How Employers Can Navigate Rising Discrimination Litigation

April 30, 2021, 8:01 AM

Government agencies are increasingly setting their sights on larger targets, ramping up enforcement efforts to root out systemic discrimination. This has important ramifications for employers who may suddenly find themselves defending a claim that, for all intents and purposes, feels like a class action, even though it started as an individual agency charge.

With advancements in technology, large data sets on workforces are more common than ever, and government agencies are taking advantage of this and will not hesitate to request data on classes of individuals to search for trends indicating potential discrimination.

EEOC Intensifies Campaign Against Systemic Discrimination

In her first public speech since being named as chair of the Equal Employment Opportunity Commission, Charlotte Burrows pledged that the federal government’s workplace civil rights agency will emphasize enforcement of laws to combat systemic discrimination. This commitment to addressing systemic discrimination is consistent with President Biden’s plans to combat racism.

The EEOC defines systemic cases as a pattern, practice, policy and/or class of cases “where the discrimination has a broad impact on an industry, profession, company or geographic location.” The agency notes that “because of access to data, as well as the ability to use Commissioner Charges and Directed Investigations, the EEOC is in a unique position to identify systemic cases.”

The EEOC’s strategic enforcement plan for 2017-2021 reaffirmed its commitment to a nationwide, strategic, and coordinated systemic program. And, in January, the agency unveiled a new webpage concerning systemic enforcement that details the process of initiating and conducting a systemic case—a further signal that the EEOC, under the Biden administration, will prioritize systemic cases.

To a certain degree, the EEOC has tipped its hand and shared areas of concern where employers should pay particular attention. On its website, the agency outlines examples of the types of practices and policies that may involve systemic discrimination. Some of the more relevant areas include:

  • hiring and promotion policies that include the use of criminal background and credit checks, using AI and personality tests, and using terms such as “young,” “energetic,” “recent graduate,” “men only,” “women only” in job searches;
  • parental leave policies that differentiate by gender and age limits for certain benefits;
  • the use of restrictive waivers when conducting lay-offs/reductions in force that prevent filing complaints or cooperating with the EEOC; and
  • non-compliance with the American with Disabilities Act.

We will continue to see systemic charges in the typical areas, such as background checks/testing; disability discrimination; pregnancy discrimination; pay equity, and age bias in advertisements. With advancements in technology, we also expect to see systemic challenges to the use of AI and big data in hiring and other employment decisions.

California DFEH: Aggressive Pursuit of Systemic Complaints

The California Department of Fair Employment and Housing (DFEH) is the largest state civil rights agency in the country. It first gained authority to file lawsuits to pursue violations of the state’s anti-discrimination laws in 2013. Part of its broad power to sue California employers includes the ability to launch statewide investigations for systemic or large-scale violations of the state’s civil rights laws.

Systemic complaints from the DFEH are not filed in court, but often look like a civil pleading, allege very broad, generalized claims, and include sweeping document requests and interrogatories. These discovery requests often lead to further investigation and depositions.

Without a formal case pending in court, California employers often face the difficult situation of responding to extensive and burdensome discovery requests without court intervention or oversight. There is a unique statutory scheme for these complaints that allows the DFEH one year to decide if the complaints are systemic, and then another year to file suit.

We expect that SB 973 (the legislation making California the first state to require employers to submit employee pay data by race and gender) will enable the DFEH to investigate and file claims under the Equal Pay Act.

It is essential that California employers regularly conduct pay equity audits, and partner with counsel to plan their reports.

Practical Tips for Employers

Employers should consider proactive risk mitigation assessments. These can come in many forms such as policy audits, reviews of hiring practices, pay and promotion reviews, etc.

The heightened emphasis on systemic discrimination means employers should consider that every charge has the potential for company-wide ramifications.

Employers should also exercise care in responding to the charge and any request for information to highlight the individualized nature of the charging party’s situation, to the extent possible, and appropriately limit information and data to that which is relevant to the charging party’s claims.

Finally, employers need to be thoughtful in the selection of comparators, ensuring that they are truly similarly situated. If you receive a request for information from the EEOC, the DFEH, or any other government agency, consult with your employment counsel who can assist in preventing the agency from overreaching.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

Krissy Katzenstein is a partner in the Employment & Compensation Practice Group in Baker McKenzie’s New York office.

Caroline Burnett is a knowledge lawyer at Baker McKenzie in the firm’s San Francisco office.

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