eeocseal.jpgBy Christopher DeGroff and Gerald L. Maatman, Jr.

We have frequently opined to readers of The Workplace Class Action Blog that litigating against the EEOC is, in a word, different. The EEOC arguably has an agenda that every U.S. employer shares:  striving for a discrimination-free workplace. But the EEOC is also a political entity, and with that reality comes a host of shifting positions and pressures. For employers, being aware of the EEOC’s official and unofficial agenda is key to working with (and sometimes litigating against) the agency.

We previously reported that the number of the EEOC’s lawsuits filed dropped precipitously in FY 2012. Although we first reported this significant drop in filings here, the EEOC’s Performance and Accountability Report confirms that the EEOC filed only 122 lawsuits in FY 2012, down from 261 merits lawsuits in FY 2011. But at a time when the overall number of lawsuits has decreased, the proportion of those cases that assert systemic claims has sharply increased; systemic suits accounted for 20% of all of its active merits suits the largest proportion on the EEOC’s active docket since it began tracking in FY 2006. This mathematical combination and the EEOC’s overall enforcement program resulted in a record number of recoveries in FY 2012, up to $365.4 million last year. This graphic captures those three elements. 

But one more critical metric must be considered when trying to forecast how the EEOC will behave in 2013: its budget.

The resources the EEOC can draw upon play an integral part in how many cases the agency can file and, bluntly, just how well it can litigate those cases. The EEOC’s pursuit of an unprecedented number of federal court filings and systemic investigations in FY 2012 tested the agency’s already strained budget. The EEOC indicated in its Strategic Enforcement Plan (discussed here, here, and here) that it has been forced to retreat from its “all in” systemic litigation focus to a more narrowly defined sub-set of systemic cases. The unspoken undertone of the SEP is that the EEOC may have concluded that its aggressive litigation machine had outstripped its manpower and budget, and that its litigation plan of attack was too ambitious.

Ultimately, the EEOC’s agenda will always be a reflection of its monetary resources. In late 2011, Congressional action reduced the Commission’s annual budget by $6.6 million. Translation: the EEOC is now under even greater pressure to do more with less. Although filing a federal court complaint is relatively inexpensive, staffing and litigating the EEOC’s 122 cases comes at a high price. And we should not forget the 261 lawsuits filed the year before – many of which are just now maturing into full-on litigation. In response to mounting political pressure, the EEOC faces even further budget cuts. The union representing EEOC workers – the American Federation of Government Employees (AFGE) – recently went on the offensive, warning that budget cuts threaten to compromise the EEOC’s effectiveness. The AFGE claims that sequestration scheduled for March 2013 may slash between $23 million to $30 million from the EEOC’s budget. The impact? AFGE National President J. David Cox Sr. warns: “This cut would cripple the agency’s ability to enforce laws that protect against workplace discrimination. EEOC cannot enforce laws without frontline staff allowed to be on the job.”

Impact For Employers

One may think that a cash-strapped litigation adversary is a good thing. Yet, employers should remember that the EEOC launched its Systemic Initiative in 2006 in the face of similar budget pressures – an initiative that has resulted in larger and larger lawsuits filed by the agency. Given the political climate, the EEOC may again try to do “more with less” and reduced budgets may actually mean that the EEOC will place an even greater emphasis on bringing large-scale claims against employers, relying on these high-impact and highly-publicized cases to send a message to other employers. Even more chilling, the EEOC indicated in its SEP that it plans to engage in strategic partnering with other agencies or may even be a referral source to the private plaintiff’s bar.

We will continue to monitor these developments and will report to our readers on budgetary next steps.