence. In its motion to reconsider, Werner pivoted and argued that the Court erred by considering what might be shown by evidence beyond the face of the training document. Id. at *5-6. The Court reasoned that applicable case law authorities consider whether the policy is discriminatory on its face, but this inquiry is not dispositive of the entire claim. The Court also opined that the EEOC could demonstrate discriminatory intent through other evidence if the policy is not discriminatory on its face. Id. at *8. The Court also noted that the policy at issue was facially discriminatory – “even if a policy isn’t discriminatory on its face (which, to reiterate, this document is.)” in light of Werner’s assertion. Id.
The Court rejected Werner’s argument that the EEOC’s claim of a facially discriminatory hiring policy was based exclusively on the training document itself. First, the Court explained the basics of a discrimination claim require the EEOC must show, among other things, an adverse employment action because of disability. Second, the Court explained that discriminatory intent can be proved either through direct evidence of discrimination, or through a showing of disparate treatment. Id. at *6. As to this point, the Court clarified there is direct evidence of discrimination when the “evidence shows a specific link between the alleged discriminatory animus and the challenged decision, sufficient to reasonably support a finding that an illegitimate criterion actually motivated the adverse employment action.” Id.
The Court held that Werner’s training document evidenced disparate treatment, but the effect of that treatment, if any, occurred after the applications from hearing-impaired drivers were diverted to the “manager basket.” Id. at *9. The Court also found the EEOC was not bound by its pleading to rely exclusively on the face of the training document to support its claim. Id. Finally, the Court determined the disputed issue for the parties to focus on is whether accommodating a hearing-impaired placement driver is reasonable. Id. at *10-11. Therefore, the Court denied Werner’s motion to reconsider the denial of Werner’s motion for summary judgment.
Implications For Employers
Employers confronted with EEOC-initiated litigation involving hiring practices should take note that the Court relied heavily on additional evidence demonstrating discriminatory intent supporting the purported facially discriminatory policy. Further, from a practical standpoint, employers should carefully evaluate training documents that may impact applicants with disabilities, as courts are apt to scrutinize these materials.
By Gerald L. Maatman, Jr., Emilee N. Crowther, and Christian J. Palacios
