Guarding Against Discrimination Claims

By: Melanie M. Poturica
Los Angeles/San Francisco Daily Journal, January 28, 2011

The U.S. Equal Employment Opportunity Commission (EEOC) recently released statistics for 2010 that reveal a nearly 7 percent increase in the total number of filings of private sector employment related discrimination charges since 2009.  According to the EEOC, charges filed alleging discrimination under Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Age Discrimination in Employment Act of 1967 (ADEA), and the Americans with Disabilities Act of 1990 (ADA) all increasethend in 2010.  The 99,922 individual charges filed in 2010 is the highest number of filings in EEOC history. 

But this record number does not necessarily mean that 2010 encountered more workplace discrimination than previous years.  In fact, the EEOC found that 64.3 percent of all of the individual charges filed in 2010 had no reasonable cause.  Moreover, in 2010, EEOC enforcement suits in federal courts declined from 314 to 271.  These statistics tend to demonstrate that an increase in charges filed with the EEOC does not necessarily correlate with an increase in actual discrimination in the workplace. 

One such external factor appears to be the continued effects of the Great Recession. Although the National Bureau of Economic Research (NBER) declared what many commentators have referred to as the "Great Recession," to have ended in June 2009, its effects continued to ripple across the country throughout 2010. 

Lasting a total of 19 months, the Great Recession was the longest recession since World War II.  The most recent recession in U.S. history prior to the Great Recession began in March 2001 and ended in November 2001.  Both recessions were marked by an increase in individual charges filed with the EEOC during the recessions themselves and during the year immediately following the end of the recessions.  The number of individual discrimination charges filed in 2002 increased by approximately 5 percent from those filed pre-recession in 2000.  The number of individual discrimination charges filed in 2010 increased by approximately 17 percent from those filed pre-Great Recession in 2006.  Finally, from 2003 to 2006, individual discrimination charges filed with the EEOC actually decreased by approximately 7 percent. 

These statistics generally indicate that individual discrimination charges filed with the EEOC increase during a recession and the year immediately following the NBER's declared end of the subject recession.  Although the Great Recession was longer and more systemic than the 2001 recession, there were additional forces at play, which may have contributed to the greater increase in the percentage of charges filed between 2007 to 2010 as compared to the increase in charges filed between 2001 to 2002.

Oftentimes it is assumed that charges filed by individuals who have been laid off account for a large percentage of the total amount of individual charges filed in any given year.  Under this premise, it would seem natural that individual charges filed with the EEOC would increase during a recession because many employers resort to layoffs to remain profitable.  However, according to the Bureau of Labor Statistics, as compared to December 2009, there was actually a 12 percent decrease in the total number of permanent job losers in December 2010.  As such, individuals who have been laid off cannot directly account for the increase in charges filed with the EEOC in 2010. 

Recent legislation provides one explanation for the significant increase in charges filed with the EEOC since the beginning of the Great Recession.  Take, for example, the Lilly Ledbetter Fair Pay Act of 2009.  The Fair Pay Act amended Title VII and the ADEA, and modified the ADA and the Rehabilitation Act of 1973, to clarify that pay discrimination claims accrue whenever an employee receives a discriminatory paycheck and, where an employer adopts a discriminatory pay decision or practice, whenever an employee is affected by that discriminatory decision or practice.  As enacted, the provisions of the Fair Pay Act are retroactive to May 2007.  Generally speaking, by extending the applicable statute of limitations, the Fair Pay Act increased the number of employees who could file pay discrimination charges against their employers.  However, because the effects of the Great Recession and the Fair Pay Act on charges filed with the EEOC would both have begun in 2007, it is difficult to determine what percentage of charges filed with the EEOC since 2007 are due to the Great Recession and what percentage of these charges are due to the Fair Pay Act.

The statistics regarding charges filed alleging disability discrimination demonstrate another example of recent legislation that contributed to the increase in charges filed with the EEOC.  At a nearly 15 percent increase since 2009, charges alleging discrimination based on disability had the largest individual increase in charges filed when compared to the other recognized forms of discrimination, e.g., gender, religion, national origin.  This sharp increase appears to be directly linked to the ADA Amendments Act of 2008 (ADAAA), which became effective on Jan. 1, 2009.  Under the ADAAA, Congress overturned U.S. Supreme Court precedent, which narrowed the definition of "disability" and reaffirmed that the term "disability" should be construed in favor of broad coverage of individuals. 

The effect of recent case law provides another external factor that may account for the increase in charges filed with the EEOC.  For example, individual retaliation charges have been on the rise since the 2006 Supreme Court decision in Burlington Northern & Santa Fe Railway Co. v. White (2006) 548 U.S. 53.  In that case, the Supreme Court held that the scope of Title VII's anti-retaliation provision was broader than the scope of Title VII's substantive provisions regarding discrimination.  Since 2006, retaliation charges filed with the EEOC have increased by almost 40 percent.  Accounting for 36.3 percent of all individual charges filed with the EEOC, 2010 marks the first time that charges alleging retaliation outnumbered charges alleging discrimination based on race.  Because this case was decided approximately one year prior to the beginning of the Great Recession, it is again difficult to distinguish which part of the increase in retaliation charges should be attributed to the Great Recession and which part is attributable to the Burlington Northern decision.    

The statistics regarding individual discrimination charges filed with the EEOC in 2010 reveal a complicated interplay between several factors.  Regardless of whether the increase in individual charges alleging discrimination is due to the Great Recession, recent legislation, recent decisional law, or some combination of all of those factors, employers should take this increase in charges filed seriously and consider seeking legal advice to determine whether their policies are in compliance with the relevant laws.  Also, employers should resist the temptation to cut costs by trimming or eliminating best employment practices and supervisory training programs.

Employers who are contemplating a reduction in their workforce must take affirmative steps to protect themselves from unfounded claims of discrimination.  As the old adage goes, the best offense is a solid defense.  Employers are wise to consider the following: Adopt a written layoff policy to help prevent a layoff from appearing arbitrary and capricious; provide clear selection criteria in the layoff policy to determine which individuals will be laid off; to combat disparate impact claims, analyze whether certain protected groups will be disproportionately affected by the layoff policy; implement the layoff policy as written to prevent the appearance of subjective and arbitrary selection for layoff; explain to employees why they were laid off; document the steps taken to evaluate employees and all the reasons for selecting an individual to be laid off; and, consider providing a severance package in exchange for a release against future lawsuits.

Melanie Poturica is a partner with Liebert Cassidy Whitmore, a labor and employment law firm representing management.  Ian A. Wright is an associate with Liebert Cassidy Whitmore, a labor and employment law firm representing management.

 Reprinted and/or posted with the permission of Daily Journal Corp. (2010).

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