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Agency staff changes; guidance on after-acquired evidence; EEOC's enforcement plan.

PERSONNEL CHANGES

Nomination for EEOC Commissioner

Reginald Jones, the senior legislative counsel to Senator James Jeffords of Vermont, is the leading contender for the vacant commissioner's seat on the Equal Employment Opportunity Commission. He would fill the seat vacated by R. Gaull (Ricky) Silberman last July.

Jones has worked on Senator Jeffords's personal staff since 1993. Before that, he was minority counsel and staff director for the Senate Labor and Human Resources Subcommittee on Labor, on which Senator Jeffords was the ranking minority member. He was active in work on and passage of the Civil Rights Act of 1991, the Americans with Disabilities Act (ADA), and the Family and Medical Leave Act (FMLA).

Before coming to Capitol Hill, Jones was a partner with the management labor law firm of Seyfarth, Shaw, Fairweather & Geraldson in New York. He is a 1972 graduate of Yale University and a 1976 graduate of New York University Law School and graduate school of business.

If confirmed by the Senate, Jones will be the second Republican commissioner; Joyce Tucker is the other GOP commissioner, whose term expires in the summer of 1996. The other members of the five-member commission are Chairman Gilbert Casellas, Vice Chair Paul Igasaki, and Commissioner Paul Miller.

Former EEOC Commissioner Ricky Silberman is now the executive director of the Office of Compliance, established by the Congressional Accountability Act of 1995 to administer and enforce federal labor and civil rights laws in the legislative branch. Previously, employees working in the House and Senate were not covered by those laws.

Vacancy at DOL

Thomas A. Williamson, the Solicitor of Labor in the United States Department of Labor (DOL), left his job in mid-February to return to the private practice of law. Williamson, who was a partner at the Washington, DC, law firm of Covington & Burling before joining DOL in 1993, will return to that firm. While at DOL, he was a close adviser to Secretary of Labor Robert Reich. There is no obvious successor to Williamson. His deputy, Oliver Quinn, left in December 1995 to return to his home in Princeton, New Jersey. Judith Kramer will be Acting Solicitor until a replacement for Williamson is named. James Henry remains head of the Civil Rights Division of the Solicitor's Office.

New Recess Appointee at NLRB

Sarah M. Fox has been appointed to the National Labor Relations Board (NLRB) as a recess appointee, to fill the remainder of a term. She is a union lawyer who served as chief counsel to the Senate Committee on Labor and Human Resources before her appointment. Her appointment brings the board to four members: Chairman William B. Gould IV, Member Margaret A. Browning, Member Charles I. Cohen, and Member Fox. The recess appointment of John Truesdale lapsed on January 3, 1996. Cohen is the sole Republican on the board, and his term expires in August 1996. The seat that Fox will fill is that of James M. Stephens, enabling her to serve until the fall of 1997.

Before joining the Senate committee staff in 1990, Fox was counsel to the International Union of Bricklayers and Allied Craftsmen for eight years. Before attending law school, from which she graduated in 1982, she was a reporter for the Buffalo Courier-Express.

EEOC ISSUES GUIDANCE ON AFTER-ACQUIRED EVIDENCE

Following up on the Supreme Court's decision in McKennon v. Nashville Banner Publishing Co., 115 S. Ct. 879 (1995), the EEOC issued an enforcement guidance on December 14, 1995, for use by its field staff in processing charges. In McKennon, the Supreme Court held that an employee discharged in violation of an antidiscrimination statute may pursue his or her cause of action even if the employer later discovers evidence of wrongdoing that would have led to the employee's termination on legitimate nondiscriminatory grounds. The Court reasoned that the antidiscrimination laws were designed not only to compensate the individual for injuries caused by illegal discrimination, but also to deter employers from engaging in such acts. Therefore, to ignore an employer's conduct merely because of the after-acquired evidence regarding a plaintiff's behavior would be inconsistent with the deterrent scheme and the public policy behind the ADEA and the other EEO statutes. However, the Court held that the relief that may be awarded to that plaintiff is limited in a number of important respects to account for the legitimate business concerns of the employer where the wrongdoing was of such severity that the employee would in fact have been discharged on that ground alone if the employer had known of it at the time of the termination.

Although McKennon was decided under the Age Discrimination in Employment Act (ADEA), the principles enunciated by the McKennon Court are applicable to charges brought under Title VII of the Civil Rights Act of 1964, as amended, the ADA, and the Equal Pay Act, according to the EEOC guidance. Similarly, although the personnel decision being challenged in McKennon was the plaintiff's termination, the EEOC and the courts have applied the same principles to other personnel decisions such as failure to hire or to promote.

In McKennon, the Court held that reinstatement and front pay will not generally be available to plaintiffs in "after-acquired" evidence cases. As a general proposition, back pay is recoverable from the date of the discharge to the date that the new information of wrongdoing was discovered. However, the Court held that extraordinary equitable circumstances that affect the legitimate interests of either party may be considered in formulating relief. The Court did not address the availability of liquidated, compensatory, or punitive damages in after-acquired evidence cases.

Since the McKennon decision, a number of lower courts have begun to apply its principles in pending cases. One of the main issues has been the quantum of proof necessary to show that the employee would have been discharged had the after-acquired evidence been known at the time. That is addressed by the EEOC at length in its guidance; in order to ascertain whether the employee would have been fired had the information been known when the plaintiff was still employed, the investigator should consider whether there have been incidents of like misconduct by other employees and whether "other applicants were rejected or other employees were dismissed, reprimanded, suspended or forgiven for similar behavior."

The EEOC says that the relevant inquiry, except in refusal-to-hire cases, is whether the employee would have been fired on discovery of the wrongdoing, not whether he or she would not have been hired in the first place. (See Shattuck v. Kinetic Concepts, Inc., 49 F.3d 1106 (5th Cir. 1995).) In a refusal-to-hire case, the relevant inquiry is whether the employer would have rejected the applicant had it been aware of the after-discovered evidence at that time. (See Washington v. Lake County, 969 F.2d 250 (7th Cir. 1992).)

If no comparable past incidents are discovered, EEOC suggests that its investigators look to three criteria to ascertain whether the misconduct would have led the employer to fire the employee. Those are (1) whether the misconduct is criminal in nature, for example, embezzlement, assault, or theft, (2) whether the employee's behavior compromised the integrity of the employer's business, for example, by divulging trade secrets, or (3) whether the nature of the employee's misconduct was "such that the adverse action appears reasonable and justifiable." The latter category is rather broad and open-ended and affords employers an opportunity to show that the type of misconduct discovered during the investigation would have warranted termination even in the absence of other instances in which similar conduct has been the basis for discipline. Plaintiffs' lawyers have expressed concern about the possible misuse of this criterion.

The guidance also deals with the difficult issue of when undertaking an investigation is itself wrongful. In McKennon, the Court held that the fact that the evidence of wrongdoing was discovered during litigation did not prevent the employer from making use of it. The Court held that it would be wrong to require employers to ignore such evidence, appearing to acknowledge that employers would undertake investigations once employees filed charges or suits. The Supreme Court believed that lower courts could deter abuses in investigations by awards of attorney fees and entry-of-sanctions orders where appropriate.

In the guidance, the EEOC defines a retaliatory investigation as one initiated in response to a complaint of discrimination in an attempt to uncover derogatory information about the complaining party or discourage other charges or opposition. Concerned that attorney fee awards or Rule 11 sanctions do not come into play until litigation is filed, the EEOC addresses the retaliatory investigation issue in the guidance in order to "deter pre-litigation overzealousness." The agency states that such retaliatory investigations may be "an extraordinary equitable circumstance" that would warrant awarding back pay after the date of the discovery of the wrongful act. The EEOC does acknowledge that in this type of situation, however, reinstatement would be inappropriate. The attempted distinction between legitimate discovery of after-acquired evidence and retaliatory investigation seems rather artificial and difficult to enforce. In any instance in which an incumbent employee files a charge, and the employer legitimately looks into the individual's background and performance in order to defend against it, the EEOC appears to say that that investigation will be classified as retaliatory and anyone terminated for wrongdoing uncovered during that investigation will be entitled to back pay beyond the date of discovery of the information. This means that an employer is never fully able to investigate a charge of an incumbent employee.

The availability of compensatory and punitive damages was not before the Court in McKennon, because those types of damages are not available under the ADEA. The agency states that the purpose of compensatory damages is to compensate an individual for injuries sustained as a result of discrimination and that this injury may well occur regardless of whether a legitimate reason for the personnel decision is subsequently discovered. The agency says that when calculating out-of-pocket losses that the complaining party would incur regardless of whether the action was taken for legal or illegal grounds, such as job search costs or moving expenses, losses incurred after the date that the evidence of wrongdoing is discovered will typically be excluded.

The agency believes that McKennon does not require compensatory damages for emotional harm to be time-limited, however. No legitimate business interests are served by exonerating a discriminator from paying the full cost of the emotional damage caused by the discrimination, according to the agency. Therefore, to the extent that the emotional harm would not have occurred if the adverse action had occurred for legitimate reasons, the employer should fully compensate those losses. That standard, however, leaves an employer a substantial amount of latitude to try to prove that the emotional harm allegedly suffered by the plaintiff was in fact due to reasons unrelated to alleged discrimination. For example, the loss of the job, which would have occurred for legitimate reasons, may be the main source of the emotional distress. Similarly, many other causes of stress in the employee's life may be playing a part as well. Under the standard in the guidance, the employer is fully justified in exploring those other causes during discovery and at trial.

Similarly, the EEOC does not believe that after-acquired evidence bars punitive damages. The employer did not know of the legitimate reason at the time of the challenged personnel action, and it is the employer's motivation that is relevant in determining the propriety of punitive damages. Liquidated damages would be awardable under the same rationale.

It is too soon to know how the agency's guidance will fare in the courts. There has been substantial litigation activity post-McKennon, and it will undoubtedly continue. Employers should be alert, before they decide whether to raise this defense when they discover after-acquired evidence of a violation of company rules, to investigate whether these rules have indeed been enforced in similar circumstances, because those facts will be fully explored by plaintiff's counsel or the EEOC. The existence of disputed facts about whether the misconduct was severe enough to warrant termination in any event is likely to preclude summary judgment and make this an issue for pretrial motions seeking to exclude certain evidence.

EEOC'S NATIONAL ENFORCEMENT PLAN

In order to conserve limited resources and make the maximum impact possible, on February 8, 1996, the EEOC adopted a National Enforcement Plan (NEP) to state its priorities and set forth an administrative and litigation plan for their achievement. Each region is to do a Local Enforcement Plan (LEP) to follow up the priorities set in the national plan in light of the particular legal and factual issues specific to the communities served by each office. The NEP embraces alternative dispute resolution as a desired means of shortcutting litigation and reducing the agency's backlog. The commission also sets priorities for its own litigation, although other cases not falling into these categories will also be pursued.

Those cases that have priority fall into four categories. The first are those involving violations of established principles that by their nature could have a potential significance beyond the parties to the particular dispute. These include harassment, glass-ceiling, and pay cases. The second group are cases having the potential of "promoting the development of law." These include cases raising unresolved questions about the allocation of burdens of proof as set forth in St. Mary's Honor Center v. Hicks, 113 Sup. Ct. 2742 (1993), issues of employer liability in harassment cases, national origin discrimination involving language issues, questions under the ADA regarding the meaning of "reasonable accommodation" and "qualified individual with a disability," cases involving the interpretation of the Older Workers Benefit Protection Act, and a number of others. Cases in which there is a conflict in the circuits on an NEP priority and cases involving the integrity of the commission's enforcement process complete the list.

The NEP also delegates substantial power to the general counsel. The general counsel may commence or intervene in litigation without going to the commission in all cases except those involving a major expenditure of resources; cases for which the commission has not adopted a position through regulation, policy guidance, commission decision, or compliance manual; cases that are believed to be appropriate for commission consideration because of their likelihood for public controversy or otherwise; and cases in which the general counsel wants the commission to participate as amicus curiae. The general counsel may redelegate to the regional attorneys the authority to commence litigation. The general counsel can also refer public-sector Title VII and ADA cases that fail conciliation to the Department of Justice (DOJ) for litigation. This authority has also been redelegated to regional attorneys, who are encouraged to consult informally with designated "point of contact" attorneys at DOJ regarding significant legal issues that arise in processing state and local government charges.

The NEP and the local plans that will be devised will help both plaintiff and defense counsel identify which of their cases are likeliest to draw EEOC involvement; this may help them to decide to file, or settle, early and may influence other strategic choices.

Barbara Berish Brown is a partner with the Washington, DC, office of Paul, Hastings, Janofsky & Walker.
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Title Annotation:Federal Regulations Update; recent developments in labor regulatory agencies
Author:Brown, Barbara Berish
Publication:Employment Relations Today
Date:Mar 22, 1996
Words:2524
Previous Article:Management practices to reduce employment-related liability.
Next Article:The jury is out: dealing with employee absences for jury duty.

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