EEOC & DOL Enforcement Initiatives in the Second Obama Administration

MINORITY CORPORATE COUNSEL ASSOCIATION 2014 CLE EXPO

March 12, 2014

Fred W. AlvarezPalo Alto, California

falvarez@jonesday.com

Who’s Who?• EEOC:

– 5 Confirmed Commissioners

– 1 Confirmed General Counsel

• DOL:

– 1 Confirmed Secretary of Labor

– 1 Confirmed Solicitor of Labor

– 1 Appointed OFCCP Director

– 1 Nominated Wage & Hour Division Director

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EEOC Initiatives

• Strategic Enforcement Plan

• Litigation Priorities

• Procedural Issues

• Defense Strategy

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EEOC’s Strategic Enforcement Plan

December 2012

• Fiscal Years 2013-2016

• Priorities:

• Eliminating systemic barriers in recruitment and hiring

• Immigrant, migrant, and other vulnerable workers

• Emerging issues : ADA Amendments Act; Lesbian, Gay, Bisexual, and Transgender issues; pregnancy and forced unpaid leave

• Compensation & gender

• Access to the legal system – retaliation & releases

• Harassment4

Recruitment and Hiring• Exclusionary policies and practices

• Channeling/steering of individuals into specific jobs

• Use of screening tools

• Pre-employment tests

• Criminal history and credit background checks

• Date of birth screens on online applications

5

EEOC & Criminal Background Checks

• Major policy and litigation initiative

• Focus on race and national origin disparate impact

• Targeting blanket prohibitions on hiring convicted felons

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EEOC Guidance on Consideration of Arrest & Conviction Records

• Issued on April 25, 2012

• Cites national conviction statistics

• Flips the burden of proof by placing the burden on employers – “Presumed impact” unless employer proves otherwise

• Affirmative defense - “job related for the position in question and consistent with business necessity.”

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EEOC Guidance on Consideration of Arrest & Conviction Records

• Two circumstances when an employer will meet the “business necessity” defense:

• The employer validates per the Uniform Guidelines on Employee Selection Procedures

• The employer develops a “targeted screen” considering at least

– The nature of the crime

– The time elapsed

– The nature of the job

– AND then provides an opportunity for an “individualized assessment” for people excluded by the screen to determine whether the policy as applied is job-related and consistent with business necessity.

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EEOC Litigation Priorities

• Criminal Convictions

• Credit Checks

• Leaves

• Pay Equity

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Criminal Background Checks• Pepsi Beverages – $3.13 million settlement with EEOC – alleged

that practice of rejecting individuals with arrest records or convictions for minor offenses had adverse impact against African American applicants.

• EEOC v. Peoplemark, Inc. (6th Cir. 2013) – Attack on alleged “blanket no-hire policy” dismissed (“… without foundation from the beginning.”) and EEOC sanctioned because employer offered employment to many convicted felons. $752,000 in defense fees awarded.

• EEOC v. Freeman (D. Md. 2013) – Dismissed because EEOC did not offer admissible statistical evidence of adverse impact; EEOC alleged discrimination against Hispanics, men and African Americans.

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EEOC Criminal Background Check Lawsuits

• EEOC v. BMW Manufacturing Co., LLC (D.S.C. pending) - EEOC alleges that BMW disproportionately screened out African Americans from jobs, and that the policy is not job related and consistent with business necessity.

• EEOC v. Dollar General (N.D. Ill. pending) – EEOC alleges that Dollar General conditions all of its job offers on criminal background checks, which results in a disparate impact against blacks.

• Nine Attorneys General Letter (July 24, 2013)

• Texas v. EEOC (filed November 4, 2013) 

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Credit Checks• EEOC asserts that using credit history data in hiring decisions

can have an adverse impact against minorities.

• EEOC v. Kaplan Higher Education Corp., Case No. 1:10 CV 2882, 2013 BL 21834 (N.D. Ohio Jan. 28, 2013), appeal pending.

• Alleged “defendants' use of credit reports in the hiring process has an unlawful disparate impact on Black applicants.”

• Court granted summary judgment in favor of the defendant.

– “race rating” used by EEOC’s expert was not reliable

– EEOC failed to prove adverse impact

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Leave Policies & the Americans with Disabilities Act

• EEOC contends that employers must “modify” attendance and leave policies to provide disabled employees with additional leave unless:

• Another accommodation would allow the employees to perform the essential functions of their position; or

• Granting additional leave would cause an undue hardship.

• EEOC may issue new guidance about the ADA and leave policies.

• Courts do not always agree with EEOC.

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EEOC & Leave

• EEOC v. Sears Roebuck & Co., No. 04 C 7282 (N.D. Ill Sept. 29, 2009)

• EEOC alleged that Sears violated ADA by automatically discharging employees after one year of workers’ compensation leave.

• Settled for $6.9 million and other relief

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EEOC & Leave

• EEOC v. Verizon, Case 1:11-cv-01832-JKB (D. Md. 2011)

• EEOC alleged that Verizon maintained attendance plans that failed to accommodate certain individuals with disabilities

• Settled for $20 million and other relief

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EEOC & Pay Equity

• EEOC has enforcement authority for pay claims under Title VII, Equal Pay Act, and other laws.

• Equal Pay Act authorizes EEOC to start an investigation without a charge.

• Several EEOC offices have started audits under the Equal Pay Act.

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EEOC & Pay Equity

• EEOC may require employers to submit pay data to EEOC.

• Paycheck Fairness Act

– Would authorize this approach

– Stalled

• National Academy of Science evaluated “data sources, methodological requirements, and appropriate statistical techniques for the measurement and collection of employer pay data.”

• August 2012 Report questioned EEOC’s ability to handle the data

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EEOC’s Other Priorities• Age Discrimination

• EEOC’s Guidance on Reasonable Factors Other Than Age

• Directed Investigations

• Waivers and Releases

• Overly broad waivers identified as an issue in Strategic Enforcement Plan

• Family and Caregiving Responsibilities

• January 2011 issued “Employer Best Practices for Workers with Caregiving Responsibilities.”

• Increased attention to discrimination against caregivers, which EEOC asserts may be largely rooted in stereotypes based on gender and/or race.

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Procedural Issues

• How broad a subpoena can the EEOC enforce?

• What is the proper scope of an EEOC lawsuit based on the Commission’s pre-suit investigation?

• Has the EEOC satisfied its duty to engage in good faith conciliation before filing a lawsuit?

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EEOC Subpoena Authority• Title VII confers on the EEOC the power to issue

administrative subpoenas during investigations.• Deference given by courts.• Any respondent who opposes an EEOC subpoena

may file a petition to revoke or modify the subpoena• File with the District Director who issued the

subpoena • Must be filed within 5 days of receipt of subpoena

• Failure to file petition may foreclose ability to oppose subpoena enforcement.

• Petition process is not available for Age Discrimination in Employment Act and Equal Pay Act cases.

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EEOC Conciliation

• “If the Commission determines after [its] investigation that there is reasonable cause to believe that the charge is true, the Commission shall endeavor to eliminate any such alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion.” – 42 U.S.C. 2000e-5(b)

• Recently, the EEOC has come under fire for failing to satisfy its pre-suit duties.

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EEOC’s “Sue First, Ask Questions Later” Strategy

• EEOC v. CRST Van Expedited, Inc., 679 F.3d 657 (8th Cir. 2012)

• Sexual harassment class action.

• District court dismissed claims on behalf of 67 class members because the EEOC failed to investigate or attempt to conciliate their claims before EEOC sued.

• 8th Circuit affirmed.

• District court sanctioned EEOC $4.7 million for violating EEOC’s pre-suit investigation and conciliation requirements

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More “Sue First, Ask Questions Later” Cases

• EEOC v. Swissport Fueling, Inc., No. CV-10-02101-PHX-GMS, 2013 BL 4628 (D. Ariz. Jan. 07, 2013) – Dismissed claims for 21 claimants not identified before EEOC sued.

• EEOC v. The Original HoneyBaked Ham Co. of Georgia, Inc., No. 1:11-cv-02560-MSK-MEH, 2013 BL 10024 (D. Colo. Jan. 15, 2013) – court limited EEOC’s case to one supervisor who allegedly sexually harassed women.

• EEOC v. Bloomberg, L.P., No. 1:07-cv-08383-LAP, 2013 BL 239093, 119 FEP Cases 1567 (S.D.N.Y. Sept. 09, 2013) – EEOC’s claims for 29 claimants dismissed because the “EEOC completely abdicate[d] its role in the administrative process.”

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Avoiding EEOC Systemic Discrimination Lawsuits

• Tailor practices and policies – and approach – with an understanding of EEOC’s position

• Recognize EEOC’s very broad authority to compel the production of information and evidence during investigations

• Communicate with the EEOC’s investigator and other field staff

• Make a clear written record

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OFCCP:Agency with an Agenda

• More aggressive OFCCP

• Seeking to expand jurisdiction

• More aggressive enforcement• Seen increase in violation findings

– Particular focus on recruitment and compensation

• Also decrease in notices of compliance and increase in compliance agreements

– 102 settlements in FY2012 v. 84 in FY2011

• Aggressive Press Releases on Settlements

• Likely more challenges to OFCCP authority

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Recent Initiatives

• New regulations under Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 – published on September 24, 2013

• New Compensation Directive #307 – issued on February 28, 2013

• New Compliance Manual – issued on August 23, 2013

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A Fundamentally Different Approach To Disability/Veterans Affirmative Action:

The Quantitative Model

• Transition from Efforts to “Goals” Results: “What’s Your Problem?”

• Re-order of priorities: first, “affirmative action to employ,” then nondiscrimination.

• OFCCP estimates if contractors comply, they will hire 200,000 more veterans and 600,000 more individuals with disabilities.

• Focus on data collection, recruitment, hiring and retention.

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Invitation to Self-Identify: Triple Check

• Both regulations require contractors to invite applicants to self-identify pre- and post-offer.

• VEVRAA – pre-offer self-identify as a protected veteran, post-offer ask whether a specific category of veteran

• Section 503 – OFCCP will proscribe the language to be used

• Section 503 regulations also require that employers invite employees to self-identify every five years, with a “check in” during that time.

• EEOC Opinion Letter

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Section 503 Utilization Goal• A 7% utilization goal, not a hiring goal.

• Goal to be applied to each job group or, for smaller employers, to the entire workforce.

• Not derived from actual job group availability or applicant flow.

• Derived from current availability estimates from census data and OFCCP estimates of “the discouraged worker effect.”

• This goal “will provide a yardstick against which contractors will be able to measure the effectiveness of their equal employment opportunity efforts.”

• Not a quota, but raises the question: “What’s wrong?”

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VEVRAA Annual Hiring Benchmark

• Contractors are required to establish an annual hiring benchmark for protected veterans

• Can be established in one of two ways:

– National availability as reported annually by OFCCP

– Or based on contractor’s own availability estimates based on five factors

• A goal, not a quota

• But “if totality of efforts (recruitment and outreach) are not effective, must identify and implement alternative efforts.”

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New Compensation Directive• Effective February 28, 2013, OFCCP rescinded two

enforcement guidance documents on pay discrimination issued in 2006: the Compensation Standards and the Voluntary Guidelines.

• Reason articulated for the change is that the 2006 documents “significantly constrained OFCCP’s ability to investigate pay discrimination to the full extent permitted by law.”

• Issued new Directive #307: “Procedures for Reviewing Contractor Compensation Systems and Practices.”

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The 2006 Compensation Standards

• Rejected “Pay Grade” Theory

• Adopted the “similarly situated” standard for comparisons of employees compensation, relying on “judicial and administrative interpretations of Title VII.” Employees are similarly situated if they perform similar work and occupy positions involving similar responsibility levels, skills, and qualifications.

• Adopted a statistical technique for assessing the combined effects of the multiple, legitimate factors that influence employers’ compensation decisions called multiple regression analysis.

• Emphasized the importance of anecdotal evidence of discrimination and noted that the OFCCP would rarely issue a Notice of Violation alleging systemic compensation discrimination without such evidence.

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How Does Directive No. 307 Change Things?

• “Case-by-Case” Approach with “range of investigative and analytical tools”

• “Statistical analyses, such as multiple regression, and non-statistical analyses, such as the use of comparators or cohort analysis, are applied as feasible and appropriate given the factual questions and the available data and evidence.”

• “COs seek anecdotal evidence, but will investigate and remedy compensation discrimination regardless of whether individual workers believe they are being underpaid, or whether OFCCP has any anecdotal evidence.”

• This approach “eliminate[s] unnecessary barriers” to OFCCP’s ability to protect workers from discrimination.

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Key Points in New Manual

• Expanding Time Period Covered by Audit

• Allowing Additional Data Requests

• Expanding Onsite Review Agenda

– Implementation of AAP

– Investigating “matters that cannot be fully examined at the desk audit”

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Contractor Strategy?• Think “Differently” About Disability and Veterans

– 2014 Plan v. 2015 Plan

– “ Missed Your Number? What’s Your Story?”

• Prepare for Open Ended Compensation Audits

– Self-Audit

– Think Through the “Disparities”

• Prepare for Adverse Impact

– Recruitment

– Hiring

• Prepare to Be Cited

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Wage & Hour Division Update• Dr. David Weil nominated by President Obama to head the

Wage & Hour Division

• Professor at Boston University

• Senior Research Fellow at the Kennedy School of Government, Harvard University

• Principal Investigator, Improving Workplace Conditions Through Strategic Enforcement

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Family & Medical Leave Act Same Sex Marriage

• “The Supreme Court’s recent decision in United States v. Windsor, which struck down the provisions of the Defense of Marriage Act (DOMA) that denied federal benefits to legally married, same-sex couples. . . . [T]he Department of Labor updated several guidance documents today to remove references to DOMA and to affirm the availability of spousal leave based on same-sex marriages under the Family and Medical Leave Act (FMLA). This is one of many steps the Department will be taking over the coming months to implement the Supreme Court’s decision. ” - Secretary Thomas Perez, August 9, 2013  

• Family & Medical Leave Act: “Spouse means a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.” U.S. Department of Labor Fact Sheet, August 2013, available at http://www.dol.gov/whd/regs/compliance/whdfs28f.htm

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Wage & Hour DivisionUpdate

• Fair Labor Standards Act “right to know” proposal would require employers to produce a “classification analysis” for each exempt employee

• No opinion letters

• Administrator Interpretations

• Minimum wage and overtime protections extended to direct care workers by regulation

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Questions

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