What Is Prohibited under Title VII
Title VII prohibits discrimination in hiring, firing, training, promotion, discipline, or other workplace decisions on the basis of an employee or applicant’s race, color, gender, national origin, or religion. Included in the prohibitions are discrimination in pay, terms and conditions of employment, training, layoffs, and benefits. Virtually any workplace decision can be challenged by an applicant or employee who falls within the Title VII categories. (See Exhibit 2.6 , “Title VII Provisions.”)
Who Must Comply
Title VII applies to employers, unions, and joint labor and management committees making admission, referral, training, and other decisions, and to employment agencies and other similar hiring entities making referrals for employment. It applies to all private employers employing 15 or more employees, and to federal, state, and local governments. (See Exhibit 2.7 , “Who Must Comply.”)
Who Is Covered
Title VII applies to public (governmental) and private (nongovernmental) employees alike. Unlike labor laws that do not apply to managerial employees or wage and hour laws that exempt certain types of employees, Title VII covers all levels and types of employees. The Civil Rights Act of 1991 further extended Title VII’s coverage to U.S. citizens employed by American employers outside the United States. Non-U.S. citizens are protected in the United States but not outside the United States.
Undocumented workers also are covered by the law, but after the U.S. Supreme Court’s 2002 ruling in Hoffman Plastic Compounds, Inc. v. NLRB, the EEOC reexamined its position on remedies for undocumented workers. In Hoffman, the Court said that U.S. immigration laws outweighed the employer’s labor violations; therefore, the employee could not recover back pay for violations of the labor law. The EEOC had been treating undocumented worker claims of employment discrimination under Title VII like violations against any other worker. After Hoffman, the EEOC said that employment discrimination against undocumented workers is still illegal, and they will not ask their status in handling their discrimination claims, but Hoffman affected the availability of some forms of relief, such as reinstatement and back pay for periods after discharge or failure to hire.
Who Is Not Covered
Exemptions under Title VII are limited. Title VII permits businesses operated on or around Native American reservations to give preferential treatment to Native Americans. The act specifically states that it does not apply to actions taken with respect to someone who is a member of the Communist Party or other organization required to register as a Communist-action or Communist-front organization. The law permits religious institutions and associations to discriminate when performing their activities. For instance, a Catholic priest could not successfully sue under Title VII alleging Religious discrimination for not being hired to lead a Jewish synagogue. (See Exhibit 2.8 , “Employees Who Are Not Covered by Title VII.”) In the case of Petruska v. Gannon University, included at the end of the article, the employee was not able to effectively bring her claim for gender discrimination because of this limitation on religious claims.
Filing Claims under Title VII
Nonfederal employees who believe they have experienced employment discrimination may file a charge or claim with the EEOC. An employee filing such a claim is called a claimant or a charging party. Employers should be aware that it costs an employee only time and energy to go to the nearest EEOC office and file a claim. By law, the EEOC must in some way handle every claim it receives. To discourage claims and ensure the best defense when they arise, employers should ensure that their policies and procedures are legal, fair, and consistently applied. Regarding the ease of bringing EEO claims, there is good news and bad news for employers. The good news is that the vast majority of charges are sifted out of the system for one reason or another. For instance, in fiscal year 2007, of the 82,792 charges filed with the EEOC, 12.2 percent were settled, 17.8 percent had administrative closures (failure of the claimant to pursue the claim, loss of contact with the claimant, etc.), 59.3 percent resulted in findings of no reasonable cause, and reasonable cause was found in only 5.0 percent of the charges.
The bad news is that the EEOC’s success rate in litigation was 91.5 percent with a total monetary recovery of over $345.5 million. For years the EEOC’s success rate has been at least 90 percent. Those are not good numbers for employers tangling with the EEOC. The best defense is a good offense. Avoiding trouble in the first place lessens the chances of having to deal with the EEOC and therefore the chances of probably losing.
Nonfederal government employee claims must be filed within 180 days of the discriminatory event, except as noted in the next section involving 706 agencies. For federal employees, claims must be filed with their employing agency within 45 days of the event. In a significant U.S. Supreme Court case, National Railroad Passenger Corp. (Amtrak) v. Morgan, these deadlines were made a bit more flexible by the Court for harassment cases. In the Morgan case, the Supreme Court said that since on-the-job harassment is part of a pattern of behavior, if a charge is filed with the EEOC within the statutory period, a jury can consider actions that occurred outside the statutory period. That is, the violation is considered to be a continuing one, so the claimant is not limited to only evidence relating to the specific event resulting in the lawsuit. Note, however, that in May 2007, the U.S. Supreme Court held that it was not a continuing violation each time an employer issued a pay-check based on gender-based wage discrimination. In Ledbetter v. Goodyear Tire and Rubber Co., Inc., the Court rejected the paycheck accrual rule that would have allowed the employee to restart the statute of limitations each time she was paid. The Court distinguished Morgan by saying the act of wage discrimination was a discrete act rather than a pattern, and, thus, did not merit the same treatment as the harassment in the Morgan case.
The reason for the fairly short statute of limitations is an attempt to ensure that the necessary parties and witnesses are still available and that events are not too remote to recollect accurately. Violations of Title VII may also be brought to the EEOC’s attention because of its own investigation or by information provided by employers meeting their record keeping and reporting requirements under the law.
You should be aware that the filing process is different for federal employees, although the EEOC is seeking to make it conform more closely to the nonfederal employee regulations. Federal employees are protected by Title VII, but the procedures for handling their claims simply follow a different path.
State Law Interface in the Filing Process
Since most states have their own fair employment practice laws, they also have their own state and local enforcement agencies for employment discrimination claims. Most of these agencies contract with the EEOC to be what is called a “706” agency (named for section 706 of the act). On the basis of a work-sharing agreement with the EEOC, these agencies receive and process claims of discrimination for the EEOC in addition to carrying on their own state business. Title VII’s intent is that claims be conciliated if possible. Local agencies serve as a type of screening process for the more serious cases. If the complaint is not satisfactorily disposed at this level, it may eventually be taken by the EEOC and, if necessary, litigated. State and local agencies have their own procedures, which are similar to those of the EEOC.
If there is a 706 agency in the employee’s jurisdiction, the employee has 300 days rather than 180 days within which to file. If an employee files his or her claim with the EEOC when there is a 706 agency in the jurisdiction, the EEOC defers the complaint to the 706 agency for 60 days before investigating. The employee can file the complaint with the EEOC, but the EEOC sends it to the 706 agency, and the EEOC will not move on the claim for 60 days. In further explaining the process, reference will only be made to the EEOC as the enforcing agency involved.
Proceeding through the EEOC
Within 10 days of the employee filing a claim with the EEOC, the EEOC serves notice of the charge to the employer (called respondent or responding party ). Title VII also includes antiretaliation provisions. It is a separate offense for an employer to retaliate against an employee for pursuing rights under Title VII. Noting that retaliation claims had doubled since 1991, in 1998 the EEOC issued retaliation guidelines to make clear its view on what constitutes retaliation for pursuing Title VII rights and how seriously it views such claims by employees. In fiscal year 2007, retaliation claims were, by far, the third largest percentage of claims filed under Title VII, with race at 37.0 percent, gender at 30.1 percent, and retaliation at 28.3 percent.
Hot. That is the best way to describe the EEOC’s approach to mediation. In response to complaints of a tremendous backlog of cases and claims that went on for years, in recent years the EEOC has adopted several important steps to try to streamline its case-handling process and make it more efficient, effective, and less time-consuming for employees filing claims. Primary among the steps is its adoption of mediation as an alternative to a full-blown EEOC investigation. In furtherance of this, the EEOC has begun several different programs involving mediation. In 1999 it launched the expanded mediation program discussed in the next paragraph. In 2003, in recognition that many private sector employers already have extensive mediation programs set up to handle workplace issues, the EEOC began a “referral-back” program. Private sector employment discrimination claims are referred back to participating employers for mediation by the employer’s own mediation program to see if they can be resolved without going any further. The same year, the EEOC ushered in a pilot program to have local fair employment practice offices mediate claims on the EEOC’s behalf. In response to the EEOC’s finding that there were more employees willing to mediate than there were employers willing to do so, the EEOC instituted “universal mediation agreements,” under which employers agree to have their claims mediated by the EEOC when discrimination charges are filed. As of the end of fiscal year 2007, the EEOC had signed universal agreements to mediate with 154 national/regional corporations and 1,115 local employers. National universal mediation agreements have been signed with such employers as Ford Motor Company; Huddle House, Inc.; Ryan’s Restaurant Group, Inc.; and Southern Company. This was a 15 percent increase in agreements over just the previous year.
Generally, the way mediation works is that after a discrimination charge is filed by the employee and notice of the charge is given to the employer, the EEOC screens the charge to see if it is one that is appropriate for mediation. If it is appropriate for mediation, the EEOC will offer that option to the parties. Complex and weak cases are not offered mediation. The agency estimates that it offers mediation to 60 to 70 percent of its incoming workload of 80,000 cases per year. Of those, about 15 percent are actually mediated. Both parties are sent letters offering mediation, and the decision to participate is voluntary for both parties. Each side has 10 days to respond to the offer to mediate. If both parties elect mediation, the charge must be mediated within 60 days for in-house mediation or 45 days for external mediation. The EEOC has expanded its mediation program to allow a request for mediation at any stage of the administrative process, even after a finding of discrimination has been issued.
If the parties choose to mediate, then during mediation they will have the opportunity to present their positions, express their opinions, provide information, and express their request for relief. Any information disclosed during this process is not to be revealed to anyone, including EEOC employees. If the parties reach agreement, that agreement is as binding as any other settlement agreement. From 1999, when it’s mediation program was fully implemented, to 2007, the EEOC conducted over 98,000 mediations, with 69 percent, over 68,000 charges, being successfully resolved, with a satisfaction rate of over 90 percent.
If the parties choose not to mediate the charge or if the mediation is not successful, the charge is referred back to the EEOC for handling. The EEOC investigates the complaint by talking with the employer and employee and any other necessary witnesses as well as viewing any documents or even visiting the workplace. The average time for an investigation is about 182 days.
After appropriate investigation, the EEOC makes a determination as to whether there is reasonable cause or no reasonable cause for the employee to charge the employer with violating Title VII. Once there has been an investigation and a cause or no-cause finding, either party can ask for reconsideration of the EEOC’s decision.
After investigation, if the EEOC finds there is no reasonable cause for the employee’s discrimination complaint, the employee is given a dismissal and notice of rights, often known as a right-to-sue letter. If the employee wants to pursue the matter further despite the EEOC’s conclusion that Title VII has not been violated, the employee is now free to do so, having exhausted the administrative remedies. The employee can then bring suit against the employer in federal court within 90 days of receiving the notice. (See Exhibit 2.9 , “The Procedure for Bringing a Claim within the EEOC.”)
If the EEOC finds there is reasonable cause for the employee to charge the employer with discrimination, it will attempt to have the parties meet together and conciliate the matter. That is, the EEOC will bring the parties together in a fairly informal setting with an EEO investigator.
The EEO investigator sets forth what has been found during the investigation and discusses with the parties the ways the matter can be resolved. Often the employee is satisfied if the employer simply agrees to provide a favorable letter of recommendation. The majority of claims filed with the EEOC are adequately disposed of at this stage of the proceedings. If the claim is not adequately disposed of, the EEOC can take the matter further and eventually file suit against the employer in federal district court.
If no conciliation is reached, the EEOC may eventually file a civil action in federal district court. As we have seen, if the EEOC originally found no cause and issued the complaining party a right-to-sue letter, the employee can take the case to court, seeking judicial review. Title VII requires that courts give EEOC decisions de novo review. A court can only take a Title VII discrimination case for judicial review after the EEOC has first disposed of the claim. Thus, in opening scenario 1, Jack cannot immediately file a discrimination lawsuit against his employer because Jack has not yet gone through the EEOC’s administrative process and exhausted his administrative remedies.
Upon going to court, the case is handled entirely new, as if there had not already been a finding by the EEOC. Employees proceeding with a no-reasonable-cause letter are also free to develop the case however they wish without being bound by the EEOC’s prior determination. If a party is not satisfied with the court’s decision and has a basis upon which to appeal, the case can be appealed up to, and including, the U.S. Supreme Court, if it agrees to hear the case. Before we leave the area of judicial review, we need to discuss a matter that has become important in the area of employees’ pursuing their rights under Title VII and having the right to judicial review of the EEOC’s decisions.
In recent years, mandatory arbitration agreements have gained tremendously in popularity. Previously confined almost exclusively to unions and the securities industry, these agreements are entered into by employees with their employers when they are hired and stipulate that any workplace disputes will be disposed of by submitting them to arbitration rather than to the EEOC or the courts.
The appeal of mandatory arbitration clauses is that they greatly decrease the time and Resources parties would spend by fighting workplace legal battles in court. There are at least two major drawbacks for employees: (1) When they are trying to obtain employment, potential employees generally feel they have little choice about signing away their rights to go to court and (2) once a case goes to arbitration, the arbitrator’s decision is not subject to judicial review by the courts unless the decision can be shown to be the result of fraud or collusion, is unconstitutional, or suffers some similar malady. This means that the vast majority of arbitration awards, many rendered by arbitrators with no legal background or grounding in Title VII issues, remain intact, free from review by the courts. It also means that while employers gain the advantage of having fewer cases in court, employees have the disadvantage of essentially having the courts closed to them in Title VII cases, even though Title VII provides for both an administrative process and judicial review.
With few downsides for employers, mandatory arbitration agreements have become so popular with employers that they are now fairly routine. Employees who come to the EEOC intending to file claims of employment discrimination are told that they cannot do so because they have entered into a mandatory arbitration agreement with their employer, which requires them to seek redress through arbitration, not the EEOC or the courts.
Two recent U.S. Supreme Court cases have decided important issues in this area. In Circuit City v. Adams, the Supreme Court held that mandatory arbitration clauses requiring arbitration of workplace claims, including those under Title VII, are enforceable under the Federal Arbitration Act. In EEOC v. Waffle House, Inc., the Court held that even though an employee is subject to a mandatory arbitration agreement, since the EEOC is not a party to the agreement, the agreement does not prevent the EEOC from pursuing victim-specific relief such as back pay, reinstatement, and damages as part of an enforcement action.
So, the EEOC claims clearly can be the subject of mandatory arbitration, but this does not prevent the EEOC from bringing its own enforcement action against the employer and even asking for victim-specific relief for the employee. An employer can avoid a Title VII court case by requiring mandatory arbitration of workplace claims, but still may have to contend with the EEOC bringing suit on its own.
Legislation to overturn Circuit City and only permit voluntary arbitration agreements was introduced in both the House and Senate shortly after the decision, but did not pass. Perhaps this was, at least in part, because the Supreme Court gave further indication of how it will view mandatory arbitration agreements in a later Circuit City case. In its initial decision, the Supreme Court required the Circuit City case to be remanded to the lower court for actions not inconsistent with its ruling. On remand, the court of appeals applied the Federal Arbitration Act and ruled that the employer’s mandatory arbitration agreement was unconscionable and unenforceable because it was offered on a take-it-or-leave-it basis, did not require the company to arbitrate claims, limited the relief available to employees, and required employees to pay half of the arbitration costs. When the court of appeals’ decision came back to the Supreme Court for review, the Court declined to hear it, leaving the court of appeals’ refusal to enforce the mandatory arbitration agreement intact.
Perhaps also, at least in part in response to mandatory arbitration agreements, the EEOC stepped up its mediation programs in order to provide employers with an alternative between litigation and mandatory arbitration. Since 1991 the EEOC had been moving in the direction of mediation, but the issue heated up after the Supreme Court decisions on mandatory arbitration. The EEOC’s subsequent litigation alternatives heavily favoring mediation included plans aimed squarely at employers, with its adoption of the national uniform mediation agreements (NUMAs) and referral-back programs. As discussed earlier, the NUMAs specifically commit employers to mediation of Title VII claims, while the referral-back programs allow employers to use their own in-house ADR programs to attempt to settle such claims.
If the employee wins the case, the employer may be liable for back pay of up to two years before the filing of the charge with the EEOC; for front pay for situations when reinstatement is not possible or feasible for claimant, for reinstatement of the employee to his or her position; for retroactive seniority ; for injunctive relief, if applicable; and for attorney fees. Until passage of the Civil Rights Act of 1991, remedies for discrimination under Title VII were limited to make-whole relief and injunctive relief.
The Civil Rights Act of 1991 added compensatory damages and punitive damages as available remedies. Punitive damages are permitted when it is shown that the employer’s action was malicious or was done with reckless indifference to federally protected rights of the employee. They are not allowed under the disparate/adverse impact or unintentional theory of discrimination (to be discussed shortly) and may not be recovered from governmental employers. Compensatory damages may include future pecuniary loss, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses. (See Exhibit 2.10 , “Title VII Remedies.”)
There are certain limitations on the damages under the law. Gender discrimination (including sexual harassment) and religious discrimination have a $300,000 cap total on nonpecuniary (pain and suffering) compensatory and punitive damages. There is no limitation on medical compensatory damages. The cap depends on the number of employees the employer has (see Exhibit 2.11 , “Compensatory and Punitive Damages Caps”). Juries may not be told of the caps on liability. Since race and national origin discrimination cases also can be brought under 42 U.S.C. § 1981, which permits unlimited compensatory damages, the caps do not apply to these categories. In 2001, the U.S. Supreme Court ruled that though compensatory damages are capped by the law, the limitations do not apply to front pay. Also, as previously discussed, the U.S. Supreme Court’s Hoffman decision foreclosed the ability of undocumented workers to receive post-discharge back pay, and the EEOC rescinded its policy guidance suggesting otherwise.
With the addition of compensatory and punitive damages possible in Title VII cases, litigation increased dramatically. It is now more worthwhile for employees to sue and for lawyers to take the cases. The possibility of money damages also makes it more likely that employers will settle more suits rather than risk large damage awards. Again, the best defense to costly litigation and liability is solid, consistently applied workplace policies.
The Civil Rights Act of 1991 also added jury trials to Title VII. From the creation of Title VII in 1964 until passage of the 1991 Civil Rights Act 27 years later, jury trials were not permitted under Title VII. Jury trials are now permitted under Title VII at the request of either party when compensatory and punitive damages are sought.
There is always less predictability about case outcomes when juries are involved. Arguing one’s cause to a judge who is a trained member of the legal profession is quite different from arguing to a jury of 6 to 12 jurors, all of whom come with their own backgrounds, prejudices, predilections, and little knowledge of the law. Employers now have even more incentive to ensure that their policies and actions are well reasoned, business-related, and justifiable—especially since employees have even more incentive to sue.