The EEOC's Investigative Power Just Got a Little More Powerful



Your company has just completed a grueling and expensive EEOC investigation into how one of your managers handled two employees who claimed they were discriminated against on the basis of race.  The EEOC concludes there was no discrimination as to those particular employees and issues them a right-to-sue letter.  The employees file suit in federal court to challenge the EEOC determination.  They lose.  Phew, it’s all over!

Three months later, the EEOC asks for more information, suspecting your company of systemically racially discriminating against all employees.  You laugh at the request.  The case is already over.  How can the EEOC possibly have the authority to go on what you perceive as a fishing expedition?

Well, according to a recent opinion from the United States Court of Appeals for the Seventh Circuit, the EEOC can, in fact, do just that.  In EEOC v. Union Pac. R.R., No. 15-3452, 2017 BL 285016 (7th Cir. Aug. 15, 2017), the court explained that the EEOC’s investigatory power is not limited to the duration of the underlying case and that the EEOC has its own investigatory and enforcement powers that are independent of the parties. 

The Story in Union Pacific

Two black Union Pacific employees argued that they were denied the opportunity to take a test that would have given them the opportunity to be promoted.  The EEOC subpoenaed Union Pacific for a copy of the test, which the company declined to provide. 

While the EEOC brought suit to enforce its subpoena, it also issued the employees a right-to-sue letter.  The employees then brought suit in an Illinois federal court.  While that case was unfolding, the EEOC then asked Union Pacific for information about the company’s electronic storage systems, additional testing and computer information and Union Pacific refused, prompting the EEOC to serve the company with a second subpoena. 

The employees’ suit was dismissed, but the EEOC still brought an enforcement action to force Union Pacific to provide the additional information, claiming that it would help the EEOC determine if the company was engaging in a broader pattern or practice of discrimination beyond just the two employees who had initially filed the charges.  Union Pacific declined to provide the information, arguing that the EEOC could not continue with its investigation because there was no longer a reason for it to be doing so.

The Seventh Circuit’s Decision

After an extensive textual analysis of Title VII’s amendments and the EEOC’s own regulations, the court sided with the EEOC, explaining that the EEOC has control over its own investigation and enforcement powers.  “To hold otherwise,” the court said, “would not only undercut the EEOC’s role as the master of its case under Title VII, it would render the EEOC’s authority as ‘merely derivative’ of that of the charging individual.” 

The court was gravely concerned with the policy implications of ruling the other way, explaining that if it had held in favor of Union Pacific, employers would have a perverse incentive to settle cases quickly in order to cut off the EEOC’s investigatory powers and prevent it from examining larger-scale problems that might have a greater impact on the general public. 

The Fifth Circuit Draws A Different Conclusion

More than twenty years ago, the EEOC provided right-to-sue letters to two female employees of Hearst Company after they alleged that they were subjected to sexual harassment.  EEOC v. Hearst Corp., 103 F.3d 462, 72 FEP Cases 1541 (5th Cir. 1997).  

In that case, the EEOC sought personnel files, copies of internal investigations and permission to conduct on-site investigations, among other things.  Hearst complied only with the request for personnel files.  The EEOC issued the employees right-to-sue letters and continued to conduct its investigation, even after Hearst made clear that it was not going to comply with the subpoenas.  The Fifth Circuit concluded that Hearst did not have to comply with the subpoena, explaining that the EEOC’s authority to investigate ended when it issued the employees a right-to-sue letter. 

What This Means For You!

This issue is probably headed for the Supreme Court, but for now, if your company is based in the friendly confines of the Fifth Circuit (Texas, Mississippi or Louisiana), you probably have a little more legal support than you would have elsewhere for quashing EEOC subpoenas that go beyond the charges from the initial parties. 

However, while the Seventh Circuit and Fifth Circuit opinions are in conflict with each other, both courts agree that the EEOC can investigate matters beyond the charge at hand. The Fifth Circuit made clear to limit the EEOC’s investigatory power to situations where a charging party receives a right to sue notice and is engaged in a civil action upon the conduct alleged in the charge filed.  The court clarified that it was not defining the EEOC’s overall investigatory power and that the EEOC could still seek relevant information, so long as it was based on a different individual charge or an EEOC Commissioner charge.

With Bloomberg Law®, you can follow development in this area of the law, Union Pacific’s next steps and whether the Supreme Court decides to address this issue in its next term.

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