Settling discrimination claims - how do you spell relief?
Far more than ever before, employees have aggressively initiated actions against their employers for perceived wrongdoings in the workplace, and employers have been quick to mount vigorous defense strategies. At the same time, the EEOC operates under conflicting internal guidelines regarding the approach it should use with employers that want to settle a discrimination claim before processing and/or litigation costs escalate. This article lays out some of the surprising elements of claim initiation and processing, examines the EEOC approach to settlement, and reviews the options available to employers.
INITIATING A DISCRIMINATION CLAIM
Individuals who believe that their rights under the fair employment practice laws have been compromised can take their grievances first to the EEOC and then to the courts. EEOC, the sole agency charged with enforcing employment laws, including Title VII of the Civil Rights Act of 1964 and Subchapter I of the Americans with Disabilities Act of 1990 (ADA), not only can aid the potential complainant, but also can act on specific requests to institute a discrimination claim itself.
Although it may have been a rather rare occurrence in the past for the EEOC to file its own discrimination charge against an employer, today the possibility may be more attractive. In a time of limited staff and budget support, the EEOC might well decide that a more efficient deployment of resources would be in increased numbers of EEOC-initiated charges predicated on information gleaned from present or past complainants. Such a tactical redirection could easily be accomplished by internal EEOC directive. And although complainants would have to provide knowing and voluntary consent to EEOC "representation," there is clearly a solid basis for such action.(1) What would at best, then, have been a number of single claims could evolve into a major frontal assault by EEOC against the employer.
A second, although perhaps more well-known, method that may be used to assert discrimination claims is the "third-party charge." In this situation, a charge on behalf of a person claiming to be aggrieved can be made by any person, agency, or organization. This written charge does not have to name the person on whose behalf it is made. It need only specify the circumstance claimed to be discriminatory. However, prior to making the charge official, the EEOC has to verify the authorization of such charge by the person on whose behalf the charge is made. Any such person may, nevertheless, still request that the commission keep his or her identity entirely confidential.
In this situation, the defendant-respondent does not even have the right to know the name and/or identity of the complainant. Odd legal situations can also arise. For example, the complainant may not even be someone who has actual standing to sue. In other words, it is quite possible for, say, a male to file a third-party charge alleging that discrimination exists against one or more female employees of the same company. Yet, that same male could never get past the courthouse door, so to speak, if he were to raise that assertion as the basis for litigation. The females would have to bring the action.
Consistent with its stated mission under Title VII of the Civil Rights Act of 1964 and relevant regulations, the EEOC could take on the task for him as the result of information gleaned from an earlier investigation of the man's assertions of company bias against women. And still the original complainant's identity would remain a secret.
Although only a minimal amount of detail is necessary when a claim is first initiated, if the written claim of discrimination is later considered inadequate in its specificity or if additional instances that purportedly prove the point are found, the individual has only to amend the original charge or allow the EEOC to do same. Therefore, it is possible for an initially minimal charge of discrimination to grow during the course of processing. As the claim expands, so may the potential investigation. Increasing quantities of information may be requested under threat of subpoena. And the defendant-respondent quickly loses any vestige of control over the outcome (sometimes regardless of the merits of the original matter).
It is clear that the likelihood of an adverse court decision combined with potential financial and other costs associated with litigation make early settlement of a discrimination claim an attractive alternative. However, an employer's attempts to settle such a claim may add up to a more complicated and expensive proposition than would have been possible prior to the 1991 Civil Rights Act.
SETTLING A DISCRIMINATION CHARGE
Settlement of discrimination claims is not, for legal purposes, an admission of any guilt whatsoever. If attempted early enough in the "liability" period, it certainly is relatively inexpensive when compared with the cost of further processing and/or subsequent court action, regardless of the final conclusion.
Relevant regulations at 29 CFR 1601.20(a) allow for this possibility to take place. Moreover, those same regulations incorporate an option under which a timely full-settlement offer must be accepted by the complainant, notwithstanding such individual's possible desire for a windfall. Indeed, if the individual does not agree to an appropriate settlement offer, the case of discrimination can be dismissed outright. Thus, the respondent must make the settlement offer in writing. The commission may, then, dismiss the charge if the complainant refuses to accept the offer, as long as the offer would afford full relief for the harm alleged and the complainant fails to accept such an offer within 30 days after actual notice of the offer.
The EEOC procedural manual is even more explicit in articulating what might constitute complainant conduct warranting dismissal of a charge in the face of a viable settlement offer. It states:
A case may be dismissed if a charging party/complainant refuses a respondent's legitimate offer to full retroactive and prospective relief. Dismissal is appropriate only if the party's demands are excessive, s/he is defiant of EEOC's and respondent's efforts to reach a settlement, and the offer meets the standards for full relief under all applicable statutes.(2)
The letter sent by the EEOC in such a situation puts the complainant officially on notice as to the agency actions that are being contemplated. The boilerplate letter states,
This is to inform you that the Commission is considering dismissal of your charge because the Commission's efforts on your behalf have resulted in the respondent's offer of a settlement which we believe constitutes full relief for the alleged discriminatory practices detailed in your charge.... The Director has determined that the respondent's offer constitutes the relief you would obtain if you or the Commission would prevail in litigation of the same charge. If we do not hear from you by (Date), that you accept this offer, your charge will be dismissed. If you refuse this offer based on a belief that it does not correct the alleged discrimination, you must state your reasons in writing to this office within the time allowed.(3)
As the reader can see, any discussion of this course of action centers around the issue of "full relief." In the pre-1990s era, essentially all that was implied by "full relief" was back pay, with interest. However, with the passage of the Civil Rights Act of 1991, other items were added to the mix. Compensatory damages, for example, are available as a component of appropriate remedies for the complainant who prevails. By definition, such damages pay a complaining party for losses or suffering inflicted due to the employer's discriminatory act or conduct, including damages for past and future out-of-pocket losses and emotional harm.
And, as noted, not only are compensatory damages rather wide-ranging in their definition, but they are available for demonstrable past, as well as future, losses on the part of the complainant. In addition, they are available for particular tangible losses as well as intangible losses. Examples of these losses are
moving expenses job search expenses medical expenses psychiatric expenses physical therapy expenses emotional pain suffering inconvenience mental anguish loss of enjoyment of life injury to professional standing injury to character and reputation injury to credit standing loss of health
Other quantifiable out-of-pocket expenses that are incurred as a result of the discriminatory conduct also are included as losses if they can be determined by receipts, records, bills, canceled checks, confirmation by other individuals, or other proof of actual losses and expenses.
Nonpecuniary losses, however, are harder to prove than the foregoing pecuniary losses. Emotional harm is not presumed by the EEOC simply because the complaining party is a victim of discrimination. Rather, the existence, nature, and severity of emotional harm must be proved through such evidence as
sleeplessness anxiety stress depression marital strain humiliation emotional distress loss of self-esteem excessive fatigue a nervous breakdown ulcers gastrointestinal disorders hair loss headaches
The employer should keep in mind that liability for emotional harm readily accrues. For example, if a complainant had preexisting emotional difficulties and his or her mental health deteriorates as a result of the discriminatory conduct, the additional harm may be attributed to the respondent. The fact that the complainant may be unusually emotionally sensitive and incur great emotional harm from discriminatory conduct does not absolve the respondent from responsibility for the greater emotional harm.
Moreover, damage awards for emotional harm vary significantly, and there are no definitive rules governing the amounts to be awarded. Computing nonpecuniary damages is typically based on the severity of harm and the time that the complaining party suffered from that emotional harm. Thus, one assesses the severity of the harm to consider whether the harm consisted of occasional sleeplessness or a nervous breakdown resulting in years of psychotherapy. The length of time that the complaining party has suffered from the emotional harm is also relevant.
The EEOC procedural manual is nowhere near as explicit about the subject of punitive damages. The reason for this approach is probably that punitive damages are much more self-explanatory. Simply stated, punitive damages are awarded so as to punish and deter future discriminatory conduct.
A CONFLICT IN DIRECTION
What the EEOC procedural manual does mention in the most explicit terms is the manner in which settlement of charges is to be approached. Here, rather than facilitate communication between the principals, with an eye to resolving the matter, the EEOC appears to search for every possible aspect of the issue that would lead to a damage award. The EEOC manual in fact states that "Damages are often a necessary component of full relief.... Damages for past pecuniary losses should be routinely sought."(4) The manual further states:
Field offices should process Title VII and ADA charges with a view toward obtaining evidence of compensatory damages.... Thus, staff should now seek evidence of compensatory damages in all appropriate Title VII and ADA charge investigations.(5)
However, if the immediately foregoing procedures are literally followed, as they are supposed to be, then settlement as a negotiated agreement between the two parties to end the charge is, for all intents and purposes, precluded. And the advantage of this tactic, as earlier outlined, is completely lost. Not only are all the specific elements of the ("valid") settlement spelled out in the manual, but also, by implication, are the relevant time frames. The agency's procedural instructions appear to include everything save the final amount, leaving nothing substantive about which the parties might converse.
Moreover, the complainant now has absolutely no incentive to accept a predetermination settlement. For all practical purposes, all a complainant need do is reject the settlement overture by the respondent in order to force further processing of the matter. The EEOC will then necessarily proceed with the matter until a final determination is reached.
Perhaps the best a respondent can do at this juncture is endeavor to force the complainant to provide some particulars as to why the settlement overture was rejected. However, in reality, this gesture serves little or no function because the EEOC is likely, under its own procedures, to counsel the complainant that no offer of less than (the EEOC's own definition of) "full relief" should be accepted.
It is, of course, intriguing that there is an inherent contradiction in tactical instruction provided by the EEOC to its own staff in applicable regulations when compared with relevant portions of the compliance manual. Regulations at 29 CFR 1601.20 encourage settlements that are mutually agreeable to the parties. The compliance manual, on the other hand, will have none of it. The manual, being the more current document and, no doubt, the more actively internally enforced, is apt to be the winner in such a circumstance.
In order to put the issue into perspective, consider the hypothetical situation involving the Babble & Bedlam Company. In response to a job opening posted in the local newspaper, I.M. Reddy applies. However, during the initial prescreening interview, he indicates to the interviewer that a recurrent back problem prevents him from sitting for too long. It is clear from his application form and resume that he has the skill set and experience to perform the job in question. Nevertheless, the interviewer states to him that the position requires the individual to remain at the workstation throughout the day with only minimal breaks and lunch. The interviewer thanks Mr. Reddy for his time and interest but informs him that there is no job available at this time that would be suitable for him. Others with approximately the same professional background are subsequently hired.
Several months later, Babble & Bedlam receives from the EEOC a Notice of Charge of Discrimination, indicating that Mr. Reddy believes the rejection of his application for employment was rooted in discrimination on the basis of disability. The EEOC initially seeks information on all applicants, interviews, rejections, and hires from January 1 of the prior year through the present. The information is to include, as a minimum, name, date of application, date of interview (if appropriate), and date of hire or rejection. Copies of actual application forms, resumes, interview notes, and correspondence both internal and external are to be incorporated in the submittal.
Before submitting, to any third party, data related to a complaint, Babble & Bedlam, as a matter of corporate policy, conducts an internal investigation as to the factual circumstance that gave rise to the complaint, as well as the relevance of the data and the impact of its content. In the situation pertaining to Mr. Reddy, Babble & Bedlam concluded from its preliminary investigation that there might well be a problem in terms of the manner in which the application was processed and the interview handled. At the very least, persuading a third party of the job-relatedness of the rejection might prove to be difficult. Thus, because it might likely quickly cost more than it is "worth" to continue investigating and defending against the claim, the company prepares to initiate settlement discussions with the EEOC.
Because it had been six months since Mr. Reddy had applied for the position, Babble & Bedlam made an offer through the EEOC for an amount equal to six months' pay at the minimum published salary for the job, less unemployment compensation (theoretically) received for the period. Mr. Reddy responded, through the EEOC, that he was not interested in such a payment because he was clearly more than minimally qualified. In formally rejecting the offer, to that assertion the EEOC added that any unemployment compensation was not to be subtracted. Such money was a matter of repayment by the individual to the state.
The request for information was repeated. The deadline was imminent.
Babble & Bedlam then increased its offer to an amount comparable to the salaries of those few who had been hired in the interim with equivalent backgrounds. Additionally, the offer was not reduced by any anticipated unemployment compensation. However, the EEOC again rejected it. First, it had not been brought up to the present time and the complainant remained unemployed. And second, it had made no allowances for overtime (theoretically) earned during the period. During these conversations, the EEOC had made subtle hints that the "open-endedness" of the situation could easily be rectified by Babble & Bedlam making an unconditional job offer that Mr. Reddy might well spurn. The company did just that, as well as modifying its previous settlement offer in accordance with the EEOC's objections.
At this juncture, the company was rapidly concluding that although settlement negotiations were indeed progressing, they were actually not going particularly well. The processing of the case was not coming to an end, the potential payment was increasing, no information had been submitted, and the deadline for doing so hung like the sword of Damocles over the organization.
Meanwhile, the offer as last modified had been rejected out of hand by the complainant. The EEOC was now inquiring into the issue of health benefits and even pension.
The company, on the other hand, was wondering whether or not the original decision to enter into settlement negotiations had been a wise one. Clearly, the negotiations were one-sided. Mr. Reddy had only to reject each offer or allow the EEOC to do it for him. The company, for all intents and purposes, now believed it not to be practical to revert to processing information on the merits of the claim. Even if it did, in the reasonably likely possibility that the EEOC found probable cause, early settlement discussions would not be seen to have saved either time or money. By the same token, to proceed with the current situation was to negotiate with no leverage. The EEOC seemed to hold all the cards and could have plucked any dollar amount out of the air and required it to be accepted.
OBSTACLES IN THE WAY OF CONFLICT RESOLUTION
Employers seem to be caught between the proverbial rock and a hard place when confronted with an allegation of discrimination that they find to be only marginally defensible. They cannot "negotiate" closure predicated on terms that are not any more favorable than they would encounter should they be found by the EEOC to have discriminated and violated the law, as charged. And yet, knowing that the EEOC may find probable cause if the matter is allowed to proceed, employers are eager to obtain a resolution that minimizes cost. Currently, there is apparently no way to reach this end.
On April 20, 1995, the EEOC announced that it was changing the manner in which it would process cases. In a Wall Street Journal article, the EEOC was reported as saying that it had "repealed its full relief policy, replacing it with a more flexible system that allows employers to offer substantial or appropriate remedies for workers complaining of discrimination." Without more, however, the EEOC statement sheds little light.
Clearly, under applicable law, the EEOC may not consider simple back pay as full relief. Therefore, an appropriate remedy must encompass more. But, the question remains, "How much more?" Any "flexibility" on the part of the EEOC is likely to be challenged by the complainant, unless the commission articulates in its regulations a substantial modification of its definition of compensatory damages.
Such a change would be a small step in the direction of efficient discrimination charge resolution. To streamline the settlement mechanism will surely be more meaningful than the EEOC developing, as has been suggested, an alternative dispute resolution system. The latter, with its attendant guidelines-cum-regulations, would only shift legal fees from one forum to another, because there is an increasing tendency for complainants and respondents to be represented by often costly counsel in any setting that might appear to be court-like.
What Employers Can Do
For employers, there is no obvious strategy that will generate advantage in the present situation. There are, nevertheless, some important moves that can be made. First, an internal dispute resolution mechanism can be established, with its use mandated as a matter of policy. Certainly, use of any such system will help in that it has the benefit of changing the arena and thus the "rules" to those of an employer-defined "due process." A viable procedure will, of course, include:
* Chain-of-command complaint handling;
* Appeal possibilities; and
* Out-of-chain option(s).
Economically speaking, any discrimination charge that is worked out prior to being filed with an administrative agency has saved both time and money. Furthermore, should the matter ultimately come before an agency, it is possible that an investigator will consider and, perhaps, accept the internal determination if it is amply supported by the facts. At the very least, the employer will have likely gathered all or almost all of the relevant information required by the agency and have established a position relative to this information.
Alternatively, it may be that seizing the offensive and urging a settlement package that combines tangibles, such as back pay, with intangibles, such as health insurance coverage of premiums or deductibles, will prove to be expeditious in terms of influencing the complainant to settle and the agency to accede to the agreement. A carefully crafted package would address, and possibly preempt, later issues related to compensatory damages. But it remains that settling discrimination charges at the agency level is one of the most problematic outgrowths of the enactment of the Civil Rights Act of 1991.
1. 29 CFR 1601.
2. BNA EEOC Comp. Man 4: 0005.
3. BNA EEOC Comp. Man 4: 0011.
Robert M. Preer, Jr., is manager of employee relations, corporate human resources, based in the Boston office of Stone & Webster Engineering Corporation. Areas that are the most recent focus of his management responsibility include employee assistance, equal opportunity/corporate civil rights, and performance evaluation. He has also written many articles on topics related to these and other employment areas.
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|Author:||Preer, Robert M., Jr.|
|Publication:||Employment Relations Today|
|Date:||Mar 22, 1996|
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