By Matthew J. GagnonChristopher J. DeGroff, and Gerald L. Maatman, Jr.

Seyfarth Synopsis: With uncertain times and profound changes anticipated for the EEOC, employers anxiously await what enforcement litigation the EEOC has in store. Although 2016 showed a marked decline in filings, fiscal year 2017 shows a return to vigorous enforcement filings, with a substantial number of filings in the waning days of the fiscal year.

Employers are living in uncertain times. The impact of a Trump Administration and the EEOC’s new Strategic Enforcement Plan (SEP) for fiscal years 2017-2021 are still working themselves out in the FY 2017 filing trends. Nonetheless, one trend has reemerged: a vigorous number of EEOC case filings. It looks like the anemic numbers of FY 2016 were just a bump in the road, as FY 2017 has revealed an increase in total filings, even eclipsing the numbers from FY 2015 and 2014. (Compare here to here and here.) This year, the EEOC filed 202 actions, 184 merits lawsuits and 18 subpoena enforcement actions.

The September filing frenzy is still an EEOC way-of-life, as this past month yet again holds the title for most filings compared to any other month. At the time of publication, 88 lawsuits were filed in September, including 21 in the last two days alone. In fact, the EEOC filed more cases in the last three months of FY 2017 than it did during all of FY 2016. The total number of filings for the remaining months remains consistent with prior years, including a noticeable ramp up period boasting double digit numbers through the summer.

Filings out of the Chicago district office were back up in FY 2017 after an uncharacteristic decline to just 7 total filings in 2016. This year, Chicago hit 21 filings, an enormous increase from last year. This is closer to the total number of Chicago filings in FY 2015 and 2014 (26 in each year). The Los Angeles district office also increased its filings, hitting a high of 22, a substantial jump compared to previous years and the most of any district office in FY 2017. On the other end of the spectrum, the Phoenix district office has seen a notable drop, with only 7 filings compared to 17 in FY 2016.

New SEP, Same Focus

Every year we analyze what the EEOC says about its substantive focus as a way to understand what conduct it is targeting. This year, Title VII takes center stage. Although Title VII has consistently been the largest category of filings, last year showed a dip in the percentage of filings alleging Title VII violations, at only 41%. Nonetheless, this year Title VII has regained its previous proportion, accounting for 53% of all filings. This is on par with FY 2015 and 2014, showing once again that FY 2016 seems to have been an outlier.

Although the 2017-2021 SEP outlined the same general enforcement priorities as the previous version of the SEP (covering FY 2012 to 2016), the new SEP added “backlash discrimination” towards individuals of Muslin/Sikh/Arab/Middle Eastern/South Asian communities as an additional focus. One would expect this focus might increase the number of Title VII claims alleging either religious, racial, or national origin discrimination. However, those filings stayed relatively even, and were even a bit down from previous years. Religious, national origin, and race discrimination claims made up 42% of all Title VII claims, compared to 50% in 2016 and 46% in 2015.

Uncertainty For Equal Pay Claims

With a new administration came a new Acting Chair for the EEOC. President Trump appointed Victoria Lipnic as Acting Chair on January 25, 2017. Employers expected the EEOC’s new leader to steer the EEOC’s agenda in a different direction. Some believed Lipnic was foreshadowing future trends when she made it clear at her first public appearance – hosted by none other than Seyfarth Shaw – that she is “very interested in equal pay issues.” (See here.) And indeed, we have seen a slight uptick in the number of EPA claims filed in FY 2017. In FY 2017, The EEOC filed 11 EPA claims, compared to 6 in 2016, 5 in 2015, and 2 in 2014.

However, on June 28, 2017, President Trump tapped Janet Dhillon as Chair of the EEOC. Dhillon would come to the EEOC with extensive experience in a big law firm and as the lead lawyer at three large corporations, US Airways, J.C. Penney, and Burlington Stores Inc. Although it is too early to know how she could change the direction of the agency if confirmed, it is entirely possible that she could back away from previous goals to pursue equal pay claims more aggressively.

The Trump Administration has also made other moves that may indicate a change in direction with respect to equal pay initiatives. On February 1, 2016, the EEOC proposed changes to the EEO-1 report that would require all employers with more than 100 employees to submit more detailed compensation data to the EEOC, including information regarding total compensation and total hours worked by race, ethnicity, and gender. This was a change from the previous EEO-1 report, which only required employers to report on employee gender and ethnicity in relation to job titles. However, on August 29, 2017, the new EEO-1 reporting requirements were indefinitely suspended. We will have to wait and see whether the slight uptick in EPA claims in FY 2017 was a one-year anomaly.

Implications For Employers

The changes brought by the Trump Administration are still in the process of working themselves down into the rank and file of many federal agencies. The EEOC is no exception. Despite all of the unrest and uncertainty about where the EEOC may be headed, the FY 2017 filing trends largely show a return to previous years, albeit with a slight uptick in EPA claims. Certainly, changes in top personnel will have an impact on how the EEOC pursues its enforcement agenda. Exactly what that impact will be remains to be seen.

Loyal readers know that this post is merely a prelude to our full analysis of trends and developments affecting EEOC litigation, which will be published at the end of the calendar year. Stay tuned for our continued analysis of FY 2017 EEOC filings, and our thoughts about what employers should keep an eye on as we enter FY 2018. We look forward to keeping you in the loop all year long!

Readers can also find this post on our EEOC Countdown blog here.

calmBy Gerald L. Maatman, Jr.

Today I had the privilege of attending the 24th Annual Employment Practices Liability Insurance Program hosted by the American Conference Institute in New York City (I moderated a session on EEOC litigation).

Constance Barker, one of the five Commissioners at the U.S. Equal Employment Opportunity Commission, gave the keynote address at the Program. Her presentation was fascinating, and focused largely on the future enforcement litigation activities of the EEOC for 2016. As the tag line of the old E.F. Hutton TV commercial suggested, “when the EEOC talks, employers should listen….” Commissioner Barker’s views and pronouncements are important for employers in crafting their workplace compliance strategies.

Focus Of Possible EEOC Activities

Commissioner Barker noted that 2016 is apt to see the EEOC issuing various regulations and guidance as the final year of the Obama Administration winds down. As she said at today’s Program, “expect a lot of activity…” In addition to regulations on GINA, the ADA, and wellness plans, Commissioner Barker asserted that other guidance is likely in the areas of retaliation, joint employer liability, leave policies, and national origin discrimination relative to Muslim workers. Commission Barker advised employers to take a close look at the proposed retaliation guidance, which she termed was “huge, huge, huge…” In particular, she cited the guidance’s expansive view of what constitutes protected activity, and how even discipline over “do not discuss compensation” policies would constitute retaliation (on the premise that discussing pay is protected activity).

Systemic Litigation Targets

Commissioner Barker opined that the healthcare, restaurant, and manufacturing industries would see significant litigation activity in 2016. Moreover, race, gender, pregnancy, and leave issues will be “litigation hot spots” for those industries. With nearly 25% of the EEOC’s docket now focus on systemic litigation involving assertion of claims on behalf of groups of employees, Commissioner Barker said that “leave and accommodation policies” also will be prime targets for systemic litigation.

Commissioner Barker shared the view that certain leave policies are on the EEOC’s litigation radar screen, such as policies that cap leave at a certain number of days; policies that have no accommodation safeguards; “100% healed” policies; and policies prohibiting leave if a worker is not FMLA-eligible.

New Developing Areas

Commissioner Barker also predicted a continuing commitment by the EEOC to “develop the law” on joint employer concepts, LGBT rights, workplace arbitration, and protections for workers in the gig economy. She noted that various agencies – such as the NLRB – have been quite aggressive in expanding traditional notions of employer liability, and that employers should be mindful that the EEOC is sometimes aligned to those views too.

In broader terms, this squarely raises the issue of the proper role and responsibility of the EEOC. Should it enforce the law as written or expand the law to maximize the reach and public policies within employment discrimination prohibitions? Many critics of the EEOC have cited its litigation focus as further evidence that the Commission is an activist agency that is result-oriented and willing to do whatever it takes to pursue litigation enforcement strategies it deems appropriate.

This issue is sure to heat up further in 2016.

Readers can also find this post on our EEOC Countdown blog here.

thCAD0SFA4By Paul Kehoe and Larry Lorber

Today, the U.S. Equal Employment Opportunity Commission (“EEOC”) issued a Notice of Proposed Rulemaking addressing wellness program incentives under the Genetic Information Nondiscrimination Act (“GINA Proposed Rule”) in the Federal Register (here).  This NRPM comes on the heels of the EEOC’s proposed rule covering wellness program incentives under the Americans With Disabilities Act (“ADA Proposed Rule”) released last April and discussed here.  Today’s proposal should be required reading for corporate counsel and HR executives. The EEOC’s litigation enforcement program has targeted wellness programs, and GINA discrimination issues is also on the Commission’s radar.

Today’s Proposal

The EEOC received about 340 substantive comments from the ADA Proposed Rule, and one of many major concerns from the regulated community was the EEOC’s piecemeal approach to addressing wellness program incentives because it ignored spousal incentives.  Today’s proposal attempts to fill that gap.  However, the GINA Proposed Rule still ignores the primary concerns of the regulated community — that the EEOC is effectively usurping the regulations issued by the Departments of Labor, Health and Human Services, and Treasury (the “Tri-Agency Regulations”) by establishing a parallel — and more onerous — regulatory scheme related to wellness program incentives.

The new proposal likely represents an improvement over the ADA Proposed Rule on wellness programs in that the 30% incentive is calculated based on the total cost of the employee’s chosen coverage, but the devil is in the details.  For example, the proposed apportionment provision permits a total incentive of $4,200 for a plan that costs $14,000, but only where the allocation to the employee is $1,800 if the single coverage plan costs $6,000 and $2,400 to the spouse and/or other dependents.  This mechanism ignores practical reality because many employers design wellness programs by providing an equal incentive for employees and spouses.  As such, this requirement is inconsistent with the Tri-Agency Regulations.

In addition, the EEOC continues to assert that it has the authority to define just what is a “reasonably designed” wellness program.  Congress and the Administration have already defined the term in the Affordable Care Act (“ACA”) and the Tri-Agency Regulations.  Introducing a “similar” definition means that the EEOC intends to adopt a different standard than the one previously adopted by Congress in the ACA or the Departments of Labor, Treasury and HHS in the Tri-Agency Regulations.  Moreover, by importing the “reasonable design” requirement from “health-contingent wellness program,” the GINA Proposed Rule (again as in the ADA Proposed Rule) imputes the burdens previously associated only with health-contingent wellness programs to all wellness programs, which exceeds what is required under the ACA and the Tri-Agency Regulations.

Implications For Employers

While this rule, if promulgated, would provide some clarity for employers, it would, in conjunction with the ADA Proposed Rule, establish a parallel – and more onerous – compliance scheme than the scheme set forth in the Tri-Agency Regulations issued by agencies with the necessary authority and expertise. Ultimately, because more onerous regulations always establish the baseline when authority is diffused among various authorities and agencies, these EEOC regulations would become the de facto law of the land, usurping the Tri-Agency regulations and establish more roadblocks for employers to provide incentives to their workforces and their families. The comment period will be open for sixty days until December 29, 2015. Stay tuned!

Readers can also find this post on our EEOC Countdown blog here.

thCAD0SFA4By Paul H. Kehoe and Lawrence Lorber  

Earlier today, the EEOC published its much anticipated Notice of Proposed Rulemaking (“NPRM”) regarding the interaction between wellness plans and the Americans With Disabilities Act (“ADA”). As we have discussed here and here, the issue of whether an incentive or surcharge permitted (indeed, encouraged) under the Patient Protection and Affordable Care Act (“ACA”) is nonetheless impermissible under the ADA and GINA has caused consternation for the regulated community. The EEOC’s proposed rule provides some clarity on that issue, but raises or ignores additional concerns for employers offering wellness plan incentives to employees. The comment period on this proposed rule will close on June 19, 2015. This is important for all employers.

The 30% Rule

Under the Affordable Care Act (“ACA”) and its implementing regulations issued by the Departments of Labor, Treasury and Health and Human Services, employers may offer financial incentives to employees up to 30% of their health care premiums for participating in and reaching certain health outcomes in a wellness plan and up to 50% for smoking cessation programs. The EEOC however, has added a nuance to the nicotine prevention component of the ACA and HIPAA. Under the NPRM, if an employer conducts a biometric exam to test for nicotine, any incentive would be capped at 30% instead of 50%. If no disability-related inquiry is made, a 50% incentive is permissible.

In addition, the NPRM does not specifically adopt the “HIPAA / ACA standard” but instead imposes hard percentage caps. If the percentages rise or fall in the future at the behest of those Secretaries, the EEOC’s adoption of hard numbers would then again leave the EEOC inconsistent with the Cabinet-level agencies.

The ADA Safe Harbor

Section 501(c) of the ADA provides that it cannot be construed to prohibit or restrict “a person or organization covered by this chapter from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law.” In its discussion of Seff v. Broward Cty., 691 F.3d 1221 (11th Cir. 2012), the NPRM seems to definitively reject the notion that any wellness plan can be part of a bona fide benefit plan. In other words, the EEOC rejects the premise that a wellness plan can be structured to fall within the safe harbor established by the ADA. The fact is, some wellness plans fall within the safe harbor, and some do not. While the EEOC may disagree with the 11th Circuit’s decision in Seff, it seems to have gone beyond its disagreement with the Seff decision and has unilaterally written the safe harbor out of the statute. The EEOC lacks that authority.

A Question About Affordability

Under the ACA, employers are not required to provide health insurance.  Instead, an employer can choose to pay a fine. Even where an employer offers health insurance, it only must offer a single plan that is affordable, and even then, employees can choose whether to enroll in that plan or a more robust plan that may not meet affordability standards.

However, in the NPRM, the EEOC specifically requested comments on the following:

Whether to be considered “voluntary” under the ADA, the incentives provided in a wellness program that asks employees to respond to disability-related inquiries and/or undergo medical examinations may not be so large as to render health insurance coverage unaffordable under the Affordable Care Act and therefore in effect coercive for an employee…

Where such incentives would render a plan unaffordable for an individual, it would be deemed coercive and involuntary to require that individual to answer disability-related inquiries[.]

If an employer would have to test affordability under some  as yet to be determined test for each of its plans for each employee, then the same wellness plan incentives could conceivably be voluntary for some employees, and non-voluntary for other employees. Such an outcome was not contemplated by the ACA or the implementing regulations, and would likely chill employers from offering any wellness plan incentives — exactly the opposite of Congressional intent and contrary to White House statements. Nor does the EEOC provide statutory support for its question regarding affordability so that the basis of this discussion in the rulemaking process would seem to be unanchored to any statutory provision.

Spousal Incentives

The regulated community has, for years, raised concerns about EEOC investigations into incentives offered to employee spouses for completing health risk assessments where information related to manifested conditions is inquired about. Indeed, this was part of the Honeywell litigation late last year. Unfortunately, the EEOC failed to address the issue and continues to leave the regulated community and its career staff without guidance.

Implications For Employers

While the rule, if promulgated, would provide some clarity for employers, it would also raise some important questions related to the EEOC’s power to strip employers of a statutory defense, and potentially muddy the waters if an affordability standard is included.  In addition, the NPRM opens the door to uncertainty with reference to wellness program-related claims under Title VII and the ADEA as well. Given these potential issues and more that will inevitably arise in the coming weeks, it is important for the regulated community — employers, wellness program providers, and others — to consider submitting comments for the record regarding the pros and cons of the proposed rule.  As we have throughout this entire process, we will keep you posted on any developments.

Readers can also find this post on our EEOC Countdown blog here.

By Gerald L. Maatman, Jr., Christopher J. DeGroff, and Paul H. Kehoe

Shortly after publishing its FY2016 budget justification (here) asking for an additional $8.6 million and authorization to hire hundreds of additional employees (over FY2014 levels), the EEOC released its FY2014 charge and litigation statistics (here and here).  Charge receipts, while still historically high, fell to 88,778, down from a high of 99,922 in FY 2010 at the height of the last recession.  The EEOC’s rate of finding reasonable cause was down, as was its effectiveness in successfully conciliating those charges.  Indeed, the monetary benefits secured through its investigations plummeted by over $75 million, or roughly 20%.  The EEOC’s litigation program filed 133 merits suits, down roughly 50% from FY2011 and down 65% over FY2005 levels.  In addition, the litigation program secured only $22.5 million for alleged victims of discrimination, down from a high of $168.6 million in FY2004.

A more in depth look at the numbers is below.

The EEOC’s Private Sector Investigations Program

Retaliation claims remain the number one allegation in EEOC charges with 37,955 (42.8%).  Race, sex, and disability discriminations charges were the top three alleged substantive violations. Claims under the Equal Pay Act and the Genetic Nondiscrimination Act were the least alleged violations.

                                                     

On a state-by-state basis, Texas, Florida, and California led the way with 8,035, 7,528, and 6,363 charges, respectively.  Wake Island was the only U.S. Territory without an EEOC charge on file.

The EEOC resolved 87,442 charges under investigation in FY2014.  The agency only found reasonable cause in 2,745 (3.1%) cases.  Between FY2010 and FY2013, the EEOC made reasonable cause determinations ranging from 3,515 and 4,981 cases annually, which represented 3.6% to 4.7% of its charges filed.

By statute, the EEOC must attempt to conciliate all of its reasonable cause findings before initiating litigation.  In FY2014, the EEOC reported that it successfully conciliated 1,031 of its reasonable cause findings.  This represents a significant drop from FY2012 and FY2013, when the EEOC successfully conciliated 1,437 and 1,591 cases, respectfully.

On the whole, the EEOC’s private sector investigation program secured $296.1M for alleged victims of discrimination, down from $372.1M in FY2013 and approximately $365M in both FY2011 and FY2012.

The EEOC’s Litigation Program

The EEOC filed 133 merits cases in FY2013.  While on par with the most recent two fiscal years, this represents a decrease in filings of roughly 50% compared to FY2011 and over 65% compared to FY2005.  The EEOC filed 76 Title VII suits, 49 ADA suits, 12 ADEA suits, 2 Equal Pay suits, 2 GINA suits and 7 suits alleging violations of multiple statutes.

The EEOC’s litigation program secured $22.5 million in monetary benefits for alleged victims of discrimination, down from $38.6 million in FY2013, $91 million in FY2011, and a high of $168.6 million in FY2005.

Implications For Employers

At a time when the EEOC was seeking an expanded budget, as it has in each of the years during the current Administration (here), the EEOC’s performance and recoveries for alleged victims of discriminations were something of a fizzle in FY2014 when compared to its historical results.  With focus on systemic litigation, it appears as that other potentially meritorious claims have received less, if any, attention.  While the President’s request for additional funds is dead on arrival for lack of even Democratic support, it remains to be seen what, if any, increase in appropriated funds will make its way to the EEOC for FY2016.  Regardless, the EEOC is likely feeling significant pressure to post big wins with its budget on the line.  Employers take note:  this may translate to even more aggressive agency enforcement tactics.

Readers can also find this post on our EEOC Countdown blog here.

By Christopher DeGroff, Matthew Gagnon, and Gerald L. Maatman, Jr.

Every year at this time we like to offer our loyal readers a pre-publication preview of our annual report on developments and trends in EEOC-initiated litigation. That book, entitled EEOC-Initiated Litigation: Case Law Developments In 2014 And Trends To Watch For In 2015 is set for distribution in early January 2015. This publication focuses on EEOC-related litigation and explores the key drivers of the EEOC’s enforcement and litigation activity in FY 2014, as well as our examination of what to expect in terms of enforcement litigation in 2015 and beyond. This publication will be offered for download as an eBook. To order a copy, please click here. 

As we look back at the last year, certain EEOC-initiated cases catch our eye as intriguing; intriguing either for their impact on the legal landscape, or for the fact that they offer a glimpse at the often puzzling and, at times, downright frustrating agency agenda.

With that, let’s take a look at the 5 most intriguing cases from 2014:

1.    EEOC v. BMW Manufacturing Co., LLC, Case No. 13-CV-1583, 2014 U.S. Dist. LEXIS 169849 (D.S.C. Dec. 2, 2014).   

BMW scored yet another win for employers in the EEOC’s long-running challenge to employers’ use of criminal and credit background checks in hiring and other employment decisions. As with other cases pursued by the agency under similar theories, the EEOC filed suit against BMW claiming the company’s criminal conviction background check policy had a disparate impact on black employees and applicants and was not job-related or consistent with business necessity. The EEOC has suffered some significant defeats pursuing this theory, including a stinging loss in the Sixth Circuit in the case, EEOC v. Kaplan Higher Education Corp., in which the Sixth Circuit harshly criticized the EEOC for using a “homemade” methodology for determining race to compile its statistical evidence. As we previously noted, the Sixth Circuit threw out the EEOC’s case after concluding that the agency’s methodology for determining race was “crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.” It was a stunning rebuke of the EEOC’s method for proving disparate impact in these types of cases.

Aside from the expert evidence, another concern for the Court in the Kaplan case and other similar cases has been the fact that the EEOC also uses criminal and credit history background checks in its own hiring practices. Naturally, it is difficult for the EEOC to argue that the use of those checks is not job-related and consistent with business necessity when it engages in the same practices itself. That was the issue that was decided against the agency yet again in EEOC v. BMW Manufacturing Co. BMW sought discovery into the EEOC’s personnel policies relating to the use of background checks. The Magistrate Judge originally ruled in favor of the agency, holding that BMW failed to explain how that information would prove that its own criminal conviction policy was job-related or consistent with business necessity. But District Court Judge Herlong disagreed, finding that the EEOC had failed to establish why its discovery objections were proper. Unless and until the EEOC changes its own personnel policies, the fact that the agency also uses credit and criminal history checks in its hiring decisions will continue to be a stumbling block as it tries to pursue other employers under this theory.

2.    State of Texas v. EEOC, Case No. 5:13-CV-255 (N.D. Tex. Aug. 20, 2014).

The EEOC’s focus on the use of credit and criminal history has also come under political scrutiny and criticism, including a case brought by the State of Texas to enjoin the enforcement of the EEOC’s guidance on this issue. As we previously blogged about here, on April 25, 2012, the EEOC issued its Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. Texas brought suit in the U.S. District Court for the Northern District of Texas in November 2013 seeking to enjoin the enforcement of that guidance, arguing that it interfered with Texas statutes that prohibit the hiring of felons in certain job categories.

As we recently discussed here, the Court dismissed the suit, holding that Texas lacked standing to challenge the guidance because the state had not alleged that there had been any enforcement action taken against it by the Department of Justice in relation to the EEOC’s guidance. This rendered the state’s attempts to establish standing mere speculation because it could not show that there was a “substantial likelihood” that Texas would face Title VII enforcement proceedings. Texas has appealed that decision to the Fifth Circuit and the briefing in that case is underway. The core of the state’s argument is that because the EEOC’s guidance is in direct conflict with state regulations and statutes, and because the EEOC’s guidance was expressly intended to preempt state law hiring policies, that should confer Article III standing on the state to defend its laws. This will be an interesting case to watch as the EEOC continues to struggle to gain traction in its push to restrict the use of criminal and credit history in employment decisions. Regardless, it certainly earns a spot on our list of the top 5 intriguing cases of 2014.

3.     EEOC v. Honeywell International, Inc., Case No. 14-CV-4517, 2014 U.S. Dist. LEXIS 157945 (D. Minn. Nov. 6, 2014).

On November 6, 2014, the EEOC lost its bid for a preliminary injunction against Honeywell International, Inc. that would enjoin the company from imposing penalties against employees who refuse to participate in the biometric screening component of the company’s corporate wellness program. The U.S. District Court for the District of Minnesota denied the EEOC’s request for a preliminary injunction because, among other things, the agency had failed to establish that irreparable harm would result if the injunction were not issued.

This case is “intriguing” because it reveals what may become a new focus for the EEOC on these types of wellness programs. Honeywell’s program allowed employees and their families the option of participating in a wellness program that was designed to inform participants about their health status and encourage improvements in some specific health goals. Employees who chose to participate would be subjected to biometric testing, and would receive certain financial incentives, including contributions to their Health Savings Accounts. Those who chose not to participate were subject to financial surcharges. The EEOC alleged that this program violated the Americans with Disabilities Act and the Genetic Information Non-discrimination Act because it discriminated on the basis of disability and the manifestation of disease or disorder in family members. This case will be one to watch as it develops because, as the District Court noted in its decision denying the injunction, there is considerable uncertainty about how the EEOC’s theory will interact with the ADA’s safe harbor provisions and the Affordable Care Act, which encourages employers to adopt these types of programs. You can read more about this interesting new development here.

4.    EEOC v. Sterling Jewelers Inc., 3 F. Supp. 3d 57 (W.D.N.Y. 2014).

On March 10, 2014, Judge Richard J. Arcara of the U.S. District Court for the Western District Of New York adopted Magistrate Judge McCarthy’s January 2, 2014 Report, Recommendation, And Order in EEOC v. Sterling Jewelers Inc.to dismiss the largest pattern or practice case in the country with prejudice. As we previously discussed here, the Court’s decision was based on the EEOC’s failure to investigate the expansive, nationwide pattern or practice case that it eventually brought. In that case, 19 female employees had filed charges with the EEOC. Those charges were assigned to a single investigator in New York. The EEOC brought suit in September 2008 alleging that Sterling “engaged in unlawful employment practices throughout its stores nationwide.” Sterling challenged, among other things, that the EEOC never investigated the expansive allegations that it put in its complaint.

The Court agreed with Sterling, rejecting the EEOC’s argument that it could not scrutinize the scope of the EEOC’s pre-lawsuit investigation. According to the Court, while courts should not review the sufficiency of the investigation, they could and should make a determination concerning whether an actual investigation occurred, and the scope of that investigation. Because the Court found no evidence that the EEOC investigated its claims on a nationwide basis, it held that the agency had not satisfied its pre-suit obligations. This case is now up for appeal before the Second Circuit.

5.    Tie: EEOC v. CVS Pharmacy, Inc., Case No. 14-CV-863, 2014 U.S. Dist. LEXIS 142937 (N.D. Ill. Oct. 7, 2014) and EEOC v. CollegeAmerica Denver, Inc., Case No. 14-CV-1232, 2014 U.S. Dist. LEXIS 167333 (D. Colo. Dec. 2, 2014).

Our case #5 is actually a duet of related cases filed a country apart. This year, the EEOC asserted a new theory of liability based on language in employers’ separation agreements that the agency believes stands as an impediment to an employee’s right to file charges with the EEOC and participate in its investigations. In EEOC v. CVS Pharmacy, Inc. and EEOC v. CollegeAmerica Denver, Inc., the EEOC brought claims alleging similar theories of discrimination arising out of terminated employees’ separation agreements. You can read more about those decisions here and here. In essence, the EEOC claims that, among other things, the confidentiality and non-disparagement provisions found in those agreements deters the filing of charges and interferes with employees’ ability to communicate voluntarily with the EEOC and other federal and state agencies. This is an entirely new attack on employers’ use of those agreements.

Both of these cases were ultimately decided on issues relating to the EEOC’s failure to conciliate the claims prior to bringing suit, rather than the merits of the allegations regarding separation agreements. So that issue remains a live concern for the EEOC about which there has yet to be a judicial determination. That makes these decisions two of the most interesting of the year. Not so much for what they held, but for what they may portend concerning the future of the EEOC’s focus in 2015 and beyond.

Interesting cases one and all. Once again, it was an exciting year of developments for EEOC-initiated litigation. We expect that 2015 will bring its own share of surprises and intriguing decisions. For additional reading, see our picks for the last few years in our previous blog postings here and here. We look forward to keeping our readers on top of all of these twists and turns in government-initiated litigation. Happy New Year to all of our followers!

Readers can also find this post on our EEOC Countdown blog here.

By Gerald L. Maatman, Jr., and Alexis P. Robertson

On November 6, 2014, in EEOC v. Honeywell International, Inc. Case No. 14-CV-4517, 2014 U.S. Dist. LEXIS 157945, (D. Minn. Nov. 6, 2014), Judge Ann Montgomery of the U.S. District Court for the District of Minnesota denied the Equal Employment Opportunity Commission’s (“EEOC”) request for a preliminary injunction enjoining Honeywell International Inc. (“Honeywell”) from levying penalties against employees who refused to undergo biomedical testifying in conjunction with Honeywell’s corporate wellness program.  The Court held that, amongst other things, no irreparable harm would result from the refusal to issue an injunction.

The EEOC made much of this case filing in the press, and the Court’s rejection of the EEOC’s request for a preliminary injunction is a significant set-back for the Commission.

Case Background

Honeywell employees and their families had the option of participating in the Corporation’s wellness program, which was designed to inform participants about their health status, encourage improvements of specific health goals and to ultimately reduce claim costs.  Employees who participated in the program had to undergo biometric testing. Employees who declined participation were not disciplined or terminated, but were subject to financial surcharges.

The biomedical testing, administered as part of the program, required a blood sample the screened for various data points. Employees completed the testing for free through Quest Diagnostics (“Quest”), or, in the alternative, employees could have their personal physician fill out a form providing the same health information. Quest would relay the collected data to an independent health management company. Honeywell would receive the aggregate data, but was not informed of the individual employee results.

Employees who participated in the program, and who earned less than $100,000 a year, were eligible to participate in the company’s Health Savings Account (“HSA”). Honeywell would then make an annual contribution to the HSA, ranging from $250 to $1500. Employees who choose not to participate in the wellness program did not qualify for the company-sponsored HSA and had to also pay a $500 surcharge that went towards their annual health insurance contribution.  Honeywell employees and their spouses could also be subject to a $1000 nicotine surcharge. Those how refused to undergo the biomedical testing were presumed to be tobacco users. However, this presumption could be rebutted by enrolling in a tobacco cessation program (actual cessation not required), submitting a report from their physician, or working with a health advocate to establish that they are nicotine free.

Three employees filed complaints with the EEOC alleging that the program violated the Americans With Disabilities Act (“ADA”) and the Genetic Information Non-discrimination Act (“GINA”). All three employees had already submitted to biometric testing. Subsequently, the EEOC sued Honeywell over the wellness program, and moved for immediate injunctive relief.

The Decision Of The District Court

The Court applied the traditional factors reviewed in determining whether to issue a preliminary injunction, including: (1) threat of irreparable harm to the movant, (2) the balance between the harm alleged and the harm that the relief may cause the non-moving party, (3) the likelihood of success on the merits, and (4) the public interest. Based on these factors, the Court denied the EEOC’s motion.

The Court held that the EEOC could not establish the threat of irreparable harm. The Honeywell employees did not face an actual threat of injury because all three had already submitted to biometric testing for the 2015 calendar year.  Further, the EEOC had failed to demonstrate that the biometric testing jeopardized any employees’ right to privacy in their health information. And, even if the EEOC were to go on to prevail on the merits, “the only harm suffered by Honeywell employees is monetary,” which could be cured “through the most basic legal remedies: monetary damages.” Id. at *6.

The Court also found that the balance of harms favored Honeywell. If an injunction, freezing all surcharges was ordered, Honeywell employees who opted-out of the biometric testing may ultimately need to pay a surcharge if Honeywell prevailed on the merits. In contrast, if the EEOC were to prevail on the merits, Honeywell employees who were initially wrongfully assessed a surcharge based on their decision to forego the testing could easily be made whole by a refund.

Finally, the Court reviewed the EEOC’s likelihood of success and the public interest in issuing a preliminary injunction. Amongst other things, the EEOC argued that Honeywell violated the ADA because the biomedical testing constituted an involuntary medical exam that was not job-related, and that Honeywell violated GINA because it collected medical information about family members. Honeywell countered that its wellness program was covered under the ADA’s safe harbor provisions, and that its testing was not considered a “genetic test” under GINA. The Court ruled that there was uncertainty surrounding the interaction of the ADA, GINA, and the Affordable Care Act.  The Court reasoned that this uncertainty surrounding the legal questions presented in the case prevented it from being able to determine whether one party was more likely to succeed on the merits.

Implications For Employers

The ruling was a slap-down of the EEOC. What it claimed was clear and illegal was nothing of the sort based on the Court’s decision.

Employers will have to wait and see how the Court rules once it is able to review the merits of the unique issues presented in this case. In the interim, we are reminded that a Court will not issue a preliminary injunction when employees are not at risk for immediate injury and when monetary damages can easily cure any damages incurred by them. Employers should pay attention to this case as it will likely influence the fate of corporate wellness programs across the country.

Readers can also find this post on our EEOC Countdown blog here.

By Reema Kapur and Lily M. Strumwasser

Just nine days into the new year the EEOC settled its first systemic lawsuit ever filed alleging genetic discrimination under the Genetic Information Nondiscrimination Act (“GINA”).  Over the past several years the EEOC has trumpeted its focus on high-impact and high-profile cases and the $370,000 settlement of EEOC v. Founders Pavilion Inc., No. 13-CV-06250 (W.D.N.Y. Jan. 9, 2014), is no exception. In the Commission’s press release, it reminded employers that “when illegal questions are required as part of the hiring process, the EEOC will be vigilant in ensuring that no one is denied employment opportunities on a prohibited basis.” This case highlights the EEOC’s focus on the National Priorities laid out in its Strategic Enforcement Plan (“SEP”), including “eliminating barriers in hiring and recruitment” and “emerging and developing issues” such as enforcement of the Genetic Information Nondiscrimination Act (“GINA”).

An Overview Of GINA

GINA prohibits discrimination against applicants and employees on the basis of genetic information. More specifically, it “prohibits the use of genetic information in making employment decisions, restricts employers and other entities covered by the statute from requesting, requiring or purchasing genetic information, and strictly limits the disclosure of genetic information.” Genetic information broadly includes an individual’s genetic tests, family medical history, and the genetic tests of his or her family members. 

EEOC v. Founders Pavilion Inc.

On May 6, 2013, the EEOC filed its first systemic lawsuit alleging violations of GINA in EEOC v. Founders Pavilion Inc. According to the EEOC’s Complaint, Founders Pavilion conducted post-offer, pre-employment medical exams of applicants. As part of the exam, Founders Pavilion allegedly requested applicants provide it with information about their family medical history. The EEOC also claimed Founders Pavilion fired an employee after refusing to provide her with an accommodation in violation of the Americans With Disabilities Act (“ADA”), refused to hire two women because of a perceived disability, and either refused to hire or fired three women because they were pregnant in violation of Title VII.

Ten months after the EEOC filed its Complaint, the parties reached a $370,000 settlement agreement. The settlement fund is divided into two groups: Founders Pavilion will provide $110,400 for distribution to the 138 individuals who it allegedly asked for their genetic information, and Founders Pavilion will pay $259,600 to the five individuals the EEOC claimed were fired or denied employment for alleged violations of the ADA or Title VII. 

Although Founders Pavilion recently sold its facility to another company, if Founders Pavilion resumes conducting business it must abide by several restrictions set out in the settlement agreement. Namely, Founders Pavilion must post notices to employees regarding the lawsuit and consent decree, adopt a new anti-discrimination policy and distribute it to all employees, provide antidiscrimination training to all employees, and provide periodic reports to the EEOC regarding internal complaints of discrimination. The settlement agreement is binding for five years.

Implications For Employers

In 2013, the EEOC filed several – and settled one – lawsuit under GINA.  Founders demonstrates that in 2014 employers can expect the Commission to closely follow the mandate laid out in its SEP and to continue to devote considerable resources to the “Big 6” national priorities. Further, it shows that charges and lawsuits alleging GINA violations often go hand-in-hand with ADA claims. This overlap raises the stakes for employers who may potentially face liability for their employment practices under both laws.

Readers can also find this post on our EEOC Countdown blog here.