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Have a plan when an EEOC investigation becomes systemic.
Without a doubt, the U.S. Equal Employment Opportunity Commission (EEOC) continues to aggressively pursue large-scale enforcement actions for cases of discrimination that could have a broad impact on an industry, profession, company or geographic location.
The commission recently reiterated that its systemic program, which pursues alleged "pattern and practice" discrimination, is one of its top priorities. The program can create unwanted exposure for employers and even greater liability in possible class-action lawsuits. Thus, it is as important as ever for employers to prepare for an investigation.
How the Program Works
The increased focus on systemic discrimination began in 2005 when the agency created a special task force to examine how it could best combat the issue. Based on that task force’s recommendations, the EEOC created its systemic program in 2006, which focused on systemic cases defined as "pattern or practice, policy and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company or geographic location."
Under this initiative, the EEOC began aggressively pursuing nationwide investigations into such cases. Just last year, the agency initiated 300 systemic investigations, resulting in 63 settlements or conciliation agreements that recovered approximately $40 million. There is no question that these numbers will continue to grow.
The EEOC uses a variety of strategies to target employers in its systemic program. One of the most common is transforming a single charge of discrimination into a systemic investigation.
For example, the EEOC can take a case in which a female employee alleges that she is paid less than a male co-worker in the same position and turn it into a systemic investigation of nationwide pay practices in order to determine whether there is a pattern and practice of paying females less than males. To do this, the EEOC seeks data about a company as a whole or makes nationwide requests for such information.
The EEOC has also begun partnering with other agencies, such as the Department of Labor and the Office of Federal Contract Compliance Programs, to share information and obtain data that could be used to support a systemic investigation.
By using these strategies, the EEOC’s systemic program targets employers that may not realize that a single charge of discrimination or a release of data to other government agencies has left them vulnerable to a large, companywide investigation.
According to the EEOC, there are a variety of practices that the systemic program seeks to investigate and eliminate. These include alleged:
There has been an increased focus on the following types of cases:
Leave policies and possible disability discrimination. The EEOC has been launching systemic investigations into whether leave-of-absence policies take into account leave modifications for employees who may need reasonable accommodations while on leave. In these cases, it is common for the agency to look at the uniform application of leave policies to make the case that such a policy could have a disparate impact on individuals with disabilities. The EEOC often launches leave-policy investigations from single charges.
Hiring practices. This has been a hot topic for the EEOC since the inception of the systemic program. In these investigations, the EEOC determines whether protected groups may be underrepresented in certain job categories. It usually relies heavily on data collected during investigations and on reports, such as EEO-1 reports, provided by the company.
Pay and promotion practices. The EEOC relies mostly on data it has obtained in investigating an apparent single charge of discrimination to launch systemic investigations into pay and promotion practices.
Gender discrimination. Always a hot topic for the EEOC, gender discrimination is now even more of a focus, with new attention being paid to gender-specific issues such as caregiver status, pregnancy and accommodations related to breast-feeding. In these cases, the agency does not rely as heavily on data; instead, it launches investigations into policies and practices to determine if women are treated differently from men.
Arrest and conviction records. In 2012, the EEOC issued updated guidelines on the use of such records in hiring. As a result, the agency has focused on whether across-the-board use of background checks has a disparate impact on certain protected classes. In particular, the EEOC has noted that "an employer’s neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) may disproportionately impact some individuals protected under Title VII, and may violate the law if not job related and consistent with business necessity (disparate impact liability)." Therefore, it can be expected that the EEOC’s systemic investigations in this area will continue to increase.
There are many ways a company can remain out of the EEOC’s line of sight. Although there is no guarantee that a company will be able to avoid an EEOC visit, the following practices will certainly help avoid large public exposure and possible liability:
Audit your policies and procedures to ensure that none are "one size fits all." An easy target for EEOC systemic investigations are long-standing nondiscriminatory company policies that the agency believes could have a disparate impact on protected classes.
A policy that requires employees to pass a computer test before being promoted to a supervisor position may not, on its face, seem discriminatory. However, the EEOC might investigate whether the test has a disparate impact on certain racial or ethnic groups. Similarly, the agency will undoubtedly consider whether a blanket policy that requires an employee to be terminated after a one-year leave of absence violates the requirement that a request for a reasonable accommodation be reviewed on an individual basis.
To pre-empt EEOC investigations, routinely audit your company’s policies to ensure that they are not always uniformly applied beyond what is necessary.
The company should also consider whether policies routinely exclude or hurt certain classes of employees, even unintentionally. If an audit suggests it is necessary, change your company’s policies so the EEOC cannot state that the policies are "uniformly applied" without regard to the needs of an individual employee or that such policies adversely affect certain categories of employees.
Examine policies to make sure decisions are "decentralized" but also properly monitored.
Today, with growing companies and technology, it is easier than ever for employees to say, "Corporate told me to do it that way." However, resorting to such explanations can open the door to a systemic investigation because it allows the EEOC to point to one decision or policy that affects a large class of employees.
Instead, the best practice is to have a corporate policy but to leave implementation up to individual supervisors in consultation with appropriate HR professionals. For example, corporate human resources may issue guidance on necessary employee performance requirements for a salary bonus, but that same guidance also may state that the amount of a bonus is determined at individual supervisors’ discretion. This language is preferred because it clearly establishes decentralized decision-making, and the EEOC will have a much more difficult time determining that a single policy has the same effect on a class of people.
Conduct internal statistical analyses. Companies targeted in systemic investigations often do not realize that their nondiscriminatory policies may have a disparate impact on protected classes, and making sure there aren’t blanket policies might not be enough. In these cases, it’s best not to be surprised by the EEOC but instead to be proactive and conduct internal statistical analyses to determine whether a disparate impact does indeed exist. Often called "self-critical analyses," these types of audits can be confidential and privileged.
Because some courts do not recognize the self-critical analysis privilege, however, a company should engage legal counsel to direct and provide advice about the analysis and how it is performed to add another layer of privilege. The analysis can be done internally or through an external party. It may focus on the salaries of employees in a protected class compared with the salaries of employees not in that class, for example, or the number of employees in managerial positions who are members of a protected class.
Based on the results, the company should adjust its policies and make other necessary changes to ensure that there is no disparate impact on a protected class. By taking this proactive approach, you will be one step ahead of the EEOC.
It’s important to note, however, that if a company does discover an issue when conducting an audit, it must be willing to make the changes necessary to correct it. Otherwise, the audit results may become the EEOC’s main evidence in arguing that the employer knew that a disparate impact existed and did nothing to remedy it.
With the EEOC showing no signs of backing away from systemic investigations, taking the necessary steps to prevent inquiries in systemic cases should be a prime concern for employers.
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