EEOC Announces Record Collections In 2015: What Does This Mean For Employers?

inlandThe Equal Employment Opportunity Commission (EEOC) has released its 2015 numbers on collections and litigation for the end of its fiscal year that ended September 30th.

Here are the numbers:

*       $525 million collected from employers;
*       $356 million collected from private, state, and local government employers via alternative dispute resolution and settlements;
*       $65.3 million collected on behalf of charging parties against employers via litigation; and
*       $105.7 million collected from the federal government.

To determine the scope of the regulatory risk, the number to weigh the most is the $65.3 million. This number represents collections won in court against employers who defended themselves, rather than settling out of court.

The collections number on the federal government ($105.7 million) reflects the feds suing the feds. Remarkably, this means nearly one out of every five dollars collected involved the U.S. government trying to enforce the law on the U.S government.

The $356 million in settlements, mediation, conciliation, and other alternative dispute resolution is the highest dollar number, but this number includes money collected from employers (private, state and local government), that commit discrimination and settle to limit their loss, as well as from employers that settle to avoid the costs associated with litigation.

Of the settlements, it would be telling if the EEOC would provide a breakdown of how many of these settlements were under $50,000; did not include an admission of guilt; and did not require any changes in management practices.  Based on my experience, I would guess most of the settlements are within these parameters, indicating nuisance value settlements…in other words an employer making a business decision to not litigate.

The EEOC states that less than 45 percent of conciliations are successful. That tells us that approximately 65 percent of employers and/or employees come to the dispute resolution table and refuse to give an inch.

Based on the numbers, you would assume that the EEOC would file a lot of cases on behalf of employees. Yet, only 142 lawsuits were filed during 2015 for discrimination. This is a small number, considering the number of employees in the United States is approximately 140 million. Even if some of the lawsuits were class actions, so as a percentage of the employed population, these are “struck by lightning” percentages.

Of the 142 cases, only 42 were high risk/high damage cases involving multiple parties or discrimination by policy (versus discrimination by treatment) and of these, only 16 were for systemic discrimination.

So, remember this percentage…0.158 percent. That is the percentage of suits brought by the EEOC for discrimination out of the 89,385 charges filed in 2015, and the percentage for high risk charges is even less.

That means if you are an employee who has suffered discrimination, your chances are pretty slim that the government will litigate on your behalf. You will have to do it on your own.

Note that the numbers collected in 2015 include charges brought in previous years, so the numbers need to be viewed as an estimate. Even so, one has to conclude that the collected amounts for the 2015 suits will be, by percentage, even lower.

As for employers, lets go back to the $65.3 million. If you add the $33.5 million collected from systemic discrimination settlements (just six percent of the overall settlement amount), this amounts to $98.8 million collected for jury verdict or employer-approved settlements for systemic discrimination (high risk cases). This constitutes less than 20 percent of the total EEOC collections.

The EEOC touts the numbers, claiming success in its efforts to eliminate discrimination. EEOC Chair Jenny Yang states:

This is a pivotal moment to renew our national commitment to combating discrimination. There is a growing awareness-across racial and ethnic lines-that we must do more as a country to address issues of equality. As we look ahead to the challenges that remain, our country must continue to invest the resources necessary to fulfill the promise of equal employment opportunity.

This statement begs the question: if employer discrimination is a national problem, why doesn’t the EEOC collect more money from employers?

I am sure the EEOC would argue if it had a larger budget and more resources, it could win more verdicts and settle more cases. Even so, this is the most aggressive EEOC in recent history, and it still does not litigate more than one percent of the charges filed.

The fact is that most employee litigation does not flow through the EEOC. Consequently, employers should not have a false sense of security that employees do not present a litigation risk…they do, and every employer should use risk management and loss prevention to curb the risk.

As for the conclusion about the risk from EEOC litigation:

*       A very small percentage of employees bring EEOC charges;
*       Of the charges filed, it is very unlikely the EEOC will litigate on behalf of the charging party; and
*       Of the charges the EEOC does litigate, there is no guarantee the EEOC will win.

With that in mind, you should follow the advice of your counsel, but consider the following if you receive an EEOC charge:

*       If the facts are unclear about whether discrimination occurred, employers should “think twice” before paying more than nuisance value when brought into the EEOC conciliation process.
*       If discrimination has occurred, it is a smart business practice to use the EEOC conciliation process to negotiate a settlement.
*       If systemic discrimination is alleged or multiple victims bring charges over the same matter, it is a smart business practice to use the conciliation process to negotiate a settlement.
*       If discrimination did not occur and the facts are in your favor, listen to counsel; evaluate the costs, and know that the odds are the EEOC will not litigate against you. The employee may, but the government usually stays on the sideline.

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