Category: EEOC Litigation

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

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

Case Background

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

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

The Consent Decree

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

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

Implications For Employers

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

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

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

Jeff: Bye everyone, thank you!

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., 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.