The EEOC is ratcheting up its systemic investigations like never before. Employers are increasingly facing nationwide requests for personnel data and company-wide investigations of their personnel practices. The EEOC is also resorting to its subpoena power to force employers to turn over their HRIS data. In a case of significant importance rendered on September 7, the Third Circuit in EEOC v. Kronos, Inc. narrowed an EEOC’s third-party administrative subpoena and adopted the defendant’s broad confidentiality proposal. The Third Circuit overturned part of the decision, affirmed part of it, and remanded the confidentiality issue back for further deliberations.

 

The case arose out of a disability discrimination claim by Vicky Sandy, who is hearing and speech impaired. She applied for a job as a cashier, bagger, and stocker with Kroger Food Stores and was not hired. Kroger utilized a test created by Kronos in determining whether or not to hire Ms. Sandy. It was this test and its possible disparate impact that became the focus of the EEOC’s investigation. The EEOC sought information on the use of the test in hiring from Kronos through a third-party subpoena. The EEOC also expanded its investigation to include race discrimination, even though Ms. Sandy’s complaint had not alleged race discrimination.

The Third Circuit allowed the EEOC’s administrative subpoena requesting information about the test used by Kroger as it related to the claim of disability discrimination. However, it rejected the EEOC’s request for information regarding the test as it related to a race discrimination claim. The Third Circuit reasoned that “[w]e conclude that the inquiry into potential race discrimination is not a reasonable expansion of Sandy’s charge. Instead, the EEOC’s subpoena for materials related to race constitutes an impermissible ‘fishing expedition.’” The Third Circuit also vacated the District Court’s confidentiality order and remanded the issue so that the District Court could conduct a “good faith balancing test” before reissuing a new order.

EEOC v. Kronos, Inc. is fertile source for employers seeking to narrow and opposed unreasonable request for information from the EEOC. We expect the decision to received significant citation in employer briefs challenging the EEOC’s discovery requests and subpoenas in systemic investigations.