Class Action Discrimination Claims - Some Recent Costly Experiences For Private And Public Sector Employers

September 9, 2010

By: Robert A. LaBerge

Several news stories over the past few weeks illustrate the potential expense and embarrassment public and private sector employers can experience from a class action employment discrimination lawsuit.  In the private sector, class action discrimination claims have been pursued with increased frequency over the past five years. These lawsuits have proven to be costly for both large and smaller employers. For example, the Rochester Democrat and Chronicle reported on August 10, 2009, that Elmer W. Davis Company, a commercial roofing contractor in Upstate New York, entered into a consent decree under which it agreed to pay $1,000,000 to resolve a class action race discrimination lawsuit brought by the Equal Employment Opportunity Commission. reports that the million dollar payout was the largest EEOC settlement ever in the Rochester area.

Elmer W. Davis Company’s settlement can now be added to a long list of multi-million dollar class action settlements. Large class action settlements have affected many national employers in virtually every type of business, including Coca-Cola ($192 million), Texaco ($176 million), State Farm Insurance ($156 million), Home Depot ($104 million), Federal Express ($55 million), Abercrombie & Fitch ($50 million), and Wal-Mart ($17.5 million). Many of these settlements have received considerable publicity and, as is the case with the Elmer W. Davis Company’s settlement, required these companies to implement training, monitoring, and other remedial programs in addition to making large settlement payments to the plaintiff class and its counsel.

These potential class action problems are not limited to private sector employers. recently reported that the federal government is defending itself from a class action discrimination claim brought by representatives of applicants for temporary census taker jobs. The plaintiff group, which potentially consists of up to 100,000 minority applicants, alleges that the U.S. Census Bureau discriminated by rejecting applicants with criminal records. The complaint was filed in the Southern District of New York in March 2010 and challenges, among other things, the U.S. Census Bureau’s alleged practice of rejecting applicants with arrest records, even when those arrests did not result in convictions. The complaint was recently amended and now also relies upon a letter that the EEOC’s former Acting Chair Stuart Ishimaru apparently sent to the Census Bureau in July 2009 after his agency received inquiries from many applicants who claimed to have been disqualified because of their prior arrest records. The complaint states that Mr. Ishimaru warned in his letter that the information the EEOC had gathered suggested that the “Census Bureau’s approach [was] overbroad and may run afoul” of Title VII.

The Daily Labor Report and Law 360° have also reported over the past few weeks on a number of other class action discrimination cases in which employers are facing multi-million dollar claims; these reports indicate that the employers have received mixed results in these cases. All of these cases highlight the need for employers of all sizes, in all industries, to take steps to address and to minimize potential class action discrimination problems. These steps can include implementing preventative and compliance measures, such as internal audit and review of hiring, promotional, and termination policies, and implementing procedures and safeguards for identifying and promptly responding to troubling claims involving pattern and practice discrimination allegations or multiple similarly situated employees.