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Government agencies are increasingly setting their sights on larger targets, ramping up enforcement efforts to root out systemic discrimination. This has important ramifications for employers who may suddenly find themselves defending a claim that, for all intents and purposes, feels like a class action, even though it started as an individual agency charge. With advancements in technology, large data sets on workforces are more common than ever, and government agencies are taking advantage of this and will not hesitate to request data on classes of individuals to search for trends indicating potential discrimination.

EEOC Intensifies Campaign against Systemic Discrimination

In her first public speech since being named as Chair of the EEOC, Charlotte Burrows pledged that the federal government’s workplace civil rights agency will emphasize enforcement of laws to combat systemic discrimination. This commitment to addressing systemic discrimination is consistent with President Biden’s plans to combat racism. (In January, Biden signed an executive order creating a government-wide “racial equity review” and underscoring enforcement of anti-discrimination laws. Read more here.)

The EEOC defines systemic cases as “pattern or practice, policy and/or class cases where the discrimination has a broad impact on an industry, profession, company or geographic location.” The agency notes that “because of access to data, as well as the ability to use Commissioner Charges and Directed Investigations, the EEOC is in a unique position to identify systemic cases.” Its 2017-2021 Strategic Enforcement Plan reaffirmed the EEOC’s commitment to a nationwide, strategic and coordinated systemic program. And, in January, the agency unveiled a new webpage concerning systemic enforcement that details the process of initiating and conducting a systemic case–a further signal that the EEOC, under the Biden administration, will prioritize systemic cases.

To a certain degree, the EEOC has tipped its hand and shared areas of concern where employers should pay particular attention. On its website, the agency outlines examples of the types of practices and policies that may involve systemic discrimination. Of most relevance to our clients, these areas are:

  1. Hiring/Promotion/Assignment/Referral
    • Criminal/credit background checks
    • Job ads showing preference (“young,” “energetic,” “recent graduate,” “men only,” “women only”)
    • Customer preference
    • Big data ¾ using algorithms to sort through applications
    • Personality or customer service tests; physical ability or capacity tests; cognitive tests
  1. Policies/Practices
    • Parental leave policies that do not give the same benefits for men and women
    • Mandatory maternity leave
    • Age-based limits on benefits or contributions to pension or other benefits
  1. Lay-off/Reduction in Force/Discharge policies
    • Waivers that may prevent employees from filing complaints or assisting the EEOC
    • Waivers that do not comply with the Older Workers Benefit Protection Act
    • Non-accommodation for medical leave
    • 100% healed return to work requirements

We also continue to see systemic charges in the typical areas, such as background checks/testing, disability discrimination, pregnancy discrimination, pay equity, and age bias in advertisements. We expect that this will continue but with advancements in technology, we also expect to see systemic challenges to the use of AI and big data in hiring and other employment decisions.

California DFEH: Aggressive Pursuit of Systemic Complaints

The California Department of Fair Employment and Housing (DFEH) is the largest state civil rights agency in the country. It first gained authority to file lawsuits to pursue violations of the state’s anti-discrimination laws in 2013. Part of its broad power to sue California employers includes the ability to launch statewide investigations for systematic or large-scale violations of the state’s civil rights laws.

Systemic complaints from the DFEH are not filed in court, but often look like a civil pleading, allege very broad, generalized claims and include sweeping document requests and interrogatories. These discovery requests often lead to further investigation and depositions. And without a formal case pending in court, California employers often face the difficult situation of responding to extensive and burdensome discovery requests without court intervention or oversight. There is a unique statutory scheme for these complaints that allows the DFEH one year to decide if the complaints are systemic and then another year to file suit.

In 2019, DFEH negotiated settlements in 710 cases for monetary recovery of $14,834,753.25. It also filed four civil court cases and litigated numerous other pending cases.

We expect that SB 973 (the legislation making California the first state to require employers to submit employee pay data by race and gender) will enable DFEH to investigate and file claims under the Equal Pay Act. Indeed, the DFEH website states: “Employers’ pay data reports will allow DFEH to more efficiently identify wage patterns and allow for effective enforcement of equal pay or anti-discrimination laws, when appropriate. DFEH’s strategic vision is a California free of discrimination.” Accordingly, it is essential that California employers partner with counsel to plan their reports, and to regularly conduct pay equity audits.

Practical Tips for Employers

  • Employers should consider proactive risk mitigation assessments. These can come in many forms such as policy audits, reviews of hiring practices, pay and promotion reviews, etc.
  • The heightened emphasis on systemic discrimination means employers should consider that every charge has the potential for company-wide ramifications;
  • Exercise care in responding to the charge and any RFIs to highlight the individualized nature of the charging party’s situation, to the extent possible, and appropriately limit information and data to that which is relevant to the charging party’s claims.
  • Be thoughtful in the selection of comparators, ensuring that they are truly similarly situated.
  • If you receive a request for information from the EEOC, the DFEH or any other government agency, consult with your Baker McKenzie employment counsel who can assist in preventing the agency from overreaching.