We suggested last year that if you felt paranoid that the federal agencies seemed out to get employers, perhaps it was not paranoia at all. The Equal Employment Opportunity Commission’s (EEOC) spate of recent lawsuits — or at least its apparent haste to sue employers and make examples out of them over such things as wellness programs (even before issuing proposed guidance on what was permissible relative to such well-intentioned programs) — clearly did not help with this concern. However, a decision by the Supreme Court last week tightened the reins on the EEOC and reminded it that, in seeking to pursue litigation against employers for violations of law, the Commission must follow the law itself and answer to claims that it has failed to do so.

Pursuant to Title VII, the EEOC must attempt to eliminate unlawful employment practices through “informal methods of conference, conciliation, and persuasion” before suing an employer for employment discrimination. Employers may feel this does not always happen because the EEOC has lately seemed more intent on filing suit (and getting press attention for its agenda…) than working things out. Consequently, employers assert they receive insufficient information from the EEOC and are forced to make a decision on a take-it-or-leave-it basis which, if wrong, can have costly consequences. The Commission has stood firm on its use of federal muscle by asserting the courts cannot review whether it has fulfilled its pre-suit conciliation obligation; only the EEOC can review whether the EEOC can do what the EEOC is supposed to do (which seems imminently fair, right?). The Supreme Court has just said otherwise.

The case arose from litigation filed by the EEOC in 2011 on behalf of a class of female applicants not hired by the employer as miners. The employer raised as a defense the argument that the EEOC had failed to conciliate in good faith prior to filing suit, based on two letters sent by the Commission. The first informed the employer that a finding of reasonable cause had been made and “[a] representative of this office will be in contact with each party in the near future to begin the conciliation process.” The second letter declared that conciliation had “occurred” and failed, though it appears that the EEOC’s actual conciliation efforts were thin at best.

The EEOC argued that its conciliation efforts were immune from court review and that, if the courts had the power to review such efforts, it could only review its actions based on the two letters. In response, the court noted the obvious point that without court review, “the Commission’s compliance with the law would rest in the Commission’s hands alone.” Justice Elena Kagan, writing for the court, also rejected the EEOC’s second argument, stating that “[c]ontrary to its intimation, those letters do not themselves fulfill the conciliation condition: The first declares only that the process will start soon, and the second only that it has concluded. . . . to treat the letters as sufficient — to take them at face value, as the Government wants — is simply to accept the EEOC’s say-so that it complied with the law.”

The court then instructed the EEOC on what it must do to follow Title VII: 1) give the employer notice of the “specific allegation,” including “what the employer has done and which employees (or class of employees) have suffered as a result”; and 2) “try to engage the employer in some form of discussion (written or oral), to give the employer an opportunity to remedy the allegedly discriminatory practice.” Justice Kagan then asserted that while judicial review is limited exclusively to whether or not the EEOC has fulfilled these requirements, if the employer provides credible evidence that the EEOC did not fulfill the requirements then a court must conduct the fact finding necessary to decide that limited dispute. If the evidence shows a failure to properly conciliate, the appropriate remedy is to order the EEOC to undertake the mandated efforts to obtain voluntary compliance. Accordingly, while stays of cases may be entered until the EEOC is given the opportunity to do what it was supposed to have done, it is unlikely that any case will be dismissed for failure to meet the pre-suit requirements.

This decision is absolutely a win for employers, as it calls the EEOC out for its improper use of federal muscle through litigation and make an example of an employer without first giving it a legitimate opportunity to assess its options. While the decision will not put employers in control, or even on equal standing, with the EEOC prior to suit, it does create leverage to insist the EEOC meet the minimum requirements. As a practical matter, this may cause the EEOC to be more forthcoming, and cooperative, at least when pressed. And employers should do exactly that if necessary and carefully document circumstances when it feels the EEOC has not done what it must.