Wednesday, May 25, 2011

The EEOC is not hot in Cleveland

Emboldened by the 2008 election results, the EEOC has become very aggressive. For example, last fall, the agency both held a public hearing on the use of credit histories as selection criteria in employment, and filed suit in federal court in Cleveland against Kaplan Higher Education Corp. alleging that its use of credit histories discriminated against blacks as a class.

Earlier this month, the court hearing the Kaplan case dealt a huge blow to the EEOC’s efforts. In granting a motion filed by Kaplan, it prohibited the EEOC from litigating any employment decision made more than 300 days before the named plaintiff filed her charge of discrimination with the agency.

The case started on February 26, 2009, when Shandria Nichols filed a charge of discrimination with the EEOC. She alleged that Kaplan fired her because of the results of a credit history check. In her charge, she alleged that Kaplan had discriminated against her because she was black, and that Kaplan also discriminated against black individuals as a class through its use of credit histories as a selection criteria. On December 21, 2010, the EEOC filed its lawsuit against Kaplan alleging that its use of credit histories constitutes a pattern and practice of discrimination against black employees and applicants.

Relying on Title VII’s 300-day statute of limitations for the filing of any charge of discrimination, the district court limited the EEOC’s potential class and barred the EEOC from seeking relief for any employment decisions that occurred more than 300 days prior to the filing of the charge, or before May 2, 2008:

The plain language of § 707(e) authorizes the EEOC to investigate and act on a charge of a pattern or practice of discrimination, and mandates that such actions be taken in accordance with the procedures of § 706. Section 706 requires a charge to be filed, under the facts of this case, within 300 days after the allegedly unlawful employment practice occurred. Thus, the EEOC may only act where a charge of discrimination has been filed, and such charges must be filed within 300 days of the unlawful employment practice. Plainly, if a charge is not filed within that time limitation, the EEOC may not act upon it. No exception exists in the statute allowing the EEOC to recover damages for individuals whose claims are otherwise time-barred.

This case is a huge victory for employers. It serves as a hard-line limitations on the EEOC’s ability to resuscitate and litigate stale claims. This ruling limits the number of potential claimants in an EEOC pattern and practice class, which, in turn, hinders the agency’s ability to leverage large classes into large settlements.

Perhaps more significantly, this ruling also joins a growing list of federal court cases that are taking the EEOC to task for overstepping its bounds. Hope springs eternal for employers facing an EEOC enforcement lawsuit, provided you are willing to expend the time (and money) to hold your ground.

[Hat tip: @ProactiveStats]

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or