A unanimous Supreme Court ruled Wednesday that federal judges have authority to make sure the Equal Employment Opportunity Commission is trying hard enough to settle charges of job discrimination before filing lawsuits against employers.
The justices said that lower courts can review whether government lawyers were being reasonable during settlement negotiations with companies accused of bias.
Employers have been closely watching the case. Many companies have complained that the EEOC has been overly aggressive in recent years, rushing to file costly lawsuits without trying to resolve disputes informally.
The EEOC has a legal duty to try settling cases first, but the question was how much a court could peer into those negotiations to make sure the EEOC was acting in good faith.
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The Obama administration argued that courts should have no role in probing confidential settlement talks. But business groups called for expansive review.
Writing for the court, Justice Elena Kagan adopted a middle ground. She said the scope of judicial review is limited and respects the “expansive discretion” the law gives to the EEOC over settlement talks, known as conciliation.
Kagan said the EEOC must inform an employer about specific charges of discrimination and which employees have suffered. And the EEOC must try to engage the employer in a discussion to give the company a chance to stop practices that may discriminate against racial minorities, women or other protected groups.
Kagan said the commission can simply present a sworn affidavit saying it has met these requirements. If a lower court finds the EEOC has fallen short, it can require the commission to resume settlement talks.
The case involves an appeal from an Illinois mining company sued by the EEOC for failing to hire qualified female job applicants. The government alleges that Mach Mining has never hired any female miners since it began operations in 2006, despite getting applications from many qualified women.
The company wanted the lawsuit thrown out because it claims EEOC officials didn’t try hard enough to negotiate a settlement before going to court. The Obama administration argued that it is solely up to the EEOC – not the courts – to decide whether terms of a settlement are acceptable.
Federal law requires the EEOC initially to try to stop illegal employment practices by “informal methods of conference, conciliation and persuasion.” But the law allows the EEOC to go ahead with a lawsuit if it has been unable to reach a conciliation agreement “acceptable to the commission.”
A federal judge agreed to review whether the EEOC’s attempt to settle the case against Mach Mining was “sincere and reasonable,” but the government objected. The 7th U.S. Circuit Court of Appeals reversed, saying a company could not raise ineffective settlement effort as a defense.
The Supreme Court’s ruling settles a split among appeals courts as to how deeply judges can probe the EEOC’s settlement efforts. Some courts have required a minimal level of “good faith,” while others have performed a more thorough analysis. The 7th Circuit was the first appeals court to rule that employers cannot try to dismiss EEOC lawsuits by claiming conciliation efforts were lacking.