Seyfarth Synopsis: The third key trend from our 16th Annual Workplace Class Action Litigation Report involves governmental enforcement litigation, including an overview of priorities and filings by the EEOC, the U.S. Department of Labor, and the National Labor Relations Board. Read the full breakdown below!
On the governmental enforcement front, the past several years have demonstrated that the Trump Administration and its appointed officials at the EEOC have not appreciably deviated from the Commission’s spirited pursuit of litigation filings and settlements.
This past year, however, posed unique challenges beyond the control of the EEOC. The Commission is a five-seat agency that has operated without a full panel of five Commissioners for the entirety of the Trump Administration. When former Commissioner Chai Feldblum’s term expired at the end of last year, the result was a lack of quorum on the Commission, which hobbled the EEOC’s efforts to pursue its mission. Although President Trump had re-nominated Commissioner Feldblum for another term, she was not confirmed by the Senate due to her perceived views on LGBT issues. This resulted in an empty Commissioner seat and a loss of quorum for roughly one-third of the year. Either by coincidence or as a result, the pace of EEOC lawsuit filings and settlements slowed significantly. Despite this setback, there was only a modest 4% reduction in aggregate recoveries relative to the totals from 2018, thereby demonstrating the Commission’s commitment to resolving disputes expediently.
Although the total number of new lawsuits filed by the EEOC decreased, when considered on a percentage basis, the distribution of cases filed in terms of the theory of discrimination alleged remained broadly consistent compared to 2018. Title VII and ADA cases once again comprised the majority of cases filed by the Commission. This suggests that the priorities and patterns of government enforcement litigation have not shifted dramatically under the Trump Administration. During 2019, the new agency appointees were installed during the latter half of the year, which inevitably will result in delayed policy changes. Compounded by the lack of quorum at the Commission for part of this past year, additional time may be necessary for the EEOC to incubate and execute fundamental changes to enforcement priorities. Stepping into a new year with the new EEOC officials in place and a quorum at the Commission, 2020 may finally reveal what changes are in store for governmental enforcement litigation.
During 2019, the Commission filed 144 merits lawsuits and 8 subpoena enforcement actions. This is a stark decline relative to the 197 merits suits and 20 subpoena enforcement actions of 2018, which constituted an over 30% reduction in total actions commenced by the Commission year over year. This past year also marked the third year of the EEOC’s 2017-2021 Strategic Enforcement Plan (“SEP”), which was implemented to guide enforcement activity. The six enforcement priorities include: (1) the elimination of systemic barriers in recruitment and hiring; (2) protection of immigrant, migrant, and other vulnerable workers; (3) addressing emerging and developing issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach
The Commission maintains discretion to interpret and pursue these priorities as it deems appropriate. While the priorities are defined, they are broad and apply to an expansive landscape of issues. For example, the EEOC has consistently focused on the protection of lesbian, gay, bisexual, and transgender individuals as a primary emerging and developing issue in the workplace. The EEOC’s efforts in this area have resulted in a body of case law across many jurisdictions, which holds that discrimination against transgender individuals or on the basis of sexual orientation is a form of discrimination prohibited by Title VII. This issue is set to be decided once and for all by the U.S. Supreme Court in a trio of high-profile cases, R.G. & G.R. Harris Funeral Homes v. EEOC, Altitude Express, Inc. v. Zarda, and Bostock v. Clayton County, Georgia Harris Funeral Homes was brought by a transgender woman who was terminated after putting her employer on notice of her forthcoming transition. Zarda and Bostock involve sexual-orientation discrimination. The issues at stake even divide government policy-makers, for the U.S. Department of Justice under President Trump filed briefs with the Supreme Court stating that Title VII protections do not extend to transgender and sexual orientation discrimination, confirming the Administration’s position on this issue.
Additionally, the EEOC issued landmark determinations addressing digital bias in July 2019, which it has identified as an emerging trend and a potential barrier in recruitment and hiring. The EEOC has especially targeted on-line advertising that uses algorithms that have the potential to allow employers to deliberately target and exclude certain classes of people by age, gender, and race when disseminating job advertisements. The Communications Workers of America filed discrimination charges against 66 employers for engaging in discriminatory advertising on Facebook, alleging that their advertising excluded women and older workers from receiving the job ads. Of the employers charged, seven were subject to an EEOC finding of “reasonable cause” to believe that the employers violated Title VII and/or the ADEA. While findings of reasonable cause do not affirmatively indicate that the employers violated federal law, they do provide insight as to how the EEOC is apt to analyze claims of digital bias in the years ahead.
In its FY 2019 Congressional Budget Justification, the EEOC stated that one of its strategic objectives is to prevent employment discrimination through education and outreach. This was reiterated in the inaugural Agency Financial Report (“AFR”) released on November 15, 2019. The EEOC conducts both free and fee-based events targeting particularly vulnerable communities that may be unfamiliar with employment law protections (i.e., low-skilled workers, new immigrant workers, etc.). This past year, the White House also launched the Initiative on Asian-Americans and Pacific Islanders and the Initiative on Historically Black Colleges and Universities. In conjunction with the White House programs, the EEOC hosted outreach events involving over 100,000 participants nationally. Based on statements made throughout the AFR, the Commission is expected to further expand its outreach efforts in 2020.
The EEOC has also prioritized initiatives to mitigate sexual harassment in the workplace that rose to prominence through the #MeToo movement. The EEOC now offers a customizable fee-based harassment prevention training for supervisors. Furthermore, the Commission held an Industry Leaders Roundtable discussion on harassment prevention. Prominently highlighted was the hospitality industry, resulting in a published statement by leaders of that industry committing themselves to various safety measures, including furnishing employees with security devices and trainings to improve hotel safety for employees and guests. The EEOC’s continued focus on #MeToo claims is reflected in its filing numbers as well. Of the 2019 Title VII filings, 68% arose out of claims of sex-based discrimination.
Arguably, the most significant step the EEOC has taken in the last few years relating to its priority of ensuring equal pay for all workers is its attempted modifications to the EEO-1 reporting obligations. Employers with more than 100 employees, and federal contractors or sub-contractors with more than 50 employees, are required to collect and provide to the EEOC demographic information (gender, race, and ethnicity) in each of ten job categories. Under the Obama Administration, the EEOC tried to expand those reporting obligations to include salary and wage data. Shortly after President Trump’s inauguration, those changes were stayed by the Office of Management and Budget (“OMB”). In 2019, a federal district court unexpectedly ordered those changes reinstated – for a time – finding that the OMB’s decision to stay those regulations was “arbitrary and capricious.” Ultimately, it was held that the EEOC must complete 2017-2018 pay data collection, according to the Obama-era rules, by January 31, 2020. When completed, that collection will provide the Commission with data regarding potential pay disparities across gender, race, and ethnicity. Whether and to what extent it will make use of this data to guide its enforcement efforts remains to be seen.
The EEOC also changed how it will report its financial and performance results. In November of 2019, it announced that the new AFR will replace the combined Performance Accountability Report (“PAR”) that was customarily published annually in November. The EEOC explained in the 2019 AFR that it will separate the information that had been contained in the combined PAR into two separate reports. The AFR will continue to be published in November and will focus on financial results and a high-level discussion of performance results. A new Annual Performance Report will be published in February of 2020 in coordination with the EEOC’s Congressional Budget Justification, which will provide a more detailed analysis of performance results. The 2019 AFR provided a snapshot of FY 2019 performance highlights, including the following:
- The Commission reported a 12.1% decrease in the backlog of pending charges as compared with the previous year. The total number of pending private sector charges was 43,850 – the lowest reported backlog number in 13 years.
- The EEOC secured approximately $486 million in relief for victims of discrimination through litigation and pre-litigation investigations. This represented a significant decrease from the total relief figure of $505 million for 2018, and was closely aligned with the recovery total of $484 million for 2017.
- The total relief figures in 2019 included $347 million for victims of employment discrimination in private sector and state and local government workplaces through mediation, conciliation, and settlements, a slight decrease from the $354 million obtained in 2018.
- Recoveries through litigation dropped significantly. The EEOC secured $39.1 million in litigation recoveries on behalf of charging parties and other aggrieved individuals this past year, as compared to the $53.5 million in recoveries in 2018. The 2019 number reflects a significant drop from the last several years as well as compared to 2015 ($65.3 million), 2016 ($52.2 million), and 2017 ($42.4 million).
Furthermore, the EEOC has continued to focus on #MeToo issues with more intensity than ever before over the past three years. In 2019, the EEOC reported a 14% increase in claims of sexual harassment. In turn, the Commission filed 28 lawsuits that advanced #MeToo-type allegations. This is a drop-off from the filings of sex discrimination lawsuit filings in 2018, when 41 cases included claims of sexual harassment. The total number of sexual harassment lawsuit filings in 2019 was closer to the total in 2017, where sexual harassment claims accounted for 33 lawsuit filings. Nonetheless, the 2019 lawsuit filing patterns reflected a consistent focus on workplace harassment litigation.
In contrast to the EEOC, the DOL’s agenda in 2018 reflected that its new Republican-appointed decision-makers had been in place for the better part of the past year. That being said, however, the DOL’s Wage & Hour Division (“WHD”) still did not have a Senate-confirmed Administrator nominated by the Trump Administration. Despite the lack of a confirmed leader (or perhaps because of it), the WHD continued its aggressive enforcement activities, setting a new record of $304 million in back wages recovered during 2018, which represents an increase of more than $30 million over the previous year.
With a confirmed Wage & Hour Administrator and a new Secretary of Labor, the WHD was in full swing in 2019. This year, WHD had a record-setting enforcement program, with a focus on improvement and expansion of its data-driven approach. By targeting relevant industries and sectors, WHD was able to deploy its resources in an effective manner, resulting in back wage recoveries of $322 million.
The WHD was not, however, singularly tasked with enforcement. Indeed, its 3,700 educational outreach events represent another record for the agency. In addition, WHD issued more than a dozen opinion letters, providing valuable guidance on such critical issues as overtime exemptions, independent contractors in the gig economy, rounding, commissioned sales, and regular rate of pay.
The year also saw WHD with a busy regulatory agenda. The WHD issued a final regulation increasing the salary threshold for the FLSA’s white-collar overtime rule and exemptions, and is expected to issue final rules providing much needed clarity on computing the regular rate of pay and establishing joint employment.
The WHD has also proposed revisions to the fluctuating workweek method of computing overtime and a number of provisions related to tipped employees, both of which are anticipated to be finalized in 2020.
Not to be outdone, the National Labor Relations Board (“NLRB”) also undertook an ambitious agenda in 2019. It swung the pendulum back toward more conservative views of labor laws, and in certain respects, peeled back on Obama-era Board precedents. It reconsidered well-settled NLRB principles on joint employer rules and representative elections, entertained the possibility of extending the protections of the National Labor Relations Act (“NLRA”) to college athletes, and litigated novel claims seeking to hold franchisors liable for the personnel decisions of franchisees. By the end of the year, however, the Trump Administration’s appointees began to roll-back NLRB precedents and positions that had been espoused during the Obama Administration, such as a reversal of the expansive view of joint employer liability, allowing more deference to employer workplace rules, and eliminating protections for obscene, vulgar, and inappropriate activity under the NLRA.
Implications For Employers
Given the change in leadership at the EEOC and the DOL that took place during 2019, it seems reasonable to expect that employers will see more changes to those agencies’ enforcement priorities in 2020 that are more in line with the Trump Administration’s business-friendly priorities. Overall, employers may be able to look forward to less aggressive enforcement of employment-related laws and regulations by the EEOC, the DOL, and the NLRB.