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What to do when the EEOC makes an offer it thinks you cannot refuse

February 25th, 2013  |  Lorene Park

After the EEOC has found reasonable cause to believe that an employee’s charge of discrimination is true, and before the agency files suit, the EEOC is required to attempt, in good faith, to resolve the dispute with the employer. According to the EEOC, there are many advantages to conciliation: the process is voluntary; it can remove the uncertainty, cost, and animosity of litigation; and such discussions are “negotiations” where “counter-offers may be presented.” But what happens when it doesn’t work that way? What if the agency presents an all-or-nothing settlement offer with little time to think it over?

Good faith required.

A federal district court in Pennsylvania recently wrestled with just that scenario (EEOC v Ruby Tuesday, Inc, WDPa 2013). A restaurant employee filed an EEOC charge alleging sex discrimination and retaliation. On August 25, 2009 the agency issued its finding of reasonable cause to believe the restaurant discriminated against the employee based on sex and engaged in a pattern and practice of age discrimination in six restaurants. The restaurant was given a proposed conciliation agreement and 13 days to respond. It asked for 30 days but the EEOC refused and, on September 9, demanded the restaurant’s “best offer” by September 18. The EEOC also for the first time demanded $6,458,375 to settle. On September 15, the restaurant counter-offered on the charging party’s claim and asked to engage in further conciliation discussions on the broader claims. The EEOC responded by issuing a notice of failure to conciliate. The agency filed suit on September 30.

After nearly three years of discovery, the employer filed a motion for summary judgment based on the EEOC’s failure to conciliate in good faith. The court was displeased with the EEOC’s failure to pass the “low bar” of good faith conciliation. To the court, “a demand for the payment of more than $6 million, coupled with nine (9) days to either say ‘yes’ or to make a ‘best and final’ response,” was “devoid of reasonableness.” Further, the EEOC provided no reason why it needed an answer in the form demanded (unqualified acceptance or best offer) or why the “line in the sand” approach could be deemed conciliation. Staying the proceedings, the court ordered the parties to engage in the conciliation that should have occurred much sooner.

Hold the EEOC to its mandate.

As illustrated in Ruby Tuesday, the “good faith” obligation presents a fairly low bar for the EEOC with respect to conciliation; however, the bar does exist. Employers presented with all-or-nothing offers or given an unreasonably short time to consider a conciliation agreement should object, and should do so sooner rather than later. Indeed, the failure to timely plead the defense of a lack of good faith conciliation can waive the defense (e.g., EEOC v Service Temps, Inc, 5thCir 2012). Employers should consider the following:

  • Factual basis: Ask for a minimal factual basis for an EEOC determination of reasonable cause and for any settlement amount demanded by the agency. Note, however, that with respect to class claims, courts do not typically expect the agency to specifically identify, investigate, and conciliate as to each individual claimant (EEOC v Evans Fruit Co, Inc, EDWash 2012).
  • Time: Ask for reasonable time to consider the facts and the offer.
  • Pleadings: If the agency files suit without good faith conciliation; plead the defense and file a motion to dismiss. Watch your deadlines (in the Ruby Tuesday case, the court also found that the EEOC failed to meet minimum pleading requirements but declined to grant the employer’s untimely motion to dismiss and merely ordered the EEOC to file a more definitive statement).
  • Confidentiality: Be aware that you can waive the confidentiality of communications exchanged during conciliation by making them public (e.g., by using them as an exhibit in court proceedings and citing terms). However, simply pleading the defense in an answer is generally not a waiver (EEOC v Mach Mining, LLC, SDIll 2012).

Whatever efforts employers make to hold the EEOC to its good faith obligations should be documented, including any requests to meet face-to-face. Employers should also keep in mind that they are unlikely to completely dispense with a discrimination suit due to the agency’s lack of good faith. Instead, courts typically stay the proceedings and order the parties to make further attempts at conciliation. Additional information with respect to resolving an EEOC charge is available on the agency’s website at: http://www.eeoc.gov/employers/resolving.cfm