Category: EEOC Litigation

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

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

Case Background

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

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

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

The Court’s Decision

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

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

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

Implications For Employers

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

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

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

Background

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

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

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

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

“Questions And Answers” About AI

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

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

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

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

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

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

Implications For Employers

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

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

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

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

By Gerald L. Maatman, Jr., Alex W. Karasik, and Nicolette J. Zulli

Duane Morris Takeaways: In EEOC v. Eberspaecher North America Inc. , No. 21-13799, 2023 U.S. App. LEXIS 11466 (11th Cir. May 10, 2023), a split three judge-panel for the U.S. Court of Appeals for the Eleventh Circuit affirmed an Alabama federal district court’s ruling and held that that an EEOC subpoena for nationwide information relative to an investigation over potential disability discrimination was too broad in scope.

Given that the EEOC’s pre-suit subpoena power is rarely limited by courts, this ruling is vitally important and apt to be cited by employers who are confronted with far-reaching EEOC subpoenas, particularly for nationwide employee data.

Case Background

A former employee at Eberspaecher North America Inc.’s (“ENA”) Northport, Alabama facility filed a charge with the EEOC, alleging ADA violations due to disability-related absences and his subsequent termination. Id. at *4. The initial charge listed only the Northport facility’s address and alleged discriminatory practices related to qualified leave. The charge did not advance any nationwide allegations.

In response, the EEOC requested information exclusively pertaining to the charged conduct from ENA’s Northport facility. However, the EEOC later requested nationwide nationwide data on employees terminated for attendance infractions at all of ENA’s locations. ENA declined to provide this information, leading the EEOC to issue a subpoena demanding the nationwide data.

On June 30, 2021, the EEOC filed an application for judicial enforcement of the subpoena with the U.S. District Court for the Northern District of Alabama. ENA moved to revoke the subpoena, arguing that it exceeded the scope of the charge. The District Court ruled in favor of ENA, ordering compliance with the subpoena limited to the Northport facility. The EEOC appealed the decision. Id. at *9.

The Eleventh Circuit’s Decision

The Eleventh Circuit affirmed the District Court’s order that ENA comply with the subpoena, “but only as it applies to [ENA’s] Northport facility.” Id. at *8.

On appeal, the EEOC attempted to argue that (1) because the charge was based on a review of ENA’s company-wide handbook; and (2) because the use of the term “aggrieved employees” in the charge meant “all employees” impacted by ENA’s allegedly unlawful practices, it was entitled to nationwide data.  Id. at *16.

The Eleventh Circuit rejected these arguments because it presupposed that the charge targeted ENA facilities worldwide. Specifically, the Eleventh Circuit concluded that the charge, which solely referenced ENA’s Northport facility, constrained the EEOC’s subpoena power. It emphasized that the relevance of the requested information should be tied to the charge against the employer and not future charges. Additionally, the Eleventh Circuit noted that the EEOC never attempted to amend the charge to expand its scope. Id.

Rejecting the EEOC’s broad request for information, the Eleventh Circuit explained that “[t]he relevance that is necessary to support a subpoena for the investigation of an individual charge is relevance to the contested issues that must be decided to resolve that charge, not relevance to issues that may be contested when and if future charges are brought by others.” Id. at *5 (citing EEOC v. Royal Caribbean Cruise, Ltd., 771 F.3d 757, 761 (11th Cir. 2014)). The Eleventh Circuit further explained that the charge did not provide notice of an investigation into ENA’s facilities nationwide. Accordingly, the Eleventh Circuit held that the District Court did not abuse its discretion by enforcing the EEOC’s subpoena of information only as to the Northport facility.

Implications For Employers

The Eberspaecher decision is noteworthy because court rulings that restrict the EEOC’s pre-suit enforcement actions are uncommon, particularly at the appellate level. This decision provides a roadmap for employers to challenge subpoenas or requests for information that exceed the charge’s scope.

While this decision represents a significant blow to the EEOC’s common practice of seeking company-wide data in administrative subpoenas, employers should note that the EEOC may seek to amend charges to include systemic allegations before serving future subpoenas. Accordingly, while this ruling is a rare management-side victory in EEOC subpoena enforcement actions, it remains to be seen whether future charges will be pleaded with an eye towards nationwide discovery in light of this new roadblock.

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

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

Cases Filed By EEOC District Offices

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

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

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

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

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

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

Notable 2023 Lawsuit Filings

Gender Identity Discrimination

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

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

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

Vaccine-Related Litigation

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

Race Discrimination

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

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

March 2023 Release Of Enforcement Statistics

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

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

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

Strategic Priorities

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

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

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

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

Other Notable Developments

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

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

Takeaways For Employers

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

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

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

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

This annual publication from the EEOC is noteworthy for employers in terms of recognizing the EEOC’s reach, understanding financial exposure for workplace discrimination claims, and identifying areas where the EEOC may focus its litigation efforts in the coming year. It is a must read for corporate counsel, HR professional, and business leaders.

FY 2022 Statistical Highlights

The EEOC’s recovery of $513.7 million in monetary relief represents a solid increase from the $485 million in monetary relief that it secured in FY 2021. More noteworthy is that the Commission secured monetary relief on behalf of 38,000 alleged victims in FY 2022, which is more than double the amount from FY 2021, when monetary relief was recovered on behalf of 15,000 alleged victims. This suggests that more complainants are being made whole through the EEOC’s litigation and alternative dispute resolution efforts.

Approximately $342 million was recovered for more than 33,298 victims of employment discrimination in the private sector and state and local government workplaces through mediation, conciliation, and settlements. Furthermore, $39.7 million was recovered for 1,461 individuals as a direct result of litigation resolutions. Notably, the EEOC indicated it successfully resolved 44% of its conciliations, and among those successes, 43.1% involved one or more Strategic Enforcement Plan priority areas. The EEOC also conducted 6,578 successful mediations, resulting in $170.4 million in benefits for charging parties.

In terms of charge intake, the EEOC reported 73,485 new discrimination charges, an increase of nearly 20% compared to fiscal year 2021. This statistic suggest workers are increasingly more apt to turn to the Commission to resolve workplace discrimination disputes.

Finally, the EEOC filed 91 lawsuits in FY 2022 on behalf of 53 individuals, including 25 non-systemic suits with multiple victims, and 13 systemic suits involving multiple victims or discriminatory policies. Approximately half of the EEOC’s newly filed lawsuits raised one or more the EEOC’s Strategic Enforcement Plan priorities.

Strategic Priorities

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

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

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

Other Notable Developments

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

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

Takeaways For Employers

While the 2020 global pandemic may have slowed down the workforce developments and relatedly the EEOC for a few years, the FY 2022 APR suggests the EEOC is back to investigating and litigating employment discrimination claims in full gear. Employers should be mindful of these data points in terms of implementing and enforcing policies against employment discrimination.

We anticipate that the EEOC will continue to aggressively pursue its strategic priority areas, such as systemic discrimination, racial justice, artificial intelligence, and its underlying goal of providing access to justice for underrepresented groups of workers. We will continue to track EEOC litigation developments throughout the year.

By Gerald L. Maatman, Jr. and Jennifer Riley

Duane Morris Takeaway: Over the past year, the Biden Administration continued to roll out changes on several fronts as it aimed to expand the rights, remedies, and procedural avenues available to workers. During 2022, such efforts fueled litigation. With its decision in West Virginia v. Environmental Protection Agency, 142 S.Ct. 2587 (2022), the U.S. Supreme Court imposed another hurdle to agency rule-making. Meanwhile, government enforcement litigation activity took a back seat.

Over the past two years, the U.S. Department of Labor, in particular, has continued to roll out worker-friendly rules that could have a cascading impact on workplace class actions, including rules designed to wipe out the pro-business policies of the Trump Administration. Such efforts continued on multiple fronts in 2022, including with respect to rules regarding businesses’ utilization of independent contractors and their use of the tip credit.

As to the former, effective January 6, 2021, the DOL during the Trump Administration adopted an Independent Contractor Rule that addressed the circumstances under which a worker qualifies as an independent contractor. The Rule arguably made it easier for companies, including companies operating in the gig economy, to utilize independent contractors. Although the DOL under the Biden Administration withdrew the Rule in May 2021, in March 2022, a federal district court in Texas found the DOL’s withdrawal of the Rule unlawful. Although the DOL appealed the decision in May 2022, it later abandoned the appeal and, instead, on October 13, 2022, the DOL issued a proposed new rule on independent contractor status. It described the proposed framework as “more consistent with longstanding judicial precedent” and stated that the DOL “believes the new rule [will] preserve essential worker rights and provide consistency for regulated entities.” The rule is likely to fuel further litigation in 2023 and have a cascading impact on the workplace class action landscape as it impacts litigation and potential recoveries.

The DOL’s efforts to regulate use of the tip credit have met similar controversy. The FLSA, at 29 U.S.C. § 203(m), permits an employer to use the tips received by tipped workers to satisfy a portion of its minimum wage obligation. In 1988, however, the DOL added a rule (the 80/20 Rule) to its Field Operations Handbook that purported to require employers to pay employees at the full minimum wage rate for time spent performing non-tip-producing tasks that exceeded 20% of their workweek. Multiple courts attempted to apply this guidance so as to require employers to separate tasks performed by tipped workers into categories of tip-producing, non-tip-producing, and unrelated tasks, and the ensuring litigation over these issues has plagued the hospitality industry, in particular, over the past decade.

In November 2018, the DOL under the Trump Administration issued an opinion letter withdrawing the 80/20 Rule and, in February 2019, it amended the Field Operations Handbook to include a “reasonable time” standard, explaining that “an employer of an employee who has significant non-tip related duties which are inextricably intertwined with [his or her] tipped duties should not be forced to account for the time that employee spends doing those intertwined duties.” In December 2020, the DOL issued the Tip Regulations Final Rule. After twice delaying the effective date of the Final Rule, on October 23, 2021, the DOL under the Biden Administration withdrew and replaced the Final Rule. In doing so, the DOL resurrected the 80/20 Rule and purported to limit the tip credit to non-tip-producing work that directly supports tip-producing work and does not exceed “a continuous period” of 30 minutes. The new rule went into effect on December 28, 2021. In 2022, the Restaurant Law Center and Texas Restaurant Association filed suit seeking to invalidate the new final rule. On February 22, 2022, the U.S. District Court for the Western District of Texas denied their much-watched emergency motion seeking to enjoin nationwide enforcement of the new final rule but did not issue a ruling on the merits, and the appeal remains pending in the Fifth Circuit. The results are apt to fuel additional litigation in 2023.

The ultimate result is apt to elucidate the limits of agency rule-making authority and test the impact of the U.S. Supreme Court’s recent ruling in West Virginia v. Environmental Protection Agency, 142 S.Ct. 2587 (2022). In that case, the Supreme Court considered the validity of the Environmental Protection Agency’s new Affordable Clean Energy (ACE) Rule that was promulgated under Clean Air Act (CAA). It held that, under the major questions doctrine, the agency must point to “clear congressional authorization” for the authority it claims. The government failed to offer such authorization, instead pointing to a “vague statutory grant” that the Supreme Court found “not close to the sort of clear authorization required by our precedents.” Id. at 2614.

The changing tide of the Biden Administration’s policies has been slow to impact other areas. Whereas the DOL acted swiftly to reverse course on many fronts, over most of the past year, the EEOC continued to operate with a Trump-appointed majority of commissioners.

During 2022, however, the EEOC continued to operate with a Trump-appointed majority of commissioners.  Although President Biden quickly named two Democrats for the five-member Commission, Charlotte E. Burrows and Jocelyn Samuels, as Chair and Vice Chair, respectively, the commission retained a Republican-appointed majority until former chair Janet Dhillon’s resignation on November 18, 2022. Although such expiration opened the door to a Democratic-appointed majority, the Senate has not yet confirmed a replacement.

As the DOL continued efforts to work an about-face on the rule-making front, the EEOC’s year-over-year activity remained fairly steady. During fiscal year 2022, the EEOC filed 94 lawsuits. The EEOC’s year-over-year activity remained fairly steady.  During fiscal year 2022, the EEOC filed 94 lawsuits, including 92 merits lawsuits and two subpoena enforcement actions.  This number marked a significant decrease from the filings during fiscal year 2021, when the EEOC filed 124 lawsuits, including 116 merits lawsuits. This year’s filing data more closely resembles fiscal year 2020, when the EEOC filed 97 total lawsuits, including 93 merits lawsuits.

Notably, the EEOC’s California district offices in San Francisco and Los Angeles combined for 13 filings this past year, which is identical to the combined 13 cases they filed in fiscal year 2021.

According to the EEOC, it filed 13 systemic lawsuits this past year, the same number it filed during fiscal year 2021.  The EEOC reported that it has 29 pending systemic cases, which accounted for 16% of the EEOC’s docket in fiscal year 2021. This data has not yet been published for fiscal year 2022.

In contrast, by the end of FY 2018, the EEOC had 71 systemic cases on its active docket, two of which included over 1,000 victims, and systemic cases accounted for 23.5% of its active lawsuits in that year, likely reflecting a stalling in the ability of its Democratic-appointment members to push this aspect of the EEOC’s agenda.

Comparing its monetary recovery to previous years, the EEOC recovered $535.5 million in all types of cases in FY 2020, $486 million in FY 2019, and $505 million in FY 2018.

In sum, whereas companies continued to see pro-business rules promulgated by the Trump Administration withdrawn and overwritten in 2022, courts continued to impose hurdles to agency rulemaking, the success of which will continue to be seen in 2023. Enforcement activity remained steady as political appointments remain pending.

Employers are apt to see increased activity in 2023 as the EEOC in particular gains its full component of Biden appointees and can exercise its majority power to advance its agenda.

 

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

Duane Morris Takeaways: On January 10, 2023, the EEOC published a draft of its proposed Strategic Enforcement Plan (“SEP”) for Fiscal Years 2023-2027. While the draft SEP was only released for public comment and is not yet final, a reading of the tea leaves suggests that a handful of subjects will be squarely on the EEOC’s radar for the next four years, including: (1) discrimination stemming from the use of artificial intelligence in hiring; (2) preventing and remedying systemic harassment; (3) equal pay obligations; and (4) various categories relating to emerging areas where protections are needed, protecting vulnerable workers, and providing access to justice.

The EEOC’s Strategic Priorities

1. Artificial Intelligence 

While the EEOC’s focus on eliminating barriers in recruitment and hiring is not a new phenomenon, employers’ increasing use of artificial intelligence in hiring has added a new wrinkle in this space. The SEP specifically notes that the EEOC will focus “on the use of automated systems, including artificial intelligence or machine learning, to target job advertisements, recruit applicants, or make or assist in hiring decisions where such systems intentionally exclude or adversely impact protected group.” Id. at 9. The Commission adds that it will monitor screening tools or requirements that disproportionately impact workers based on their protected status, including those facilitated by artificial intelligence or other automated systems, pre-employment tests, and background checks. Finally, the EEOC notes that it will keep an eye on restrictive application processes or systems, including online systems that are difficult for individuals with disabilities or other protected groups to access.

Employers who utilize artificial intelligence in the hiring process should take heed. The EEOC listed this category first in terms of subject matter priorities. Given the Commission’s implied skepticism in regards to the impact of automated hiring software, now is the time for employers to vet their systems and make sure they are legally compliant.

2. Systemic Harassment

Preventing and remedying systemic discrimination has long been a cornerstone priority for the EEOC. The EEOC Commissioners appointed by different presidential administrations have taken varying approaches to tackling discrimination on a systemic level, but regardless, the EEOC always has its eyes open for instances where there is widespread discriminatory practices at a company. The SEP makes clear that “[h]arassment remains a serious workplace problem,” noting that over 34% of the charges of employment discrimination the EEOC received between FY 2017 and FY 2021 included an allegation of harassment. Id. at 14. The SEP labels this a potential systemic issue, noting that a claim by an individual or small group may fall within this priority if it is related to a widespread pattern or practice of harassment. The EEOC indicates it will combat this problem by focusing on strong enforcement with appropriate monetary relief and targeted equitable relief to prevent future harassment.

While isolated incidents of harassment at largescale organizations may seem inevitable, the SEP’s declaration of this priority suggests employers need to pay closer attention to claims of harassment. If the EEOC senses that harassment is part of the fabric of an organization’s culture, such a situation could be ripe for a systemic discrimination claim. Accordingly, employers should take each individual claim of harassment seriously, and should consistently work to eradicate such behavior from the workplace.

3. Equal Pay

The SEP makes clear that equal pay, and gender pay differences in particular, will continue to be a focus for the EEOC. The SEP notes that “[b]ecause many workers do not know how their pay compares to their coworkers’ and, therefore, are less likely to discover and report pay discrimination, the Commission will continue to use directed investigations and Commissioner Charges, as appropriate, to facilitate enforcement.” Id. at *13. Transparency appears to be a key component of this strategic priority, as the EEOC opines that pay secrecy policies, retaliating against workers for asking about pay or sharing their pay with coworkers, reliance on past salary history to set pay, and requiring applicants to specify their desired or expected salary at the application stage will all be areas of concern.

Pay audits should be a consistent practice for employers. If they are not, the EEOC’s inclusion of this priority in its SEP suggests that the Commission will aggressively investigate such claims and ask employers to produce data. Employers can best avoid the time and cost-draining exercises of producing pay data by proactively examining their compensation practices up front.

4. Additional Priorities

The remaining three subject matter priorities include: (1) addressing emerging and developing issues; (2) protecting vulnerable workers; and (3) providing access to justice. In regards to emerging issues, the SEP seeks to address discrimination that is influenced by local, national and global events, such as pandemic-related discrimination and incidents of targeting various racial and religious groups. The SEP also seeks enhanced protections for vulnerable workers, such as migrant workers, disabled people, older workers, teenaged workers, and LGBTQ+ individuals. Finally, the SEP seeks to focus on policies and practices that limit substantive rights, discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or impede the EEOC’s investigative or enforcement efforts. For example, this priority includes practices that deter or prohibit filing charges with the EEOC or cooperating freely in EEOC investigations or litigation.

In sum, these additional priorities are geared towards flexibly adopting to the evolving needs of the workforce, to make sure all individuals have uninhibited access to justice.

Implications For Employers

The EEOC’s SEP is an important publication for employers since it previews areas where companies may be targeted for investigations. While the 2023-2027 SEP is currently in draft form, we do not anticipate that there will be any significant overhaul, particularly in regards to the strategic priorities that are analyzed in this blog post. Accordingly, prudent employers should be mindful of these strategic priorities, and get a head-start on compliance if they have not already done so.