HR Magazine: Legal Trends

By Jathan W. Janove May 1, 2001

HR Magazine, May 2001Vol. 46, No. 5

Soothing the EEOC Dragon

Learn to compromise, or take your chances on getting burned.

At the end of a long day, an HR director returns to the comfort of home. She tumbles into bed, happy for the chance to escape her troubles at work.

But she can’t escape. Her dreams are infiltrated by visions of a former employee who files a harassment claim with the Equal Employment Opportunity Commission (EEOC). The company believes the claim is frivolous; the agency does not.

The HR director speaks with the EEOC investigator. At first, the investigator seems reasonable. But as the conversation goes on, he becomes increasingly terrifying. Gradually, he is transformed into a huge, snarling dragon—one that threatens to enlist current and former employees in a class-action suit against the company.

The expense of fighting such a suit could ruin the company.

The HR director has no other option—she must fight. But she also has only a slight chance of victory. As the dragon leans across the desk to issue additional words of discouragement, his fiery breath—and the words it carries—shows that he won’t stop until he has burned the company to the ground.

Wake Up and Compromise!

When nightmares attack your sleep, you don’t have to worry about finding solutions. All you have to do is wake up.

But when nightmares attack your business, you don’t have that same luxury. You have to find a solution.

And sometimes the best solution is not to fight but to compromise. Why waste valuable energy fighting a dragon if you can find an easier way?

I learned this lesson personally. I once became involved, late in the investigative process, in a case that had the potential for a nightmarish outcome. In that case, a manager engaged in sexually charged conduct with subordinate employees. From the manager’s perspective, the activity was consensual and therefore appropriate. However, a female employee complained and subsequently filed a charge of discrimination with the EEOC.

Following a lengthy investigation, the EEOC determined that the charge had merit, so it issued a cause finding. In fact, the EEOC believed its case was so strong, and the manager’s behavior so egregious, that it considered filing a class-action lawsuit—even though only one employee had filed a charge.

Where would the additional litigants come from? The agency planned to seek full economic relief for all present and former employees it considered victims. Unlike typical private-party claims, which must be filed within 300 days of an allegedly discriminatory event, the EEOC planned to include individuals who had left the company years before.

To gather these individuals, the EEOC mailed out questionnaires to former employees, asking them if they had:

  • Been subjected to verbal or physical sexual harassment.
  • Witnessed other employees being subjected to sexual harassment.
  • Received a complaint about inappropriate sexual behavior.
  • Complained of sexual harassment.
  • Been interviewed by the employer regarding sexual harassment.

These former employees were invited to return the questionnaire to the EEOC and contact the agency directly with additional information. The questionnaires served not only as a source of information for the EEOC in building its case, but as a means of locating potential class action members.

The employer was not notified that these questionnaires were being distributed and learned of this fact only accidentally. As a result, it had no opportunity to rebut the information that surfaced.

But even if it had known of the questionnaires, the employer likely would have had difficulty mounting a rebuttal. When employers must gather information that is several years old, they often find that applicable policies, personnel files and other documents are gone, and that key witnesses have left the company or have forgotten important information.

Compounding these problems was the fact that EEOC representatives would not have been limited by attorney-client anti-solicitation rules. As a result, they planned to aggressively advertise in the media, looking for present and former employees to join the lawsuit.

In addition, the agency indicated that it might expand its action to include commonly owned (although separately incorporated) companies for judgment, collection and employee counting purposes. This significantly raised the ante for the employer because Title VII’s compensatory and punitive damages caps vary from $50,000 to $300,000 per employee, depending on workforce size.

An 'Out of the Box' Settlement

After reviewing the matter, it became apparent that serious attention to the EEOC’s proposed “injunctive” terms (i.e., non-monetary relief) might be the best way out of this mess.

We started by announcing that we would act on the EEOC’s proposed injunctive terms, whether or not we reached an overall settlement. The terms included preparing anti-harassment policies and procedures, conducting management and workforce training and taking corrective action to ensure that the alleged harasser, who was still employed in the organization, would not repeat his offensive behavior.

This proactive approach had a positive effect on the conciliation process. Although the agency’s opening negotiating position still seemed maximalistic (it sought lost wages plus the full amount of damages allowed for punitive and compensatory relief for each class member—a cumulative amount that the company could not afford to pay), an agreement was eventually worked out that averted class-action litigation.

Salient points included:

  • The total settlement amount was far below the EEOC’s initial position and a fraction of the potential damages the company might have incurred had the case been litigated. In addition, the agency agreed to a three-year payment period that eased the burden on the employer’s cash flow.
  • The EEOC stopped its search for class members. Although the agency ultimately determined the allocation of settlement proceeds among class members, the employer had a fair amount of input into the allocation.
  • Not all of the money went to the class members. Approximately one-third of the proceeds were split between a non-profit organization selected by the employer that provides assistance to battered and abused women, and a comprehensive training program for managers and supervisors of the company, affiliated companies and managers at other companies in the same industry.
  • The EEOC concluded that the manager’s actions were egregious. But it also agreed that, rather than firing him, it made sense to have him commit to a new standard of behavior, apologize to the women in writing and attend individualized training on appropriate workplace conduct.
  • The company agreed to waive confidentiality so that the EEOC could issue a press release, as part of the settlement.

What has been the upshot of this settlement? Although expensive, the settlement, including payment terms over time, enabled the employer to continue its operations unabated. According to management, the company suffered no ill effects of the EEOC’s press release and the comprehensive training program paid dividends by improving the communication and leadership skills of its managers.

Soothing the EEOC Dragon

If you have aroused the fiery temper of the EEOC, how can you avoid being burned? From the experience described above (as well as other, less harrowing, agency encounters), I suggest the following:

Discover the priority of your claim. When the EEOC investigates charges, it assigns them initial classifications of A, B or C. The “C” classification is the best news for employers because it is the lowest priority and a candidate for summary dismissal. A “B” classification means the charge will probably be dropped into the investigative hopper—and will be handled on a who-knows-when timeframe.

Employers whose claims are categorized as an “A” better get asbestos pants because the dragon is close and getting warmed up.

Even so, not all “A” classifications are the same. The agency has sub classifications of “A-2” (which indicates that a cause finding is likely, but that the EEOC won’t litigate) or “A-1” (which indicates that the agency may pursue the claim itself).

The investigator won’t necessarily tell you the classification, but with a little analysis and inquiry, you usually can figure it out. If the following things take place, consider yourself a candidate for the “A” classification:

  • You have been asked to submit a position statement.
  • The request for information from the agency appears to have been written with close attention to the allegations of the charge.
  • A questionnaire (like the one described at the beginning of this article) has been sent to former employees.
  • The EEOC did not invite you to mediation.
  • The investigator seems to have a working knowledge of the charge or seems familiar with the allegations.
  • In states where the EEOC typically defers to a state agency, you hear from the feds instead and there is no technical reason why (such as a difference in state and federal statutes of limitation).

If you learn your charge has been stamped with the proverbial “Scarlet A,” immediately hire an attorney who knows his or her way around Title VII and the agency process.

Conduct a frank investigation. Even if the charge has not been given an “A” classification, do a thorough investigation of the allegations and take a frank (as opposed to defensive) look at the company’s exposure. Scrutinize issues such as:

  • Are there innocent but exploitable inconsistencies in management’s documentation or treatment of different employees?
  • How difficult or costly would it be to mount a defense?
  • Are there other factors that suggest this is not a claim over which you would like “to draw a line in the sand?”

Consider early mediation. Some employers reject early mediation. For the most part, I think this is a mistake. Mediation programs present an early window for resolving claims on a cost-effective basis.

Even when mediation does not produce a settlement, it nevertheless may be useful in getting a clearer picture of the charging party’s allegations. This additional information can be helpful in analyzing the claim and framing a response to the agency.

According to EEOC spokesperson David Grinberg, in fiscal year 2000, 81 percent of charging parties who were offered mediation accepted, whereas only 31 percent of employers accepted mediation.

Of the claims that went to mediation, 65 percent were resolved, obviating litigation or further investigation. On average, these claims were resolved within 96 days (as compared to the EEOC’s more typical “Rip Van Winkle” turn-around time). An independent survey commissioned by the EEOC revealed that 96 percent of employers that participated in the mediation program would do so again if faced with another discrimination charge.

Don’t scorch the earth. Assuming you decide to contest the charge, resist the temptation to return a zealous investigator’s fire with fire. In emotionally charged cases, there is a tendency to adopt the approach that “If you hit me, I’ll hit you back harder.” This approach is seldom productive, especially with agencies such as the EEOC.

Put another way, few dragons can scorch the earth like the EEOC. It’s far better to learn the reasons for the agency’s aggressive position, identify the assumptions under which it operates and explain in non-vitriolic language why these assumptions are incorrect.

Beware Rule 412. A related “scorched earth” caution involves sexual harassment claims. In circumstances where charging parties appear to be manipulating the system to avoid responsibility for their own behavior or poor performance, there is a tendency to besmirch them with evidence of their sexual behavior.

However, one should approach the issue of the charging party’s sexual conduct with great care. Litigating sexual harassment claims remains a priority with the EEOC; the agency is far more interested in a business’s overall working environment than in the particular mores of a charging party.

Thus, an aggressive attack on the charging party’s sexual behavior is not only unlikely to persuade the EEOC, it is likely to antagonize it. As one EEOC attorney indicated to me, if the agency perceives your position to be “She was asking for it,” then you are asking for it.

Moreover, when addressing the issue of the charging party’s sexual behavior, one should be wary of Rule 412 of the Federal Rules of Evidence (sometimes referred to as the “rape shield rule”). This rule limits an employer’s ability to inquire into or introduce evidence of the plaintiff’s sexual behavior in a sexual harassment suit, especially when the behavior did not involve the alleged harasser. The EEOC is well aware of Rule 412 and follows it in the administrative process.

Consider prompt remedial action. Prompt remedial action can go a long way toward dissuading the EEOC from “making an example” of an employer. If a manager was overly hasty in terminating the charging party, the company can make an unconditional offer of reinstatement by which the employee could return to work and yet continue to pursue his or her claims.

Such an offer (which usually will be rejected, in my experience) can go a long way toward reducing the agency’s interest in litigating. It also may discourage plaintiff’s attorneys from taking the case: Under case law construing Title VII, if a charging party rejects an unconditional offer of reinstatement, that person may lose all claim to further back pay, reinstatement or front pay.

Sometimes, you can help dissuade the agency from pressing the claim by offering the charging party the option of unconditional reinstatement or the option of “make whole” relief—reinstatement plus back pay. If the charging party wants emotional or punitive damages as well, the EEOC may decline to use its resources to litigate his or her case.

Also, in a case of co-worker harassment, the agency may construe an offer of “make whole” relief to be an attempt by the employer to fulfill its duty to remedy harassment. As a result, the agency may issue a no-cause finding.

Other examples of early remedial action include curing gaps, omissions or errors in company policies and conducting workforce and management training without awaiting an agency determination.

Employers may be reluctant to engage in such activity due to a concern that the EEOC would deem such measures an admission of wrongdoing. Although one should consult legal counsel regarding the evidentiary implications, in my experience, such remedial action has a positive effect in moving the claim away from litigation.

Giving the dragon its due, the EEOC is generally more interested in fixing work environments than in torching them. In the case I described, EEOC representatives told me that the most persuasive factor in their decision to withhold fire was evidence of the employer’s commitment not only to making its organization an EEO model but to offering education to other employers regarding their EEO obligations.

Understand the EEOC’s perspective. When negotiating with the EEOC, it helps to understand the agency’s goals or needs. As just stated, a key goal is improving working environments. In my client’s case, we addressed this goal with the charitable contribution and a training program offered not only for the company but for affiliated companies and other industry managers.

Addressing the EEOC’s desire to educate employers on their EEO obligations, the company agreed to wave confidentiality and allow the agency to publicize the settlement terms, including the training program.

Although my client was prepared to terminate the manager in question, it agreed to keep him employed as part of an effort to change this manager’s workplace behavior (and to avoid the situation where he simply moved on to another workplace and repeated his behavior there).

Even though the EEOC found this manager’s behavior to be egregious, it was a point in our favor that the company did not terminate him but sought instead to rehabilitate him. The EEOC will insist that it won’t tell an employer what kind of discipline should be meted out to harassers or discriminators; nevertheless, it will closely scrutinize your disciplinary decisions for better or for worse.

With respect to allocation of settlement proceeds to the charging party and other class members, one point to consider is the importance the EEOC places on rewarding employees who come forward and file charges, which gives the agency the opportunity to address problematic work environments. This point can be difficult for employers to swallow when the charging party is less than a model employee.

Nevertheless, once mutual trust has been established and progress made on other settlement terms, an employer may be able to reduce such a charging party’s share to a stomach-able “below-windfall” level.

Lessons of Beowulf

Since I speak of dragons, it is perhaps useful to recall the story of Beowulf. (To be spared the tortures of ancient English, check out Seamus Heaney’s recent translations, published by Farrar Straus & Giroux and W.W. Norton.)

In this tale, Beowulf is a warrior king whose successes on the battlefield have brought 50 years of peace to his people. After all this time, however, a long-quiet dragon terrorizes the countryside.

But the truth is, the dragon has a legitimate gripe. A runaway slave, seeking to appease his master, has stolen a precious goblet from the dragon’s lair. But rather than address the dragon’s grievance over the stolen goblet, Beowulf attacks the fire-breathing monster.

He succeeds in killing it but he and his nation pay a grievous price. Beowulf succumbs to injuries inflicted in the conflict. At the end of the story, his people mourn his loss and bemoan their expected fate without his leadership and strength to protect them from other tribes.

Contrasting Beowulf’s story, negotiating with an angry dragon is never easy—whether it lurks in a rocky cave or a bland government office building. The temptation to grab sword and shield and wade into battle may be great. Sometimes, in fact, the fight may be necessary.

Nevertheless, before proceeding in Beowulf-like fashion, I encourage employers to consider the points above and make an earnest and early effort to seek a negotiated resolution of the conflict. Hopefully then, the dragon will return to its lair and the village can live and prosper.

Jathan Janove is partner in Janove Baar L.C. in Salt Lake City and has been a practicing attorney for 19 years. Although he still helps employers fight fires (whether from EEOC dragons or other causes), his primary professional focus is on helping employers prevent them through training, consulting and developing sound HR policies and processes.

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