Two recent cases provide hope for employers facing class actions lawsuits by the EEOC.

In EEOC v. CRST Van Expedited, Inc., the U.S. District Court for the Northern District of Iowa awarded the employer $4.7 million in attorneys fees, finding that the EEOC brought claims that were “frivolous, unreasonable, or without foundation.” The EEOC initially brought the claims for harassment on behalf of one plaintiff “and a class of [270] similarly situated female employees.” However, after the employer won a summary judgment motion with the court finding that the employer had not engaged in a “pattern or practice” of harassment, the EEOC was forced to attempt to prove individual claims of sexual harassment. The EEOC was not successful, and after a series of summary judgment motions, all of the individual claims were dismissed. The EEOC appealed, the 8th Circuit Court of Appeals held that two of the individual claims should not have been dismissed.

However, upon return to the district court, the EEOC acknowledged that one of the remaining individual claims needed to be withdrawn for failure to exhaust administrative remedies, and promptly settled the second claim for $50,000. In the settlement, the EEOC specifically acknowledged that the employer was not precluded from seeking attorneys’ fees and costs as the prevailing party in the companion cases. However, when the employer went to collect, the EEOC claimed that since one of the 270 cases was settled, the claims were not frivolous, unreasonable, or without foundation. The district court rejected this argument. It reasoned that it would be unfair for the EEOC to be allowed to join any number of frivolous claims with one legitimate claim and escape an award of attorneys’ fees. Instead, the court should separate the attorneys’ fees incurred defending against the frivolous claims from those for the non-frivolous claims, and award fees that would not have been incurred but for the frivolous claims. In this case, the court found that the employer should be awarded $4.2 million in attorneys’ fees and over $400,000 in costs as a result of the frivolous claims. The EEOC is appealing the award.

In, the next case, EEOC v. Peoplemark, Inc., the Sixth Circuit Court of Appeals affirmed the award of $751,942 in fees and costs to an employer that the EEOC accused of having a blanket policy of denying jobs to applicants with criminal records. Although there is no law directly prohibiting discrimination on the basis of criminal records, the courts have taken the position that such policies have a disparate impact on some minorities, because they are statistically more likely to have a criminal record than white applicants. Here, after one applicant was rejected because of a criminal record, the EEOC investigated, and was told by the company’s Vice President and Associate General Counsel that the company had a policy of rejecting applicants with felony criminal records. Based on those representations, the EEOC brought a claim for unlawful employment practices in 2008. As discovery continued, it was determined that the company did not actually have a company-wide policy of rejecting felon applicants. The Vice President and General Counsel had been mistaken.

Rather than dismiss the claim, the EEOC decided to proceed on a theory that merely considering felony convictions created an unlawful disparate impact. However, the EEOC could not produce new expert reports in time, and after the employer moved for summary judgment, the EEOC voluntarily dismissed its case. The employer moved for attorney’s fees as the prevailing party, and was awarded $751,942.48 in fees and costs. The EEOC appealed to the Sixth Circuit, claiming that an award of fees was inappropriate because it had relied on the statement of the company’s officer in bringing the initial complaint, and was not given enough time to produce new expert opinions after it became clear that there was not actually a company-wide policy. The Sixth Circuit disagreed, finding the award appropriate because the Commission could not prove its case based on the complaint it filed, and it had never attempted to amend its complaint. As a result, the award of fees to the employer was appropriate.

This case provides an important lesson: when the EEOC is investigating a complaint, it is important to get advice from experienced attorneys that know federal and state laws and EEOC policy. The EEOC has made it well known that it prohibits blanket policies regarding criminal convictions for several years. Inquiries about company-wide policies from the EEOC are not to be taken lightly, and the person responding should not make guesses about company policy without first conducting a thorough investigation. Working with an attorney that knows this rapidly changing area of the law can reduce the chance of missteps that may lead to litigation.