Author Archives: Marilyn Clark

Marilyn Clark

About Marilyn Clark

A partner in the Labor & Employment practice group, Marilyn’s practice consists of both litigation and advice services in a wide range of employment matters. She is also experienced with workers’ compensation and unemployment claims, as well as contract and tort disputes such as breach of contract, breach of fiduciary duty, misappropriation of trade secrets, and defamation claims.

It ain’t Over ’til it’s Over (and Even Then, it Might not Be Over): How long can the EEOC Continue Investigating – after Issuing a Right-to-Sue Letter?

EEOC charges are a fact of life for employers.  Even with comprehensive equal employment policies, top-notch human resources personnel, and a great workplace culture, many employers will at some point encounter a charge of discrimination or retaliation.  While any charge is an unwelcome event, the stakes increase even further if the EEOC decides to take the employer to court.  The prospect of litigating against the EEOC can be daunting.  So employers tend to breathe a sigh of relief when they learn that the EEOC has issued a right-to-sue letter in response to a pending charge, because this typically signals the end of the EEOC’s investigation (and involvement in the matter).  Although the charging party may still sue, after the EEOC issues a right-to-sue letter, is it safe for employers to assume the EEOC is safely in the rear view mirror?

On August 15, 2017, the United States Court of Appeals for the Seventh Circuit decided EEOC v. Union Pacific Railroad Company, adding to current uncertainty about when the EEOC’s authority to act comes to an end.  Prior court of appeals decisions had split over the question of whether the EEOC can continue investigating after issuing a right-to-sue letter.  The Seventh Circuit sided with the Ninth Circuit in holding that the EEOC can continue to investigate, and go on to file its own enforcement action, even after issuing a right-to-sue letter.  This conflicts with an older decision from the Fifth Circuit—which held that such action exceeded the agency’s authority.  As with any circuit split, there is a chance the Supreme Court might weigh in.

The underlying facts are straightforward, but the procedural history is not.  In 2011, two African-American men began entry-level jobs with Union Pacific.  They unsuccessfully applied for promotions and were eventually terminated in October 2011, when their positions were eliminated.  Both men filed EEOC charges alleging discrimination and retaliation (they had filed earlier charges after being denied the promotions).  Union Pacific grudgingly responded to the charges and to the EEOC’s first request for information, requiring an EEOC subpoena and enforcement action.  The EEOC eventually issued a right-to-sue letter pursuant to 42 U.S.C. § 2000e-(5)(f)(1), which requires the agency to issue notice of a charging party’s right to sue within 180 days after receiving a charge.  The charging parties sued in federal court.  But they ultimately lost on summary judgment, and the Seventh Circuit affirmed.  Case closed, right?

Not so fast.  While the lawsuit was pending in the district court, the EEOC issued a second request for information.  When Union Pacific refused to respond, the EEOC filed suit to enforce its subpoena.  Union Pacific moved to dismiss, arguing that the EEOC lacked authority to continue investigating given that it had already issued a right-to-sue letter.  The district court denied the motion, and Union Pacific appealed.

The Court of Appeals framed the legal question as “whether the EEOC is authorized by statute to continue investigating an employer by seeking enforcement of its subpoena after issuing a notice of right-to-sue to the charging individuals and the dismissal of the individuals’ subsequent civil lawsuit on the merits.”  The answer, at least in the Seventh Circuit, is “yes.”

The court noted that the EEOC’s governing statutes give it the authority to request information or records only in the context of investigating a charge.  In other words, the EEOC cannot simply call up employers and ask to sift through their personnel files.  Although the EEOC must issue a right-to-sue letter within 180 days of receiving a charge, the governing statutes are silent as to what effect such a letter has on the agency’s investigative powers.

With no clear-cut statutory answer, the Seventh Circuit looked to analogous cases, including the Supreme Court’s decision in EEOC v. Waffle House, Inc., 534 U.S. 279 (2002).  In Waffle House, the Supreme Court held that a charging party’s agreement to arbitrate the claims giving rise to a charge did not prevent the EEOC from pursuing victim-specific judicial relief on behalf of the charging party.  In other words, the EEOC could go to court even though the employee could only go to arbitration.  Following Waffle House, the Seventh Circuit itself addressed a similar issue, holding that even when a charging party withdraws a charge, the EEOC can continue its investigation.  See Watkins Motor Lines, Inc. 553 F.3d 593 (7th Cir. 2009).  These decisions, buttressed by the EEOC’s own regulations, see 29 C.F.R. § 1601.28(a)(3), led the Seventh Circuit to conclude that the agency can continue investigating employers and subpoenaing their records even after issuing a right-to-sue letter.

But what about the fact that the charging parties’ underlying case had been decided on the merits?  Union Pacific argued that this resolution terminated the EEOC’s authority to investigate.  Once again, the Seventh Circuit disagreed.  According to the court, the EEOC’s authority does not derive from a charging party’s claims; a valid charge irrevocably triggers the agency’s investigative and enforcement powers.  Tethering the EEOC to the private interests of the parties would undermine the agency’s mission to serve the public interest.  In short, the court held that the EEOC gets to decide when it is done investigating, not the parties.

This decision has at least two important implications for employers.  First, EEOC charges are serious matters with potentially significant consequences.  Whether employers respond to charges themselves or engage outside counsel, they should ensure that their submissions to the agency are comprehensive and persuasive.  The same goes for responses to requests for information.  In 2016, the EEOC issued its first-ever nationwide procedures on how to effectively respond to charges, outlining the elements that the agency considers most important.  See U. S.  Equal Empt. Opportunity Comm’n, Effective Position Statements.  Employers are well advised to familiarize themselves with these expectations to achieve the best possible result at the agency level.

Second, employers should consider pursuing a “no probable cause” finding, even after the EEOC issues a right-to-sue letter.  The agency rarely pursues an investigation after issuing a right-to-sue letter, but Union Pacific proves that—at least for now—it can still happen.  Employers and their outside counsel may want to request findings of no probable cause as a matter of course for every EEOC charge, even after the agency issues a notice of right-to-sue.

Given the disparate views among the circuit courts regarding the scope of the EEOC’s authority, employers should stay tuned for future developments in this key area.  Employers should also be aware of how courts view this issue in their jurisdictions to ensure they understand the potential consequences after a right-to-sue notice issues.  Finally, employers should consider seeking legal guidance when responding to any agency charge—given the high stakes involved.

Court Halts DOL Rule Set To Extend Overtime To Millions on December 1

In an unexpected decision, on Tuesday, November 22nd, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against implementation of the Department of Labor’s (“DOL’s”) controversial final Rule expanding overtime eligibility for millions of workers, which was set to take effect on December 1st.

The DOL’s new Rule, issued on May 18, 2016, nearly doubled the salary threshold for the so-called “white collar exemptions” from the Fair Labor Standards Act’s (“FLSA’s”) minimum wage and overtime requirements. Under the old Rule, employers satisfied the minimum salary threshold if they paid exempt employees a salary of $23,660 annually (or $455/week). The new Rule increased this requirement to $47,476 annually (or $913/week). According to the DOL, this new threshold was set based on the salary level at the 40th percentile of earnings for full-time workers in the lowest-wage Census Region (which currently is the South). See DOL Factsheet, Final Rule to Update the Regulations Defining and Delimiting the Exemption for Executive, Administrative, and Professional Employees, available at https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.htm.

Since the 1940s, the DOL’s regulations have required employers to satisfy both a “salary” and a “duties” test in order to classify employees as exempt executive, administrative, or professional employees. The DOL last updated the minimum salary requirement in 2004. When it issued the new minimum salary requirement in May 2016, the DOL stated that in focusing on the salary component in its new Rule, its intent was to “simplify the identification of overtime-protected employees, thus making the [executive / administrative / professional] exemption easier for employers and workers to understand and apply.” See DOL Factsheet, supra. The DOL observed that—absent an upward salary adjustment by their employers—the new Rule would expand the right to receive overtime pay to approximately 4.2 million workers currently classified as exempt. See id.

Despite this lengthy regulatory history, in deciding to issue a nationwide preliminary injunction, U.S. District Judge Amos Mazzant held that while Congress delegated significant authority to the DOL to define exempt duties, it did not authorize the DOL to limit application of the white collar exemptions based on salary level. The District Court noted: “While [Congress’s] explicit delegation would give the [DOL] significant leeway to establish the types of duties that might qualify an employee for the exemption, nothing in the [executive / administrative / professional] exemption indicates that Congress intended the [DOL] to define and delimit with respect to a minimum salary level.” As such, in promulgating the May 2016 final Rule, “the [DOL] exceed[ed] its delegated authority and ignore[d] Congress’s intent by raising the minimum salary level such that it supplants the duties test.”

Although the District Court stated that its decision applies only to the DOL’s May 2016 final Rule – and expressly disclaimed an intent to make a “general statement on the lawfulness of the salary-level test for the [executive / administrative / professional] exemption” – proponents of the DOL’s final Rule likely will continue to argue that the District Court’s decision runs counter to an established understanding of the state of the law and considerable judicial precedent across the country enforcing the DOL’s minimum salary requirement for decades. Indeed, despite the District Court’s attempt to limit its holding, the court’s rationale would appear to have considerably broader implications than an injunction only against the new minimum salary requirement.

Yesterday’s preliminary injunction is a welcome development for employers concerned about the DOL’s abrupt and significant increase in the minimum salary requirement for the white-collar exemptions. It is clear that the new minimum salary requirement will not go into effect for U.S. employers on December 1, 2016, as anticipated. However, employers should not assume that the DOL’s final Rule is dead. The District Court’s order only imposes a preliminary injunction, which the District Court could lift itself after further litigation, although that outcome seems relatively unlikely at present. The DOL also could appeal any final injunction to the United States Court of Appeals for the Fifth Circuit, a possibility that also is uncertain given the imminent change in presidential administrations. Further, future litigation will determine whether the Eastern District of Texas’s rationale could be adopted more broadly to have a more sweeping effect on the longstanding salary basis test.

While the future of the DOL’s new minimum salary requirement is now uncertain, employers should remember that the duties requirements for the FLSA’s white collar exemptions remain intact. Employers should remain diligent in ensuring that only those employees whose primary duties satisfy one or more of the applicable exempt duties tests are treated as exempt from overtime requirements.

Employers also should remain aware of exemption requirements under applicable state law, which are unaffected by developments at the federal level. For example, employers must remember that during the period the injunction is in effect, they still must comply with varying state-level minimum salary requirements that are higher than the existing federal minimum. For example, California requires that white-collar exempt employees be paid a monthly minimum salary of at least twice the state’s minimum wage. California’s minimum wage will increase starting January 1, 2017, with annual increases thereafter. As of January 1, 2017, the California salary minimum will be $43,680, lower than the $47,476 proposed requirement at issue but far above the current federal salary requirement.

Quirky Question #278: DOL Doubles the FLSA Salary Basis Threshold

Question: Where can I find more information about the DOL’s doubling of the FLSA salary basis threshold? Did they make other changes? As an employer, what does this mean for me? And how long do I have to prepare?

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Quirky Question #259, The FMLA and the ADA: Joined at the Hip

Question:

I work in my company’s HR department and we just had an employee ask for additional time off, even though we’ve already given the employee a bunch of time off we are required to under the FMLA.  I wanted to say no but my co-worker here in HR says I have to grant the extra time off.  Who is right?

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