Human Resources News & Insights

Court orders EEOC to pay $750K for ‘unreasonable’ lawsuit

Remember last year, when a federal court chided the Equal Employment Opportunity Commission for its “sue first, ask questions later” approach to a case involving a temporary staffing firm? Now several business groups have banded together to make sure the agency pays the price for its over-aggressive tactics.

The U.S. Chamber of Commerce, the Equal Employment Advisory Council and the National Federation of Independent Business Small Business Legal Center recently filed a joint “friend of the court” motion urging that a federal appeals court order the EEOC to fork over more than three-quarters of a million dollars to Peoplemark, Inc.

A lower court awarded Peoplemark $752,000 in attorney’s fees and costs after the agency pursued an “unreasonable and meritless litigation strategy” in a racial discrimination claim against the staffing company.

The case has gained notoriety in a time when employers have started to voice concerns about the EEOC’s tactics in expanded enforcement efforts. One observer characterized the agency’s approach as “ready, fire, aim.”

‘Disparate impact’ alleged

Here’s the background: The EEOC filed a lawsuit against Peoplemark, claiming that the firm had a blanket policy against hiring applicants with criminal records. That policy discriminated against African American and Hispanic applicants, the agency alleged.

According to the business consortium’s court filing, the EEOC’s lawsuit was brought on behalf of an individual who claimed that she was denied employment due to her criminal conviction record, “as well as an unidentified class of similarly situated individuals.”

But after the EEOC filed its civil complaint, Peoplemark produced a statistical analysis which revealed that at least 22% of the 286 applicants the EEOC claimed
were negatively affected by the company policy were, in fact, hired by the company.

And the EEOC couldn’t produce any statistical evidence of disparate impact based on the alleged hiring policy.

After extended legal wrangling, the agency and the company filed a joint motion to dismiss the case.

‘Without foundation from the beginning’

Subsequently, Peoplmark argued that the EEOC’s tactics “deliberately caused Peoplemark unnecessary delay and expense in a very time consuming and complex case,” and asked that the agency be required to reimburse the company’s attorney’s fees and costs.

The district court agreed, finding that the agency continued to
prosecute the case after it became clear that it had no basis for doing so.

The judge wrote:

“This is one of those cases where the complaint turned out to be without foundation from the beginning.

“Once the EEOC became aware that its assertion that Peoplemark categorically refused to hire any person with a criminal record was not true, or once the EEOC
should have known that, it was unreasonable for the EEOC to continue to litigate on the basis of that claim, thereby driving up defendant’s costs, because it knew it would not be able to prove its case.”

The EEOC appealed the lower court decision. The business consortium’s motion was filed with the Sixth Circuit Court of Appeals, which will decided whether the $752,000 award will stand.

The question is, will a $752,000 slap-down make the EEOC rethink its approach to similar cases? Only time will tell.





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  1. Common Sense says:

    I just love it when government agencies with imbecilic bureaucrats cost the tax payers time and money via their partisan agenda driven witch hunts. (Note; I am still looking for a sarcasm font).

  2. I don’t think this will affect whether or not the EEOC brings forth any other unjustified cases. As with most government agencies, employees feel they have a responsibility to proove their usefullness, not turn a profit. These employees need to be held accountable for thier lack of research before they act in order for this to change. A fine to the EEOC does not affect the agency’s employee’s paychecks, so there is no incentive for the employees to change their ways.

  3. The EEOC does not have to temper its behavior when it receives unfavorable rulings because they are paying with OUR money. The people who pursue this outrageous agenda have no accountability and the entire attitude of the regulatory community toward business is “Slash and Burn”. Until they are brought to heel by Congress, their reign of terror will continue.

  4. And don’t miss the point that not only did the EEOC spend taxpayer dollars to bring this case before the courts but now will have to spend an addition $750,000 of taxpayer dollars to pay for their foolishness. Washington run amuck once again!

  5. As HR professionals, it is clear that many of you do not have a very good view of the EEOC (suprising to say the least). I for one am thankful for the EEOC in that were it not for the organization, equal employment opportunity would only be a theoretical idea in this county. After all, it took organizations like this to demand sound EEO practices and hold employers accountable for them. Let me first say that the organization was definitely wrong in this case but in many others, it has proven a great resource for individuals/classes that have been illegally discriminated against. It seems that many of you are willing to throw the whole organization out the window due to this single situation. Are businesses thrown out the window due to mistakes they should have known better than to commit? No, they are sued and fined just as in this circumstance but they are allowed to continue in business. Many times these companies are federal contractors receiving tax payer funds as well (healthcare organizations, construction firms, defense contractors, etc.). Many of you fail to address the funds the organization has collected because of wrongs committed by businesses which far outweighs the fine this organization may be required to pay. Just putting it into perspective for ya.

  6. Common Sense says:

    @mman. Thanks for the lecture on why we as h.r. professionals should feel thankful for this bumbling government agency. You say:It seems that many of you are willing to throw the whole organization out the window due to this single situation.” No one here has suggested scrapping this agency, but if they did, I assure you it would not be based solely on this “single situation”. They have developed a pattern of innefficiency and abuse.
    You try to compare a business to government agencies when their is little similarity. Businesses (unless they are heavily subsidized like Solyndra) exist on their own merits. If they fail to competitively serve their customers they will cease to exist. Customers will vote with their dollars and take their business elsewhere. Government agencies have little accountability and almost never go away. It does not matterhow meaningless their purpose, how ineffective, wasteful, duplicative, contradictory… their purpose.
    Just putting it into perspective for you.

  7. @Common Sense…O.K. so I see you advocate the whole argument of the “invisible hand” that guides the market thus stating that the market will correct itself when businesses or industries go awry. Your are mistaken sir. In essence, businesses, by your logic, if they behave badly will eventually go away (some have some haven’t). You are sadly mistaken. You need to study your ethics books that show how some companies have behaved badly, many times worse than the EEOC and very often to the cost of lives but yet they still exist and are stronger than ever. This is because the products some of these unethical companies make are so pervasive in our society that its hard to eliminate them because consumers feel they can’t live without them. Therefore, agencies like the EEOC, OSHA, and the like need to be there to hold them accountable. God help us if they weren’t. But I will give you that government agencies need to be held accountable but that doesn’t mean they are useless. Moreover, government agencies exist on their own merits, contrary to your argument, as well due to the purpose they are meant to serve (EQUAL EMPLOYMENT OPPORTUNITY) something I believe strongly in. It all doesn’t have to be about turning a profit. By the way, you are welcome!

  8. As with many government agencies, I don’t think today’s EEOC looks anything like what was intended when it was created. Especially in the past few years, it seems their primary concern is to abuse their power and promote their name in the media.
    I recently attended a seminar led by an attorney who left the EEOC to go into private practice. She said that employees at the EEOC were specifically told to go after the cases that would get them the most attention from the press.
    I find it sad that an agency that was created to protect employees is now more concerned about media coverage than about the people they represent.

  9. @JLH…if your comments are true (I’m not saying they are or they aren’t) that may be more of a product of the current administration rather than the organization itself.

  10. Common Sense says:

    @Mman: The “invisible hand” unarguably guides the market by fostering innovation, productivity, competition… Government agencies have no such internal mechanism.

    Let us not confuse the issue by taking the “invisible hand” effect and trying to apply it to regulation by the government. Government does serve a purpose in setting some regulations (It can be debated how much is adequate and varies from industry to industry).

    I was speaking in generalities not absolutes. Everything I said was accurate. When I speak of accountability, I speak of an accountability a business has to its shareholders and customers. While not perfect the market “invisible hand” generally flushes poor performers out. You know as well as I that government has no such measures. The evidence is overwhelming and can be seen in almost every agency, from the IRS to the DMV.

    You say I “need to study your ethics books that show how some companies have behaved badly…”. Thanks for the news flash. I am not saying theses particular agencies are “useless” like you have implied I have said. I simply said that the government need to be a lot more accountable.

    You say: “It all doesn’t have to be about turning a profit.” I don’t know where you are coming from with that. Actually, business is about turning a profit. If it is not profitable, it will cease to exist.

    You say to JLH “if your comments are true (I’m not saying they are or they aren’t) that may be more of a product of the current administration rather than the organization itself.”
    As easy as it is to blame the current administration, most of out-of-control government has to do with the all to predictable by-product of bureaucracies. (waste, corruption and inefficiencies). It has been here long before Obama and will be here long after.

    P.S. Despite what you say not all government agencies stand on their own merits. Many cause more problems than they solve and most are inefficient and wasteful. I will be happy to give you a list if you need examples.

  11. @Common Sense…“I don’t know where you are coming from with that. Actually, business is about turning a profit. If it is not profitable, it will cease to exist”. I beg your pardon, there are many successful not-for-profits that do not exist just to turn a profit out there that perform just as well as for profits if not better. While I do realize they need to operate in the black, their sole purpose for existence is not the bottom line.

    But I do agree with you on one thing, government agencies do need to be held accountable, just as businesses do for unacceptable behavior.

  12. Common Sense says:

    @MMAN: You beg my pardon, when once again nothing I said was incorrect. I beg your pardon as I I need to correct you yet again.
    So called non-profit organizations do indeed need to make a profit. Profit and non profit companies “both have to generate a profit in order to survive and grow… In both cases some of the profits are re-invested in the organization (although laws, especially tax laws, place limits on how much non-profits are allowed to re-invest) either to replace aging and worn out assets (buildings, machinery, etc.) or to acquire new assets needed to expand the organization’s operations (such as a religious group building a new and larger church to accommodate a growing congregation). However, it is the distribution of the remainder of the profits that is one of the differentiating characteristics between for profit and non-profit organizations. In a for profit organization the profits that are not re-invested in the organization are distributed to the owners of the corporation as cash. In the case of a non-profit organization the profits are used to provide goods or services to the group or groups the non-profit was formed to help.”

  13. @Common Sense…you did not obviously ready my post through…I said that even not for profits need to operate in the black (a profit) but that is not the primary focus of their existence…it is to serve some other purpose for the common good (hopefully)! And through serving this/these need(s) they can indeed grow through surplus funds they take in. So why are you arguing? You state as a true fact that everything you say is a true fact…contrary to your confidence, some of what you say are indeed opinions.

  14. Common Sense says:

    @Mman You ask; Why am I arguing? It is because despite the fact that you say you don’t like to play “gotcha” games you consistently play them by finding ways to parse and twist my words while failing to see the big picture. It is a shame I have to spell it out, but here is what I am saying:

    Yes, the vast majority of businees are for profit.
    Yes non-profits also need to be profitable in order to sustain themselves.
    Yes, even if a non-profit’s “sole purpose” is not to be profitable it will fail to exist if it can not sustain profits. Thus any other purpose it may have had also ceases.
    So yes, It is in essence all about turning a profit.
    Yes, your lecture (displaying your shock and disappointment at HR Mornings reader’s negative attitudes of an overly intrusive bumbling agency) has managed to once again derail these posts completely off-point.
    No, despite what you say, I did not state “everything I say is a true fact”. I said “Everything I said was accurate” and I stand by that statement. If you disagree, please show me where I was wrong on the facts.

    Please don’t start down some ridiculus road where you some non-profits are organized to promote hobbies, clubs…

  15. @Common Sense…I have not derailed the conversation any more than you have sir. And no, I am not playing “gotcha” games…that’s childsplay. I am only disagreeing with some of the statements you make because the accuracy of the same is relevant to only your (and whoever agrees with you) statements. Take the argument of the “invisible hand” for instance, you say it is a true fact that this is unarguably guides the market yadayadayada… however, this is only a theoretical idea and can not be proven as accurate let alone a “fact”.

    So let me get this straight…what you are telling me is that if I agree with the seeming majority of the sentiments on this topic, I will not be “derailing” these points completely off-point, but if I don’t I am guilty of it? Well hows that for open discussion?

  16. Lillie_Rae says:

    HAHA! I haven’t checked this site in over a YEAR and MMAN was making ridiculous arguments back then. Glad to see nothing has changed!

  17. @Lillie_Rae…what makes them ridiculous, because you don’t agree with them?

  18. Lillie_Rae says:

    They’re ridiculous because you do not support your stance. You use the same off-topic posts to simply “out-post” others with valid points. It’s as if you went to a public debate and declared yourself the winner even though everyone has left and the lights have been turned off.

  19. Common Sense says:

    @Mman Please, I ask you again, stop purposefully contorting my words. It truly reflects worse on you than it does me. When speaking of the “invisible hand”, I never said “it is a true fact that this is unarguably guides the market yadayadayada…” I said “The “invisible hand” unarguably guides the market by fostering innovation, productivity, competition…” You say “however, this is only a theoretical idea and can not be proven as accurate let alone a “fact”.”
    Yes the invisible hand is a theory. No one has claimed otherwise. But let me revise my statement; Unless you are debating a half-wit, the “invisible hand” unarguably guides the market… To argue against the theory of the “invisible hand” is to argue that people don’t work in regards for their own self-interests. One may want to debate how much effect the “invisible hand” has or if the effect is positive of negative, but to argue that it does not exist is a fools errand. (I believe even Karl Marx acknowledges an invisible hand effect, he simply believes it is a negative force).

    When I say you derailed the conversation off topic, I am not referring to whether or not you disagree. I welcome disagreement if it is on topic. I am referencing the fact that the topic was the EEOC’s abuse of power and frivolous lawsuits and you turned it into a lecture on why we as H.R. professionals should have a positive image of them.
    It is analogous to a news report of Barry Bonds using steroids. A discussion erupts on whether or not Barry Bonds was a jerk for using steroids and then a third party (you) enters the conversation and gives a lecture on why Bond’s and baseball’s past achievements have been good for the country and that the original debaters are short-sighted for failing to address all of the good that they have done. So please don’t chide others for having “failed to address” how much funds the EEOC has collected, especially when it is off topic.

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