On March 11, 2009, the Equal Employment Opportunity Commission (EEOC) announced that a record-breaking number of workplace discrimination charges—95,402, to be exact—were filed with the agency in Fiscal Year 2008. This number represents a 15.2 percent increase over the previous fiscal year, when the agency received 82,792 charges of discrimination against both public and private employers. This dramatic increase is a likely indicator of what is to come.
The EEOC’s fiscal year ends September 30; thus, the agency’s statistics do not include charges filed since the nation’s economic woes devolved into a crisis last fall. According to the Bureau of Labor Statistics, since the recession began in December 2007, about 4.4 million jobs have been lost, but more than half—2.6 million—of the decrease occurred in the four-month period from November 2008 through February 2009. Historically, as EEOC spokesperson David Grinberg acknowledges, charges increase dramatically the year following an economic downturn. Thus, Grinberg warns: “It’s possible we have yet to see the full impact of the recession on discrimination charge filings as the economy continues to spiral downward since fiscal year 2008.” In short, it looks like we may be headed toward another record-breaking year in which more than 100,000 workers file discrimination charges.
Breaking Down the EEOC’s Numbers
All major categories of charges filed with the EEOC increased in FY 2008. The largest annual increase involved allegations of age discrimination, which rose almost 29 percent to a record 24,582 charges. Retaliation claims experienced the next highest increase, climbing 22.6 percent to 32,690. The number of retaliation claims filed was second only to the historical leader, race discrimination, which, at 33,937 charges, experienced an 11 percent increase over FY 2007. Sex discrimination charges came in third with 28,372 charges filed, a 14 percent increase over FY 2007.
Other protected categories showing a double-digit increase in the number of charges filed include:
- Religion: 14 percent increase (3,273 charges filed)
- National Origin: 13 percent increase (10,601 charges filed)
- Disability: 10 percent increase (19,453 charges filed).
In FY 2008, the EEOC recovered approximately $376 million in monetary relief for thousands of employees, former employees and job applicants. This amount does not include monetary relief obtained by workers who filed discrimination charges with state or local human rights agencies or settlements and awards obtained by plaintiffs as a result of private lawsuits brought against employers in federal and state courts.
Reading the Tea Leaves
Looking ahead, the most troubling numbers from the EEOC’s FY 2008 report may be the enormous spike in age discrimination charges. Although data recently released by the Bureau of Labor statistics indicate that older workers fared better than their younger colleagues in holding onto their jobs at the beginning of the economic downturn, historical patterns suggest that they likely will experience a reversal of fortune in 2009.
Older workers who are laid-off, while younger workers are retained, may perceive age bias even where none exists, particularly if they had been with the company longer than their younger colleagues. Moreover, according to statistics recently compiled by the American Association of Retired Persons (AARP), older workers have a much harder time than younger workers finding a new job and are, on average, unemployed for more than six months. AARP’s findings are consistent with a 2005 study that found that, when interviewers are given resumes containing the applicant’s age, younger job applicants are 40 percent more likely to be called for an interview than are applicants over age 50. When combined, these factors suggest that we will see a significant increase in the number of age-bias charges and lawsuits in 2009.
Now add to the mix that the U.S. Supreme Court has made it easier for older laid-off workers to sue and win age discrimination cases. In 2005, the Court held that older workers need not prove that their employer intentionally discriminated against them; rather, they need only show that the challenged policy, such as a reduction-in-force (RIF), had a “disparate impact” on the company’s older workers. In other words, an employer may be held liable for age discrimination if a RIF resulted in a statistically significant disparity in the number of older workers (those over 40) laid off as compared to the number of younger workers who lost their jobs. Although an employer may counter unfavorable statistics by, among other defenses, asserting that the layoff decisions were based on a “reasonable factor other than age” (RFOA), the Court recently placed the burden of proving the existence of an RFOA squarely on the shoulders of the employer.
Because RIFs typically involve groups of workers and “disparate impact” claims, they tend to result in high-stakes age (or race or sex) discrimination class actions. Moreover, the EEOC itself can bring a class action. Indeed, in announcing its FY 2008 statistics, the agency’s Acting Chairman, Stuart J. Ishimaru, declared: “The EEOC is committed to vigorously enforcing federal laws prohibiting employment discrimination and will continue to invest in programs such as its systemic litigation program to maximize its effectiveness.” “Systemic litigation” is the agency’s terminology for class actions.
The Take Away
The dramatic surge in the number of charges filed last year with the EEOC, particularly the record number of age discrimination claims, underscores the broad reach and impact of the current economic crisis. As employers try to cope with the business challenges posed by the economic downturn, they need to address the myriad legal pitfalls inherent in such operational decisions as a RIF. The cost of a poorly planned and hastily implemented RIF can more than negate the financial benefit initially realized by the “cost-cutting” measure.