United States: House Hearing Examines EEOC's Regulatory And Enforcement Policies

On Tuesday, May 23, 2017, the House Subcommittee on Workforce Protections held a hearing to discuss the direction of the U.S. Equal Employment Opportunity Commission (EEOC). The witnesses and lawmakers raised several topics related to the EEOC's regulatory and enforcement priorities in recent years and the Commission's revised EEO-1 report. The EEOC's focus on systemic investigations came under scrutiny as did the FY 2018 proposed budget's call for merging the EEOC with the Office of Federal Contract Compliance Programs (OFCCP). The following provides a brief overview of the hearing.

Revised EEO-1 Report

In September 2016, the EEOC announced that starting in March 2018, it will collect summary employee pay data from certain employers on revised EEO-1 reports. This has caused an uproar in the employer community for a variety of reasons, many of which were teased out at the hearing.

Subcommittee Chairman Bradley Byrne (R-AL) noted that for years, employers required to fill out the EEO-1 report contended with about 130 data points; the new form will contain more than 3,000 data points. Chairman Byrne reported that the new reporting requirements are estimated to cost employers $1.3 billion, and will require more than 8 million hours of paperwork. The Chairman also raised privacy concerns, as "the agency has failed to demonstrate how it will safeguard this information."

Camille Olson, testifying on behalf of the U.S. Chamber of Commerce, echoed these concerns, explaining that the EEOC, for the very first time, will solicit from employers W-2 information and hours worked. This information request, which constitutes "a massive expansion" from the current form's requirements, will have "no probative value" in ferreting out legitimate pay disparities, she said. The main reason the information will have no utility, Olson claimed, is because the revised EEO-1 report "combines vastly dissimilar jobs, and ignores legitimate reasons for pay differences," such as experience. As a result, the EEOC will impose a substantial new recordkeeping obligation "that will do nothing to reduce unequal pay for unequal work."

Rae Vann, vice president and general counsel of the Equal Employment Advisory Council, agreed that the data collection would provide no benchmarking utility. She noted that even within industries, employers use a wide range of pay systems and use myriad variables that go into calculating pay. According to Vann, looking at aggregated data even within a particular industry will not provide useful information.

When asked whether a miscalculation in the burden estimate could constitute grounds for the Office of Management and Budget (OMB) to revisit its approval of the revised form, the Chamber's witness said it would. Olson explained that the Paperwork Reduction Act compels the OMB to review and rescind a data collection requirement if the agency significantly underestimated the burden of this new requirement. Whether this will be an option used to rescind the rule remains to be seen.

On the other hand, Todd A. Cox, the director of policy at the NAACP Legal Defense and Educational Fund, said that the revised EEO-1 form could be used to "inspire employers to do some self-checking."

Enforcement, Systemic Investigations and Charge Backlog

Another point of contention at the hearing was the EEOC's enforcement practice and focus on pursuing systemic discrimination cases—which the agency defines as "pattern-or-practice, policy and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company, or geographic location"—versus individual charges of discrimination. Critics of this strategy claim that this focus results in "fishing expeditions" and allows the backlog of over 73,000 individual charges to languish. Chairman Byrne claimed that "the EEOC is falling short of its important responsibilities," and that members of Congress have repeatedly raised concerns about the Commission's "misplaced priorities" – i.e., "pursuing flawed enforcement policies at the expense of American workers."

The U.S. Chamber of Commerce's witness elaborated that since 2013, this charge backlog has increased 3.9%, while the number of merits lawsuits filed has significantly declined.

Rep. Virginia Foxx (R-NC) asked witness Vann whether this backlog can be attributed to misguided practices or a lack of resources. Vann was "skeptical" that the steady backlog increase stemmed from a lack of resources, as the Commission's budget has either increased slightly over the years or remained flat. "I suggest a large part of backlog is a direct result of the agency's misguided focus on systemic enforcement, and resources and time" spent on processing and prosecuting such claims, she testified.

Some of the witnesses suggested that a more efficient use of the agency's time and resources would be to promote its mediation program. Lisa Ponder, Vice President and Global HR Director of the MWH Constructors, Inc., who testified on behalf of the Society for Human Resource Management (SHRM), said that mediation benefits both employers and employees. The process allows for a relatively quick and final settlement, and lets employers address potential problems and improve their practices at an earlier stage. Witness Vann also promoted the EEOC's mediation program, saying the agency "should seriously consider expanding" the program to more stages of the investigation process.

EEOC and OFCCP Merger

The White House's FY 2018 budget, released the same day as the House Committee hearing, proposes merging the OFCCP into the EEOC, "creating one agency to combat employment discrimination." According to the proposal, both agencies "will work collaboratively to coordinate this transition to the EEOC by the end of FY 2018. . . . The transition of OFCCP and integration of these two agencies will reduce operational redundancies, promote efficiencies, improve services to citizens, and strengthen civil rights enforcement." This proposal already faces significant opposition.

During the hearing, several witnesses, both those testifying on behalf of the business community and a civil rights advocate, voiced opposition to this merger.

The Chamber of Commerce opposes this move, according to its witness, as while both agencies are in need of reform, time would be better spent improving the agencies rather than merging them. The two agencies also serve different primary missions with different procedures and different remedies, she explained.

Witness Cox agreed with this position, saying that both agencies' missions would be undermined by a merger.

Delegation Authority

Some witnesses also found fault with the Commission's delegation of litigation authority to the EEOC's general counsel. This has led to a lack of quality control standards, according to witness Vann. Upon questioning from Rep. Foxx, Vann suggested that the agency rescind its delegation of litigation authority in most cases, and let the full Commission have final say over which lawsuits to pursue.

Other Issues

Tuesday's hearing touched on other issues, including the agency's policy concerning the use of criminal background checks in employment decision-making, and whether the Religious Freedom Restoration Act (RFRA) should override Title VII. While witness Cox was in favor of the EEOC's position that an employer's use of background checks can constitute discrimination, he opposed allowing an employer's sincerely held religious beliefs to exclude or discriminate against a job applicant or employee, as this "opens up a dangerous door."

An archived webcast of the hearing and links to the witnesses' testimony can be found here.

What's Next for the Commission?

The five-member Commission currently has one open seat as well as a general counsel vacancy. Victoria Lipnic, the lone Republican currently seated on the Commission, has been serving as the EEOC's acting chair. The term of Jenny Yang, the former EEOC chair, ends on July 1, 2017. It is expected that President Trump will name Republican members to fill Yang's seat and the remaining vacant seat, creating a 3-2 Republican majority, although this process will take time. A Republican is expected to be appointed as the agency's new general counsel as well. This means that the Commission's current focus on systemic investigations, and its implementation of the revised EEO-1 report, will likely remain for the time being. Any changes to either priority are not expected to occur until the composition of the Commission changes. Stay tuned.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael J. Lotito
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