[Federal Register Volume 63, Number 34 (Friday, February 20, 1998)]
[Proposed Rules]
[Pages 8594-8606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4165]


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EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

29 CFR Part 1614

RIN 3046-AA66


Federal Sector Equal Employment Opportunity

AGENCY: Equal Employment Opportunity Commission (EEOC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Equal Employment Opportunity Commission is proposing 
revisions to its federal sector complaint processing regulations to 
implement recommendations made by the Chairman's Federal Sector 
Workgroup. The Commission proposes to require that agencies establish 
or make available alternative dispute resolution (ADR) programs during 
the EEO pre-complaint process. The Commission proposes revisions to the 
counseling process, the bases for dismissal of complaints, and 
procedures for requesting a hearing. The Commission also proposes to 
provide administrative judges with the authority to issue dismissals 
and final decisions on complaints. The Commission proposes a number of 
changes to the class complaint procedures, including authorizing 
administrative judges to issue final decisions on class certification 
and requiring that administrative judges determine whether a settlement 
agreement is fair and reasonable. The Commission proposes changes to 
the appeals procedures to provide agencies the right to appeal an 
administrative judge's final decision, to revise the appellate briefing 
schedule, to establish different standards of review for agency final 
decisions and administrative judges' final decisions, and to revise the 
process for seeking reconsideration of a decision on appeal. Finally, 
the Commission proposes to amend the remedies section of the regulation 
to permit administrative judges to award attorney's fees and to provide 
for payment of attorney's fees for all services provided by an attorney 
throughout the equal employment opportunity (EEO) process, including 
counseling.

DATES: Comments on the notice of proposed rulemaking must be received 
on or before April 21, 1998.

ADDRESSES: Written comments should be submitted to Frances M. Hart, 
Executive Officer, Executive Secretariat, Equal Employment Opportunity 
Commission, 1801 L Street, N.W., Washington, D.C. 20507. As a 
convenience to commentators, the Executive Secretariat will accept 
comments transmitted by facsimile (``FAX'') machine. The telephone 
number of the FAX receiver is (202) 663-4114. (This is not a toll free 
number.) Only comments of six or fewer pages will be accepted via FAX 
transmittal. This limitation is necessary to assure access to the 
equipment. Receipt of FAX transmittals will not be acknowledged, except 
that the sender may request confirmation of receipt by calling the 
Executive Secretariat staff at (202) 663-4078 (voice) or (202) 663-4077 
(TDD). (These are not toll free numbers.) Copies of comments submitted 
by the public will be available for review at the Commission's Library, 
room 6502, 1801 L Street, N.W., Washington, D.C. between the hours of 
9:30 a.m. and 5:00 p.m.

FOR FURTHER INFORMATION CONTACT: Nicholas M. Inzeo, Deputy Legal 
Counsel, Thomas J. Schlageter, Assistant Legal Counsel or Kathleen 
Oram, Senior Attorney, Office of Legal Counsel, 202-663-4669 (voice), 
202-663-7026 (TDD). This notice is also available in the following 
formats: large print, braille, audio tape and electronic file on 
computer disk. Requests for this notice in an alternative format should 
be made to EEOC's Publications Center at 1-800-669-3362.

SUPPLEMENTARY INFORMATION:

Introduction

    As part of an ongoing effort to evaluate and improve the 
effectiveness of the Equal Employment Opportunity Commission's 
operations, the Chairman established the Federal Sector Workgroup to 
review the federal sector equal employment opportunity process. The 
Workgroup was composed of representatives from offices throughout the 
Commission. The Workgroup focused on the effectiveness of the EEOC in 
enforcing the statutes that prohibit workplace discrimination in the 
federal government, namely: section 717 of Title VII of the Civil 
Rights Act of 1964, which prohibits discrimination against applicants 
and employees based on race, color, religion, sex and national origin; 
section 501 of the Rehabilitation Act of 1973, which prohibits 
employment discrimination on the basis of disability; section 15 of the 
Age Discrimination in Employment Act, which prohibits employment 
discrimination based on age; and the Equal Pay Act, which prohibits 
sex-based wage discrimination.
    The Workgroup's review evaluated the Commission's administrative 
processes governing its enforcement responsibilities in the federal 
sector and developed recommendations to improve

[[Page 8595]]

its effectiveness. In addition, the review sought to implement the 
goals of Vice President Gore's National Performance Review (NPR), 
including eliminating unnecessary layers of review, delegating 
decision-making authority to front-line employees, developing 
partnership between management and labor, seeking stakeholder input 
when making decisions, and measuring performance by results.
    The Federal Sector Workgroup issued a report entitled ``The Federal 
Sector EEO Process * * * Recommendations for Change'' in May 1997. The 
report contains numerous recommendations for changing the federal 
sector complaint process, including changes to the Part 1614 
regulations, changes to EEOC's Management Directive 110 which contains 
additional guidance and instructions on the federal complaint process, 
and changes to EEOC's internal procedures.
    The Commission proposes to amend Part 1614 to implement the 
regulatory recommendations. The proposed changes, which are discussed 
in greater detail below, address the continuing perception of 
unfairness and inefficiency in the federal sector complaint process. In 
addition, the proposals accomplish the National Performance Review 
goals of removing unnecessary layers of review and delegating decision-
making authority to front-line employees.
    EEOC spent over a year and a half in the development of the federal 
sector NPRM. During that time period, EEOC consulted extensively with 
all stakeholders in the federal sector process, very much including the 
other federal agencies. On April 22, 1996, prior to the development of 
any recommendations, the EEOC's Federal Sector Workgroup held a meeting 
with federal EEO and Civil Rights personnel organized by the President 
of the Council of Federal and Civil Rights Executives. At that time the 
Council supported EEOC's interest in making the administrative judge 
decisions final and eliminating agency final decisions following those 
decisions. The Council subsequently changed its view on this question. 
On May 21, 1996, then-Chairman Casellas wrote to the EEO Directors of 
all departments and agencies requesting their written comment on a 
number of subjects related to the federal sector complaint process. We 
received comments from 27 agencies, all of which were fully considered 
in developing the recommendations contained in the Workgroup's report. 
On September 26, 1997, the Workgroup held a briefing for EEO Directors 
on the Workgroup's recommendations.
    The Commission coordinated this proposed regulation with all 
federal agencies pursuant to Exec. Order No. 12067 (1978). A number of 
comments were received from agencies, which included helpful 
suggestions to improve the proposed regulation as well as criticisms of 
essential elements of the proposals. The Commission has included a 
discussion of its proposal, the rationale for the changes, as well as 
the criticisms of the agencies, in this statement of Supplementary 
Information and has made certain changes to the proposal. It prefers to 
decide whether or how to make other changes to this proposal after the 
benefit of public comment. Federal agencies are, of course, the 
entities whose conduct would be regulated by these proposals and making 
decisions based only on their input, without having the opportunity to 
consider the input of other stakeholders, including complaining parties 
and their representatives, would be insufficient. The Commission will 
seriously consider the agency comments in conjunction with the public 
comments. The Commission will retain the comments received from the 
agencies during the coordination period in the rulemaking file and will 
consider and address those comments in the final rule.
    In proposing these changes, the Commission seeks to serve two 
different yet intertwined purposes: first, to ensure that the process 
for federal employee complaints is fair and is perceived to be fair, 
and second, to make the process more efficient by eliminating 
unnecessary layers, dealing expeditiously with meritless claims and by 
delegating authority to front-line employees.

Alternative Dispute Resolution

    The Commission proposes to amend section 1614.102 to require all 
agencies to establish or make available an alternative dispute 
resolution (ADR) program for the EEO pre-complaint process. The 
required pre-complaint ADR program would be in addition to the 
provisions in the current regulation that encourage the use of ADR at 
all stages of the complaint process. Agencies would be free to develop 
the programs that best suit their particular needs. While many agencies 
have adopted the mediation model as their ADR initiative, other 
resolution techniques would be acceptable, provided that they conform 
to the core principles set forth in EEOC's policy statement on ADR, 
which will be contained in Management Directive 110. Although ADR is 
believed to be most effective at the early stages of a dispute, 
agencies may continue their ADR efforts at any stage in the process, 
including after the formal complaint has been filed. An effective ADR 
program will serve both goals set out by the Commission. By resolving 
complaints early on, ADR will make the process more efficient. ADR will 
also serve to make the process fairer, by giving complainants an 
alternative to the counseling process that has been criticized by 
agency officials and employee representatives.
    The Commission also proposes changes to section 1614.105, which 
covers pre-complaint processing, to require that counselors advise 
aggrieved persons that they may choose between participation in the ADR 
program offered by the agency and the traditional counseling activities 
provided for in the current regulation. If a matter is not resolved 
during ADR or during traditional counseling activities, the counselor 
will conduct a final interview and the aggrieved person may file a 
formal complaint. As noted above, agencies would be free to establish 
the type of ADR program they offer during the counseling period as long 
as it is consistent with the ADR program core principles set out by 
EEOC. Before aggrieved persons make a choice between counseling and 
ADR, they will have an initial counseling session in which counselors 
must fully inform them about their rights and the choice between the 
counseling process and the ADR program. Counselors must also inform 
aggrieved persons that if the ADR process does not result in a 
resolution of the dispute, they will receive a final interview and have 
the right to file a formal complaint. If the aggrieved person chooses 
to participate in the agency's ADR program, the role of the counselor 
would be limited to advising that person of his or her rights and 
responsibilities in the EEO complaint process, as set forth currently 
in section 1614.105(b). Counselors would not be required, in those 
instances, to attempt to resolve the dispute, but would not be 
precluded from doing so, if they believe a matter could be resolved 
quickly.
    Many agencies who submitted comments on the draft revisions when it 
was coordinated under Exec. Order No. 12067 (1978) welcomed Alternative 
Dispute Resolution (ADR) at the pre-complaint process stating that ADR 
would result in an early resolution of many cases and create a positive 
view of the EEO process. A number of agencies suggested that not all 
cases are appropriate for ADR. Rather, these

[[Page 8596]]

agencies requested that they should have the flexibility to establish 
what type of matter or circumstance would be eligible for ADR. Several 
agencies also requested that consideration be given to the practical 
difficulties of creating an ADR program, and accordingly, that ample 
time be provided to them to obtain the necessary expertise, personnel 
and funds for ADR. An effective date will be included in the final rule 
and the governing management directive.
    Under the proposed regulations, agencies would be free to develop 
ADR programs that would best serve their particular needs and unique 
circumstances. The EEOC encourages creativity and flexibility in 
establishing ADR programs. This would certainly encompass an array of 
ADR programs. Agencies with limited funds and resources could use the 
services, in whole or in part, of another agency, a volunteer 
organization or other resources to provide for their ADR programs. 
Keeping with our emphasis on flexibility, an agency could exclude 
circumstances or matters that it believes are not appropriate for its 
ADR program. The Commission does not anticipate that ADR will be used 
in connection with every complaint. For example, agencies may exclude 
class allegations from its ADR program. As circumstances and needs 
change within a particular agency, it could modify its ADR program. 
However, it is essential that all agency ADR programs comply with the 
spirit of the EEOC's policy statement on the core principles of ADR. 
Equal Employment Opportunity Commission's Alternative Dispute 
Resolution Policy Statement (July 17, 1995). Management Directive 110 
(MD 110) will provide further information and amplify these core 
principles.
    Some agencies urged that the regulations should clarify the precise 
roles and responsibilities of the person responsible for conducting ADR 
during the pre-complaint process and the EEO counselor, for example, 
whether the mediator or counselor will complete the counselor's report 
if mediation or other means of ADR fails. These concerns and other 
questions raised by the agencies about how ADR and EEO counseling will 
coexist will be explained in MD 110. Each agency will have discretion 
to develop its own procedures in accordance with the regulation and MD 
110. With this flexibility, there will most likely not be uniformity 
among agencies in the precise roles and responsibilities of EEO 
counselors and persons conducting ADR activities.

Dismissals

    The Commission proposes to amend section 1614.107 to remove one 
basis for dismissal of EEO complaints and add two new bases for 
dismissal. The Commission proposes to eliminate the provision in 
section 1614.107(h) that permits agencies to dismiss complaints for 
failure to accept a certified offer of full relief. The full relief 
dismissal policy was premised on the view that adjudication of a claim 
is unnecessary if the agency is willing to make the complainant whole. 
The regulatory process, however, has been criticized because 
complainants are placed in the position of risking dismissal of their 
complaints if they do not believe the offer of their opposing party is 
an offer of full relief. If a complainant makes the wrong assessment of 
the offer and EEOC decides on appeal that the agency did offer full 
relief, the complainant is precluded from proceeding with the complaint 
or from accepting the offer. In addition, difficulties assessing what 
constitutes full relief increased when, as a result of the Civil Rights 
Act of 1991, damages became available to federal employees. Unless the 
agency offers the full amount of damages permitted under the statutory 
caps in the law, it is virtually impossible to assess whether the 
agency has offered full relief. The Commission found that offers of 
full relief must address compensatory damages, where appropriate. 
Jackson v. USPS, Appeal No. 01923399 (1992); Request No. 05930306 
(1993).
    During coordination of EEOC's proposals pursuant to Exec. Order No. 
12067, some agencies agreed with EEOC's position that full relief 
dismissals have become rare since compensatory damages became available 
to federal employees. Other agencies recommended that EEOC revise the 
procedure to permit an independent review and certification of full 
relief offers by EEOC, arguing that certification of offers by EEOC 
would minimize the risk complainants must now take in determining on 
their own whether an agency's offer constitutes full relief. Finally, 
some agencies simply disagreed with the proposal to eliminate the full 
relief dismissal provision, arguing that they continue to use it in 
some cases. As noted above, without certification of full relief offers 
by EEOC, complainants are in the unfortunate position of trying to 
evaluate whether the agencies they believe discriminated against them 
have truly offered them all the relief they would be entitled to in a 
federal court, and jeopardizing their whole case if they decide in 
error. The Commission has determined that it would not be a wise use of 
our limited resources at this time to create a certification procedure 
for full relief offers. In response to agency comments, though, as more 
fully explained below, the Commission has added a provision permitting 
agencies to make an ``offer of resolution'' in a case. The offer of 
resolution is similar, but not identical, to the procedure under Rule 
68 of the Federal Rules of Civil Procedure for an offer of judgment. 
Hence, for all of the reasons set forth above, the Commission proposes 
eliminating the regulatory provision permitting agencies to dismiss 
complaints for failure to accept a certified offer of full relief.
    The Commission proposes to add dismissal provisions permitting 
agencies to dismiss complaints for two reasons. First, the Commission 
proposes to permit agencies to dismiss complaints that allege 
dissatisfaction with the processing of a previously filed complaint 
(commonly called spin-off complaints). EEOC's regulations at 29 CFR 
Part 1613, which were superseded by 29 CFR Part 1614 in 1992, expressly 
permitted complainants to file separate complaints alleging 
dissatisfaction with agencies' processing of their original complaints. 
29 CFR 1613.262 (1991). The procedure resulted in the filing of 
multiple spin-off complaints. The Commission recognized the need to 
limit these complaints, and did not include the Part 1613 provision in 
Part 1614. Guidance was provided in Management Directive 110. 
Complainants continued, however, to file spin-off complaints. Any 
alleged unfairness or discrimination in the processing of a complaint 
can--and must--be raised during the processing of the underlying 
complaint and there is ample authority to deal with such allegations in 
that process. There is no provision in either the regulations or the 
management directive permitting the filing of a separate complaint on 
this issue. Accordingly, separate complaints should be dismissed. The 
Commission proposes to add the dismissal provision permitting dismissal 
of spin-off complaints to ensure that a balance is maintained between 
fair and nondiscriminatory agency processing of complaints and the need 
to eliminate multiple filing of burdensome complaints about the manner 
in which an original complaint was processed.
    In conjunction with this regulatory change, the Commission will 
issue companion guidance in Management Directive 110 addressing the 
procedures agencies must follow to resolve allegations of 
dissatisfaction with the complaints process quickly. Individuals

[[Page 8597]]

who are dissatisfied with the processing of a complaint will be advised 
to bring this dissatisfaction to the attention of the official 
responsible for the complaint, whether it be an investigator, an EEOC 
administrative judge, or the Commission's Office of Federal Operations 
on appeal. The allegation of dissatisfaction, and any appropriate 
evidence, will then be considered during the processing of the existing 
complaint. Proper handling of spin-off allegations is important to the 
Commission because it involves the overall quality of the complaints 
process. Individuals who do not follow the process set out in the 
Management Directive for allegations of dissatisfaction will have such 
complaints dismissed by the agency or by the Commission. The procedure 
to be used will ensure that any evidence of discrimination or improper 
handling will be considered as part of the claim before the agency or 
Commission without unnecessarily adding complaints to the system.
    The Commission also proposes to add a dismissal provision to 
section 1614.107 permitting an agency to dismiss a complaint where it 
finds a clear pattern of abuse of the EEO process through strict 
application of the criteria set forth in Commission decisions. The 
proposed section codifies the Commission's decision in Buren v. USPS, 
Request No. 05850299 (1985). The Commission has stated that it has the 
inherent power to control and prevent abuse of its processes, orders or 
procedures. It is within the Commission's purview to determine that 
either complainants or agencies are engaging in conduct that 
constitutes a scheme designed to frustrate the administrative process. 
The Commission also has recognized that dismissing complaints for abuse 
of process should be done only on rare occasions because of the strong 
policy in favor of preserving complainants' EEO rights whenever 
possible. Kleinman v. Postmaster General, Request No. 05940579 (1994). 
The Commission believes that evaluating complaints for dismissal for 
abuse of process requires careful deliberation and application of 
strict criteria. Agencies must analyze whether a complainant's prior 
behavior evidences an ulterior purpose to abuse the EEO process. 
Evidence of numerous complaint filings, in and of itself, is an 
insufficient basis for making such a finding. Hooks v. USPS, Appeal No. 
01953852 (1995). However, multiple filings combined with the nature of 
the subject matter of the complaints, lack of specificity in the 
allegations, and allegations involving matters previously raised may be 
considered in determining whether a complainant has engaged in a 
pattern of abuse of the EEO process. Goatcher v. USPS, Request No. 
05950557 (1996). The Commission proposes to add the dismissal provision 
based on abuse of process, as well as the dismissal for spin-off 
complaints, because it believes that they will improve the efficiency 
and effectiveness of the EEO process. In addition, dealing summarily 
with abusive complaints will make the process fairer for agencies that 
must process complaints and for complainants who raise bona fide 
allegations by focusing resources on bona fide allegations.

Offer of Resolution

    The Commission proposes to add a provision to the procedures 
permitting agencies to make offers of resolution to complainants as 
long as they are made at least 30 days prior to the hearing. Offers of 
resolution must be in writing and must explain to the complainant the 
possible consequences of failing to accept the offer. Complainants will 
have 30 days to consider the offer and decide whether to accept it. If 
a complainant is represented by an attorney at the time that the offer 
is made and fails to accept an offer of resolution, and the decision on 
the complaint is not more favorable than the offer, then, except where 
the interest of justice will not be served, the complainant will not 
receive payment from the agency of attorney's fees or costs incurred 
after the date of rejection or the expiration of the 30-day period of 
the offer of resolution if there has been no rejection. If the offer of 
resolution is not accepted within thirty days it is deemed to have been 
rejected. Failure to accept an offer of resolution will not preclude an 
agency from making other offers of resolution or either party from 
seeking to negotiate a settlement of the complaint at any time. If an 
agency believes that it has made a fair offer to an unrepresented 
complainant who later obtains representation and seeks to avoid further 
liability for attorney's fees, the agency can make a new offer in 
writing at that time.
    The Commission proposes the offer of resolution procedure, in part, 
in response to comments from the agencies requesting that the failure 
to accept a certified offer of full relief dismissal provision be 
retained or modified. The Commission wishes to encourage resolution of 
complaints at all times in the complaint process and believes the 
proposed offer of resolution provision will provide incentive for 
agencies and complainants to resolve complaints. The Commission seeks 
comment on the offer of resolution proposal, particularly on the 
interest of justice exception to the preclusion of costs and fees. The 
Commission believes that the interest of justice standard in the 
proposal will apply to those situations in which an administrative 
judge determines that it would be unfair to preclude payment of 
attorney's fees and costs.

Fragmentation of Complaints

    The Commission seeks public comment on whether regulatory changes 
are necessary to correct the problem of fragmented processing of EEO 
claims. A recurring problem found by the Federal Sector Workgroup was 
that many agencies do not distinguish between allegations in support of 
a legal claim and the legal claim itself. As a result, some claims 
involving a number of different allegations are fragmented or 
separated. What should be one legal claim then becomes a number of 
miscellaneous events, losing its character as a claim. A hypothetical 
example would be a harassment claim where a pattern of incidents are 
used to support a claim, but the separate incidents would not 
constitute a legally cognizable claim of discrimination. As a result of 
fragmentation, the number of discrimination complaints by federal 
employees is unnecessarily multiplied and cognizable claims are 
fragmented to such an extent that potentially valid claims become 
meaningless. The Commission plans on amending its Management Directive 
to address this problem and seeks comment on what, if any, regulatory 
changes are necessary to correct this problem.

Partial Dismissals

    The Commission proposes changes to the regulations to eliminate 
interlocutory appeals of partial dismissals of complaints. Currently, 
where an agency dismisses part of a complaint, but not the entire 
complaint, the complainant has the right to immediately appeal the 
partial dismissal to EEOC. The Commission provided for interlocutory 
appeals of partial dismissals in Part 1614, hoping to streamline the 
process and avoid holding two or more hearings on the same complaint. 
Multiple hearings could have occurred absent an interlocutory appeal 
when EEOC reversed an agency's partial dismissal after a hearing was 
held on the rest of the complaint. The Commission believes that this 
result can be accomplished without the unintended delays of complaints 
or fragmentation of complaints that may have resulted from the current 
provision.

[[Page 8598]]

    The Commission proposes to amend section 1614.401 to remove the 
right to immediately appeal the dismissal of a portion of a complaint. 
In addition, the Commission proposes to add a paragraph to the 
dismissals section, section 1614.107, explaining how to process 
complaints where a portion of the complaint, but not the entire 
complaint, meets one or more of the standards for dismissal contained 
in that section. In those circumstances, the agency will document the 
file with its reasons for believing that the portion of the complaint 
meets the standards for dismissal and will investigate the remainder of 
the complaint. If the complainant requests a hearing from an 
administrative judge, the administrative judge will evaluate the 
reasons given by the agency for believing a portion of the complaint 
meets the standards for dismissal before holding the hearing. If the 
administrative judge believes that all or a part of the agency's 
reasons are not well taken, the entire complaint or all of the portions 
not meeting the standards for dismissal will continue in the hearing 
process. The parties may conduct discovery to develop a record for all 
portions of the complaint continuing in the hearing process. The 
administrative judge's decision on the partial dismissal will become 
part of the final decision on the complaint, which either party may 
appeal to EEOC, in accordance with proposed section 1614.401. Where a 
complainant requests a final decision from the agency without a 
hearing, the agency will issue a decision addressing all claims in the 
complaint, including its rationale for dismissing claims, if any, and 
its findings on the merits of the remainder of the complaint. The 
complainant may appeal the agency's final decision, including any 
partial dismissals, to the EEOC.

Hearings

    The Commission proposes four changes to the hearings process. 
First, the Commission proposes to amend section 1614.108, by adding a 
new paragraph (g), providing that complainants who wish to have a 
hearing on their complaints after the 180 days period for investigation 
has expired would be required to submit requests for hearings directly 
to EEOC, rather than to their agencies, as is the current practice. 
Agencies will be required to inform complainants in their 
acknowledgment letters of the EEOC office and address where a request 
for hearing is to be sent. When requesting a hearing from EEOC, 
complainants will be required at the same time to send a copy of the 
request for a hearing to their agencies' EEO offices. Upon receipt of a 
request for hearing, EEOC would request that the agency provide copies 
of the complaint file to EEOC and, if not previously provided, to the 
complainant. The Commission believes that the proposed change will 
expedite the complaint process. Complainants will communicate directly 
with EEOC with copies to their agency, rather than through their agency 
whose only function was to serve as a conduit for getting the request 
to EEOC. In addition, the proposed change would alleviate concerns that 
agencies are not responding to requests for hearings quickly enough by 
allowing the parties to communicate directly with EEOC.
    Second, the Commission proposes to specify in the regulation at 
section 1614.109(b) that administrative judges have the authority to 
dismiss complaints during the hearing process for all of the reasons 
contained in the dismissal section, 29 CFR 1614.107. Currently, 
administrative judges do not have the authority to dismiss complaints 
that are in the hearing process, but will remand a complaint back to 
the agency for dismissal, where appropriate. The proposed change would 
eliminate an unnecessary layer by giving the administrative judge the 
authority to dismiss without the need for remanding the complaint to 
the agency.
    Third, the Commission proposes to add a provision permitting 
administrative judges to issue a final decision without a hearing where 
they determine, even though material facts remain in dispute, that 
there is sufficient information in the record to decide the case, that 
the material facts in dispute can be decided on the basis of the 
written record, that there are no credibility issues that would require 
live testimony in order to evaluate a witness' demeanor and that the 
case lacks merit. A new paragraph 1614.109(f)(4) would contain this 
provision, which would supplement administrative judges' existing 
authority to issue summary judgment decisions currently contained in 29 
CFR 1614.109(e). While the decision is like a dismissal in that it will 
result in a ruling against the complainant, it is set out as a separate 
subsection because it will be an adjudication on the merits of the 
complaints.
    Finally, the Commission proposes to amend the regulations to 
provide that administrative judges issue final decisions on complaints 
that have been referred to them for a hearing. Complainants or agencies 
could appeal administrative judges' final decisions to EEOC. Agencies 
would continue to issue final decisions in cases where the complainants 
request an immediate final decision without a hearing.
    The Commission believes that allowing agencies to reject or modify 
an administrative judge's findings of fact and conclusions of law leads 
to an unavoidable conflict of interest. This is particularly true 
because those cases have been referred to a neutral third party, an 
EEOC administrative judge, to hear the dispute. Historically, agencies 
have rejected or modified a majority of administrative judges' findings 
of discrimination, but have adopted nearly all findings of no 
discrimination. In fiscal year 1996, Commission administrative judges 
issued 3,083 decisions, of which 284, or 9.2%, found discrimination. 
Agencies accepted only 101 of those decisions and rejected 178, or 
62.7%. Conversely, of the 2,799 findings of no discrimination, agencies 
rejected only four or 0.1%. The Commission does not have available 
current information containing the percentage of agency decisions it 
accepts or rejects on appeal following administrative judge decisions. 
The Commission believes that the proposed change will address the 
perception of unfairness and conflict of interest in agencies deciding 
complaints of discrimination against them. In addition, this proposal 
eliminates a layer of review and permits decision-making at an earlier 
state, central goals of the National Performance Review, thus making 
the process more efficient.
    Of those federal agencies that commented on the draft regulation 
when the regulation was coordinated under Exec. Order No. 12067 (1978), 
some supported the proposal to make the decision of the administrative 
judge final. A number of agencies opposed it, however, chiefly arguing 
that the Commission did not have authority to allow administrative 
judges to issue final decisions, while some agencies believed that the 
administrative judge could only issue a final decision if the hearing 
was the first level of an appeal to the Commission. The Commission 
believes that it has broad authority to restructure the discrimination 
complaint process for federal employee complaints and that 
administrative judges can issue decisions as proposed.
    Section 717(b) of the Civil Rights Act of 1964 authorizes the 
Commission to ``issue such rules, regulations, orders, and instructions 
as it deems necessary and appropriate to carry out its responsibilities 
under this section.'' 42 U.S.C. Sec. 2000e-16(b). Such broad language 
has been interpreted by the courts to constitute a delegation of 
legislative rulemaking authority. E.g.,

[[Page 8599]]

Mourning v. Family Publications Service, Inc., 411 U.S. 356 (1973); 
Public Utilities Commission of California v. United States, 355 U.S. 
534, 542-43 n. 4 (1958).
    In 1972 Congress gave this rulemaking authority to the Civil 
Service Commission, which was the predecessor to the EEOC in having 
responsibility for enforcing the employment discrimination laws in the 
federal sector. In so doing, Congress made it clear that it was 
granting the Commission complete authority to restructure the complaint 
process to ensure protection of the interests of all parties involved 
in the process. It explained:

    One feature of the present equal employment opportunity program 
which deserves special scrutiny by the Civil Service Commission is 
the complaint process. The procedure under the present system, 
intended to provide for the informal disposition of complaints, may 
have denied employees adequate opportunity for impartial 
investigation and resolution of complaints.
    Under present procedures, in most cases, each agency is still 
responsible for investigating and judging itself. Although provision 
is made for the appointment of an outside examiner, the examiner 
does not have the authority to conduct an independent investigation, 
and his conclusions and findings are in the nature of 
recommendations to the agency head who makes the final agency 
determination on whether there is, in fact, discrimination in that 
particular case. The only appeal is to the Board of Appeals and 
Review in the Civil Service Commission.
    The testimony before the Labor Subcommittee reflected a general 
lack of confidence in the effectiveness of the complaint procedure 
on the part of Federal employees. Complainants have indicated 
skepticism regarding the Commission's record in obtaining just 
resolution of complaints and adequate remedies. This has, in turn, 
discouraged persons from filing complaints with the Commission for 
fear that doing so will only result in antagonizing their 
supervisors and impairing any future hope of advancement. The new 
authority given to the Civil Service Commission in the bill is 
intended to enable the Commission to reconsider its entire complaint 
structure and the relationships between the employee, agency, and 
Commission in these cases.

S. Rept. No. 92-415 (1971), reprinted in Legislative History of the 
Equal Employment Opportunity Act of 1972, 410 at 423 (1972) (emphasis 
added).
    In 1979, the authority for enforcement of the federal employee 
complaint process was transferred from the Civil Service Commission to 
EEOC. In proposing this transfer, the President stated:

Transfer of the Civil Service Commission's equal employment 
opportunity responsibilities to EEOC is needed to ensure that: (1) 
Federal employees have the same rights and remedies as those in the 
private sector and in state and local government; (2) Federal 
agencies meet the same standards as are required of other employers; 
and (3) potential conflicts between an agency's equal employment 
opportunity and personnel management functions are minimized.... The 
Civil Service Commission has in the past been lethargic in enforcing 
fair employment requirements within the Federal government.

Hearings Before a Subcommittee of the Committee on Government 
Operations, Reorganization Plan No. 1 of 1978 (Equal Employment 
Opportunity), at 6-7 (1978). In its report on the Plan, the Office of 
Management and Budget stated that ``The Civil Service Commission is 
expected to be lawmaker, prosecutor, judge and jury on employment 
discrimination in the Federal workforce. Organizational deficiencies 
like these inevitably lead to less rigorous compliance.'' Hearings, 
Reorganization Plan No. 1 of 1978 at 186. In addition, OMB stated that 
``[t]he Civil Service Commission's regulations concerning the filing of 
class action complaints are highly restrictive.'' Hearings, 
Reorganization Plan No. 1 of 1978 at 193. The type of organization 
conflict of interest that the Commission seeks to eliminate in this 
proposal, where an agency both takes an action and then serves as the 
final decision maker on the complaint, has been of concern for years.
    By proposing these changes, the EEOC is doing precisely what the 
Congress envisioned would be done, i.e., the Commission is 
reconsidering the complaint structure and the relative positions of the 
employee, the agency and the Commission. The language of section 717, 
its legislative history, and the transfer of that responsibility to 
EEOC under Reorganization Plan No. 1 of 1978 all confirm that the EEOC 
has been given the broadest possible authority to restructure the 
complaints process for individual and class complaints.
    Those agencies that assert that EEOC lacks the authority to change 
its regulations to make administrative judges' decisions final, or that 
it can only be done as part of an appellate procedure, rely on section 
717(c), 42 U.S.C. Sec. 2000e-16(c). Section 717(c) provides:

Within thirty days of receipt of notice of final action taken by a 
department, agency, or unit referred to in subsection 717(a), or by 
the Civil Service Commission upon an appeal from a decision or order 
of such department, agency, or unit on a complaint of 
discrimination, * * * or after one hundred and eighty days from the 
filing of the initial charge with the department, agency, or unit, 
until such time as final action may be taken by a department, or 
unit, an employee or applicant for employment, if aggrieved by the 
final disposition of his complaint, or by the failure to take final 
action on his complaint, may file a civil action as provided in 
section 706, * * *

This language, which permits a federal employee to file suit against 
the agency alleged to have discriminated, waives the government's 
sovereign immunity from suit. Chandler v. Roudebush, 425 U.S. 849 
(1976); Brown v. GSA, 425 U.S. 820 (1976). Nothing in this statutory 
language limits EEOC's ability to issue regulations under subsection 
717(b) or to structure the administrative process to enhance its 
effectiveness and fairness. The language delineates when, under the 
procedures that existed at that time, an individual could file suit in 
court. There is no indication that Congress also intended to codify any 
parts of the existing administrative procedures by the language of this 
sentence. Indeed, the legislative history of section 717 demonstrates 
that Congress expected the then-Civil Service Commission to make 
significant changes to the complaint process. The importance of 
administrative flexibility to improve the complaint process was 
reaffirmed in 1978 when the President transferred the responsibilities 
for federal employee complaints to EEOC.

Class Complaints

    The Federal Sector Workgroup identified a series of concerns with 
the class complaint process. It found that despite studies indicating 
that class-based discrimination may continue to exist in the federal 
government, recent data reflect that very few class complaints are 
filed or certified at the administrative level. Only a very small 
number of cases are brought as class actions and those that are filed 
generally result in a denial of class certification. While an effective 
administrative process for class complaints offers several advantages 
over litigation in federal court, including informality, lower cost, 
and the speed of resolution, the Workgroup found there is a perception 
the current process does not adequately address class-based 
discrimination in the federal government. As a result, complainants 
often have elected to pursue their complaints in federal court.
    Class actions play a particularly vital role in the enforcement of 
the equal employment laws. They are an essential mechanism for 
attacking broad patterns of workplace discrimination and providing 
relief to victims of discriminatory policies or systemic practices. The 
courts have long

[[Page 8600]]

recognized that class actions ``are powerful stimuli to enforce Title 
VII,'' providing for the ``removal of artificial, arbitrary, and 
unnecessary barriers to employment when the barriers operate 
invidiously to discriminate on the basis of racial or other 
impermissible classification.'' Wetzel v. Liberty Mutual Ins. Co., 508 
F.2d 239, 254 (3d Cir.), cert denied, 421 U.S. 1011 (1975). The class 
action device exists, in large part, to vindicate the interests of 
civil rights plaintiffs. See 5 James W. Moore, Moore's Federal Practice 
Sec. 23.43[1][a], at 23-191 (3d ed. 1997).
    These same policies apply with equal force in the federal sector. 
Accordingly, we propose several changes to strengthen the class 
complaint process. The purpose of these changes is to ensure that 
complaints raising class issues are not unjustifiably denied class 
certification in the administrative process and that class cases are 
resolved under appropriate legal standards consistent with the 
principles applied by federal courts. Where a class of individuals have 
been affected by a policy or practice, it is far more efficient to 
address those concerns in one action rather than requiring numerous 
individual complaints. These proposed changes seek to make the class 
complaint process fairer by allowing individuals to seek class 
certification at any reasonable stage in the process. The class 
implications of a complaint may not be apparent until the complainant 
receives the investigative file or information in discovery that would 
indicate that the agency has acted in a way that will have implications 
for a class. In addition, to further address the concerns identified by 
the Workgroup, the Commission has undertaken a pilot program in which 
all decisions on class certification will be made centrally by the 
Complaint Adjudication Division of its Office of Federal Operations to 
explore possible operational changes.
    The Commission proposes four regulatory changes to the class 
complaint procedures found at 29 CFR 1614.204. The Commission proposes 
to revise section 1614.204(b) to provide that a complainant may move 
for class certification at any reasonable point in the process when it 
becomes apparent that there are class implications raised in an 
individual complaint. If a complainant moves for class certification 
after completing counseling, the complainant will not be required to 
return to the counseling stage. Some agencies who commented on this 
proposal when it was coordinated under Exec. Order No. 12067 supported 
the change but asked that the regulation define ``reasonable point in 
the process'' and indicate what criteria would be used to determine 
that a complaint has class implications. Some agencies opposed the 
change, arguing that it would entail additional investigative costs and 
invite abuse by complainants seeking to bypass the counseling process 
by making frivolous class allegations. They maintained that a 
complainant should have to elect between a class or an individual claim 
at the pre-complaint stage. Others objected only to eliminating 
counseling, as that it is how the complainant is informed of his or her 
rights and responsibilities as class agent.
    The Commission believes that the proposed change is an important 
step toward removing unnecessary barriers to class certification of 
complaints that are properly of a class nature. The Commission has 
consistently recognized that its decisions on class certification must 
be guided by the complainant's lack of access to pre-certification 
discovery; this is different from the situation of a Rule 23 plaintiff 
who does have access to pre-certification discovery on class issues. 
Similarly, often an individual complainant will not have reason to know 
at the counseling stage that the challenged action actually reflects an 
agency policy or practice generally applicable to a class of similarly 
situated individuals. The Commission intends that ``reasonable point in 
the process'' be interpreted to allow a complainant to seek class 
certification when he or she knows or should know that the complaint 
has class implications, i.e., it potentially involves questions of fact 
common to a class and is typical of the claims of a class. Normally, 
this point would be no later than the end of discovery at the hearing 
stage. It would be the responsibility of the agency or administrative 
judge, as appropriate, to ensure that the class agent is advised of his 
or her obligations at this time. The Commission believes it would be 
impracticable and unproductive to require the complainant to return to 
counseling at this stage.
    The Commission proposes to amend section 1614.204(d) to provide 
that administrative judges would issue final decisions on whether a 
class complaint will be accepted (or certified) or dismissed. 
Currently, administrative judges make recommendations to agencies on 
acceptance or dismissal. The Commission particularly invites comment on 
this proposal. Agencies who commented on this proposal when it was 
coordinated under Exec. Order No. 12067 said they either supported or 
opposed it for the same reasons they gave with respect to the proposal 
for administrative judges to issue final decisions on individual 
complaints. Some agencies said they supported it only if the agency is 
given the right to appeal a certification decision. Under the 
Commission's proposal, an agency would have such a right under section 
1614.401(b), which provides that an agency may appeal an administrative 
judge's final decision. The Commission also seeks public comment on 
whether to make administrative judges' decisions on the merits final in 
class cases, consistent with the proposal to allow administrative 
judges to issue final decisions in section 1614.109(h).
    In addition, the Commission proposes to amend section 
1614.204(g)(2) to require that administrative judges must approve class 
settlement agreements pursuant to the ``fair and reasonable'' standard, 
even when no class member has asserted an objection to the settlement. 
Several agency commenters under Exec. Order No. 12067 supported this 
proposal while others disagreed, arguing that it would add an 
unnecessary layer of review and that adequate safeguards exist in 
section 1614.204(g)(4), which gives dissatisfied class members the 
right to petition to vacate a settlement, and 1614.204(a)(2), which 
requires the class agent to fairly and adequately represent the class. 
The Commission believes this proposed change is necessary to protect 
the interests of the class. As one agency commenter noted, class agents 
sometimes seek to settle their individual claims without full regard 
for the interests of the class. The change would make the regulations 
consistent with the practice in federal courts where the court must 
approve any settlement of a class case under a fair and reasonable 
standard.
    Finally, the Commission proposes to amend section 1614.204(l)(3) to 
clarify the burdens of proof applicable to individual class members who 
believe they are entitled to relief. The proposed change would make 
explicit that the burdens enunciated in Teamsters v. United States, 431 
U.S. 324 (1977), apply. In Teamsters, the Court stated that where a 
finding of discrimination has been made, there is a presumption of 
discrimination as to every individual who can show he or she is a 
member of the class and was affected by the discrimination during the 
relevant period of time. Agencies then would be required to show by 
clear and convincing evidence that any class member is not entitled to 
relief, as is provided currently in sections 1614.501 (b) and (c).

[[Page 8601]]

Appeals

    In addition to the proposal to allow complainants or agencies to 
appeal administrative judges' final decisions, noted above, the 
Commission proposes to revise the briefing schedules for appeals to 
EEOC, to add a provision permitting the Office of Federal Operations to 
sanction parties for failure to comply with the regulations, to change 
the standard of review for some appeals, and to revise the process for 
seeking reconsideration of appeals decisions. The Commission proposes 
to amend section 1614.403 of the regulations to require that 
complainants submit any statement or brief in support of an appeal of 
dismissal of a complaint to EEOC within 30 days of receipt of the 
dismissal. Any statement or brief in support of an appeal of a final 
decision on a complaint would have to be submitted to EEOC within 30 
days of filing the notice of appeal. Statements or briefs in opposition 
to appeals would have to be served on the opposing party within 30 days 
of receipt of a statement or brief in support of an appeal. The 
Commission will strictly apply appellate time frames. Currently, 
complainants have 30 days after filing the notice of appeal to submit a 
statement or brief. The Commission believes that 30 days is sufficient 
time to file briefs in procedural cases (cases that are dismissed by 
the agency or the administrative judge) because those cases usually do 
not raise voluminous factual issues. On the other hand, appeals of 
final decisions on the merits of cases generally require a thorough 
review of the record and warrant additional time to formulate arguments 
to support the appeals. In connection with the briefing schedule 
changes, the Commission proposes to amend the regulation to require 
agencies to submit the complaint file to EEOC within 30 days of 
notification that the complainant has filed an appeal or within 30 days 
of submission of an appeal by the agency.
    The Commission proposes to amend section 1614.404 to add a 
paragraph authorizing the Office of Federal Operations to take 
appropriate action where a party to an appeal fails without good cause 
shown to comply with the appellate procedures or to respond fully and 
in timely fashion to a request for information. The proposal would 
allow the Office of Federal Operations to draw an adverse inference 
that requested information a party failed to provide would have 
reflected unfavorably on that party, to consider the matters to which 
the requested information pertains to be established in favor of the 
opposing party, to issue a decision fully or partially in favor of the 
opposing party, or to take such other actions as appropriate.
    The Commission proposes to amend section 1614.405 of the 
regulations to provide that decisions on appeal from final decisions by 
administrative judges after a hearing will be based on a substantial 
evidence standard of review, but review of all other decisions will be 
based on a de novo standard of review. The version of the NPRM 
circulated for interagency coordination had included a clearly 
erroneous standard of review for administrative judges' factual 
findings; this was changed to the substantial evidence standard now in 
the NPRM at the request of agencies, who took the position that the 
clearly erroneous standard was too restrictive. No new evidence will be 
considered on appeal unless the evidence was not reasonably available 
during the hearing process. It should be emphasized that the 
substantial evidence standard does not preclude meaningful review of 
factual findings. However, applying the de novo standard of review to 
the factual findings in administrative judges' final decisions after 
hearings would be an inefficient use of EEOC's limited resources. In 
addition, since EEOC's Office of Federal Operations did not see and 
hear the witnesses, it would not be in a position to second-guess the 
administrative judge during the appellate process, especially with 
respect to credibility determinations based on a witness' demeanor. 
Factual findings based on documentary evidence are more susceptible to 
review in the appellate process.
    Finally, the Commission proposes to amend sections 1614.405 and 
1614.407 to model its reconsideration process after the process used by 
the Merit Systems Protection Board (MSPB). Reconsideration is an extra 
layer of review that is duplicative and time-consuming but that does 
little to improve the complaints process. The Commission denies the 
majority of requests for reconsideration, whether in procedural or 
merits cases. The purpose of this change is to enable the Commission to 
direct more resources to decision-making at the first appellate level, 
focusing on policy issues it deems important and developing a 
consistent body of decisional law on those issues. Restructuring the 
reconsideration process will permit the Commissioners to become more 
involved in the initial appellate decision. This proposal would also 
effectuate one of the central goals of the National Performance Review 
by, in many cases permitting decision-making at an earlier stage. The 
Commission will retain its discretion to reconsider any decision under 
section 1614.407(a).
    Most agency commenters who commented on this proposal when it was 
coordinated under Exec. Order No. 12067 opposed eliminating the right 
to seek reconsideration. They urged retention of the right to request 
reconsideration as a safeguard for agencies against mistakes and 
inconsistencies by the Office of Federal Operations. It would be unfair 
to deny agencies this last opportunity for recourse, they maintained, 
particularly if administrative judges' decisions are made final and 
given greater deference. They argued the change would unjustifiably tip 
the balance in favor of complainants, who have the right to file suit 
in federal court and receive a de novo review. As they noted, agencies 
do not have the right to any court review if dissatisfied with a 
Commission decision. Several commenters also argued in favor of 
preservation of the right to request reconsideration of at least those 
decisions involving important legal issues or having a significant 
impact on agency policies or programs beyond the case at hand. In 
response to these comments the Commission has provided standards for 
parties to meet in seeking reconsideration. While reconsideration will 
continue to be discretionary, parties can seek reconsideration where 
there is a clear mistake of fact or law or where the decision will have 
a far ranging impact on the agency.
    Reformation of the reconsideration process is an important 
component of the proposed federal sector reforms. It will provide the 
resources to improve the timeliness and quality of the Commission's 
Office of Federal Operations decisions across the board. The broad 
availability of reconsideration has not significantly enhanced the 
overall decision-making process. Many requests are simply a reargument 
of previously unsuccessful positions. They are sometimes used only to 
delay the finality of an adverse decision. The overwhelming majority of 
requests are denied. For example, in fiscal year 1997, requests for 
reconsideration resulting in a reversal of an order on the merits 
occurred in only seven instances or about 4% of the cases. For fiscal 
years 1996, 1995, 1994 and 1993, the figures were 5%, 2%, 2% and 3%, 
respectively.
    To the extent agencies have legitimate complaints about erroneous 
Office of Federal Operations decisions, the Commission believes the 
principal remedy is to seek to improve the quality timeliness and 
consistency of the

[[Page 8602]]

decision-making process as a whole. This is best accomplished by 
shifting resources to the appeal stage. Although the agencies view it 
as unfair that, unlike complainants, they cannot go to court if they 
are dissatisfied with the administrative process, the Commission does 
not believe that this argument supports adding another layer to the 
process. Regardless of how the reconsideration process is structured, 
complainants will still have the right to obtain court review while 
agencies will not. This inherent aspect of the process does not 
outweigh the need for finality at an earlier stage and the value of a 
more streamlined process. Finally, some agencies have argued that 
reconsideration is an important step to ensure full consideration of 
the agency position in cases involving significant legal issues or 
broader consequences for agency policies and programs. In the first 
instance, it is incumbent upon the agency to identify and thoroughly 
address such policy or legal issues in its brief at the appellate stage 
so that the Commission can give the case the level of scrutiny 
warranted at the most appropriate level of review. Moreover, the 
proposed standards address this concern.

Attorney's Fees

    The Commission proposes to amend the attorney's fees section of the 
regulations to authorize administrative judges to calculate reasonable 
attorney's fees in cases where a hearing is requested. Currently, 
administrative judges decide the entitlement to attorney's fees. 
Agencies, however, calculate the amount of the award. The Commission 
believes that administrative judges are in a better position to render 
an impartial decision on the reasonableness of the fees request. They 
have heard the evidence and can assess the complexity of the case as 
presented by the attorney as the basis of the award. Moreover, because 
administrative judges are neutral third parties to the dispute, their 
attorney's fees calculations will not be perceived as biased in favor 
of one party or the other. This proposal has been questioned by some 
agencies because administrative judges generally have not issued such 
awards previously. In light of these concerns, the Commission will 
issue guidance to administrative judges on the calculation of 
reasonable attorney's fees. The Commission will consult with other 
agencies prior to issuing the guidance.
    In addition, the Commission proposes to amend section 
1614.501(e)(1)(iv) to provide that an award of attorney's fees may 
include compensation for the time spent during the counseling period 
including any ADR process. The Commission believes that the current 
regulation, which limits attorney's fees awards to fees for work 
performed after a formal complaint is filed, could serve as a 
disincentive to participate in alternative dispute resolution, which 
often occurs during the counseling period, or otherwise settle a case 
during counseling.
    During inter-agency coordination of the proposed rule, many 
agencies expressed opposition to this proposal to provide for 
attorney's fees awards for pre-complaint activities, arguing that 
providing for attorney's fees will formalize the informal counseling 
process and make it more legalistic and adversarial. While the 
Commission believes that the availability of attorney's fees will 
permit settlement early on, agencies believe that it will draw out the 
process. The Commission proposes the change, in part, to make the EEO 
complaint remedies consistent with the remedies available to Federal 
employees in other forums. The Office of Personnel Management's (OPM) 
Back Pay Act regulations provide for the payment of attorney's fees 
without a temporal restriction in cases correcting unjustified or 
unwarranted personnel actions. 5 CFR 550.807. In other words, OPM's 
regulations provide for full attorney's fees, including cases resolved 
during the informal stage (first step) of the grievance process. 
Likewise, the Merit System Protection Board's (MSPB) regulations do not 
contain any restriction on attorney's fees. 5 CFR 1201.37. The 
Commission does not believe that federal employees who have been 
discriminated against should receive a lesser remedy than federal 
employees who prevail in grievances and MSPB appeals. The Commission is 
particularly interested in comments on this proposal.
    In addition to the proposed changes outlined above, the Commission 
proposes to amend section 1614.103(b) of the regulations to include the 
Public Health Service Commissioned Corps and the National Oceanic and 
Atmospheric Administration Commissioned Corps in the coverage of Part 
1614. This inclusion is consistent with prior Commission decisions and 
with the determination of the Solicitor General that Commissioned Corps 
member are covered by federal sector anti-discrimination statutes.
    In proposing these changes, the Commission wishes to reiterate its 
intention to monitor the federal employee complaint process and to 
propose changes that may become necessary to correct problems that may 
develop. In order to better monitor the system, the Commission will 
examine the data that it maintains on complaints and appeals to ensure 
that appropriate information about appeals from final decisions, 
attorney's fees awarded and other costs exists.

Regulatory Procedures

Executive Order 12866

    In promulgating this notice of proposed rulemaking, the Commission 
has adhered to the regulatory philosophy and applicable principles of 
regulation set forth in section 1 of the Executive Order 12866, 
Regulatory Planning and Review. This regulation has been designated as 
a significant regulation and reviewed by OMB consistent with the 
Executive Order.

Regulatory Flexibility Act

    In addition, the Commission certifies under 5 U.S.C. Sec. 605(b), 
enacted by the Regulatory Flexibility Act (Pub. L. 96-354), that this 
rule will not have a significant economic impact on a substantial 
number of small entities, because it applies exclusively to employees 
and agencies and departments of the federal government. For this 
reason, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

    This regulation contains no information collection requirements 
subject to review by the Office of Management and Budget under the 
Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 29 CFR Part 1614

    Administrative practice and procedure, Age discrimination, Equal 
employment opportunity, Government employees, Individuals with 
disabilities, Race discrimination, Religious discrimination, Sex 
discrimination.

    For the Commission.
Paul M. Igasaki,
Chairman.
    Accordingly, for the reasons set forth in the preamble, it is 
proposed to amend chapter XIV of title 29 of the Code of Federal 
Regulations as follows:

PART 1614--[AMENDED]

    1. The authority citation for 29 CFR Part 1614 continues to read as 
follows:

    Authority: 29 U.S.C. 206(d), 633a, 791 and 794a; 42 U.S.C. 
2000e-16; E.O. 10577, 3 CFR, 1954-1958 Comp., p. 218; E.O. 11222, 3 
CFR, 1964-1965 Comp., p. 306; E.O. 11478, 3 CFR, 1969 Comp., p. 133; 
E.O. 12106, 3 CFR, 1978 Comp., p. 263; Reorg. Plan No. 1 of 1978, 3 
CFR, 1978 Comp., p. 321.


[[Page 8603]]


    2. Section 1614.102 is amended by redesignating paragraphs (b)(2) 
through (b)(6) as paragraphs (b)(3) through (b)(7), and by adding 
paragraph (b)(2) to read as follows:


Sec. 1614.102  Agency program.

* * * * *
    (b) * * *
    (2) Establish or make available an alternative dispute resolution 
program for the equal employment opportunity pre-complaint process.
* * * * *
    3. Section 1614.103 is amended by removing the word ``and'' at the 
end of paragraph (b)(3), removing the period at the end of paragraph 
(b)(4), adding the word ``; and'' at the end of paragraph (b)(4) and 
adding paragraphs (b)(5) and (b)(6) to read as follows:


Sec. 1614.103  Complaints of discrimination covered by this part.

* * * * *
    (b) * * *
    (5) The Public Health Service Commissioned Corps, except when, in 
time of war or national emergency, the President declares the Corps to 
be a military service in accordance with 42 U.S.C. 217;
    (6) The National Oceanic and Atmospheric Administration 
Commissioned Corps.
* * * * *
    4. Section 1614.105 is amended by redesignating paragraph (b) as 
paragraph (b)(1), revising the first sentence of redesignated paragraph 
(b)(1), adding paragraph (b)(2), revising the first sentence of 
paragraph (d) and revising paragraph (f) to read as follows:


Sec. 1614.105  Pre-complaint processing.

* * * * *
    (b)(1) At the initial counseling session, Counselors must advise 
individuals orally and in writing of their rights and responsibilities, 
including the right to request a hearing or an immediate final decision 
after an investigation by the agency in accordance with 
Sec. 1614.108(f), election rights pursuant to Secs. 1614.301 and 
1614.302, the right to file a notice of intent to sue pursuant to 
Sec. 1614.201(a) and a lawsuit under the ADEA instead of an 
administrative complaint of age discrimination under this part, the 
duty to mitigate damages, administrative and court time frames, and 
that only the matter(s) raised in precomplaint counseling (or issues 
like or related to issues raised in pre-complaint counseling) may be 
alleged in a subsequent complaint filed with the agency. * * *
    (2) Counselors shall advise aggrieved persons that they may choose 
between participation in the alternative dispute resolution program 
offered by the agency and the counseling activities provided for in 
paragraph (c) of this section.
* * * * *
    (d) Unless the aggrieved person agrees to a longer counseling 
period under paragraph (e) of this section, or the aggrieved person 
chooses an alternative dispute resolution procedure in accordance with 
paragraph (b)(2) of this section, the Counselor shall conduct the final 
interview with the aggrieved person within 30 days of the date the 
aggrieved person contacted the agency's EEO office to request 
counseling. * * *
* * * * *
    (f) Where the aggrieved person chooses to participate in an 
alternative dispute resolution procedure in accordance with paragraph 
(b)(2) of this section, the pre-complaint processing period shall be 90 
days. If the matter has not been resolved before the 90th day, the 
notice described in paragraph (d) of this section shall be issued.
* * * * *
    5. Section 1614.106 is amended by adding a sentence after the first 
sentence of the introductory text of paragraph (d) to read as follows:


Sec. 1614.106  Individual complaints.

* * * * *
    (d) * * * The agency shall advise the complainant in the 
acknowledgment of the EEOC office and its address where a request for a 
hearing shall be sent. * * *
* * * * *
    6. Section 1614.107 is amended by redesignating paragraphs (a) 
through (h) as paragraphs (a)(1) through (8), redesignating the 
introductory text as paragraph (a) introductory text and revising it, 
revising paragraph (a)(8) and adding new paragraph (a)(9) and paragraph 
(b) to read as follows:


Sec. 1614.107  Dismissals of complaints.

    (a) Prior to a request for a hearing in a case, the agency shall 
dismiss an entire complaint:
* * * * *
    (8) That alleges dissatisfaction with the processing of a 
previously filed complaint; or
    (9) Where the agency strictly applies the criteria set forth in 
Commission decisions and finds a clear pattern of misuse of the EEO 
process.
    (b) Where the agency believes that some but not all of the claims 
in a complaint should be dismissed for the reasons contained in 
paragraphs (a)(1) through (9) of this section, the agency shall notify 
the complainant in writing of its determination, the rationale for that 
determination and that those allegations will not be investigated, and 
shall place a copy of the notice in the investigative file. A 
determination under this paragraph is reviewable by an administrative 
judge if a hearing is requested on the remainder of the complaint, but 
is not appealable until a final decision is issued on the remainder of 
the complaint.
    7. Section 1614.108 is amended by revising paragraph (f) and adding 
a new paragraph (g) to read as follows:


Sec. 1614.108  Investigation of complaints.

* * * * *
    (f) Within 180 days from the filing of the complaint, within the 
time period contained in an order from the Office of Federal Operations 
on an appeal from a dismissal, or within any period of extension 
provided for in paragraph (e) of this section, the agency shall provide 
the complainant with a copy of the investigative file, and shall notify 
the complainant that, within 30 days of receipt of the investigative 
file, the complainant has the right to request a hearing and final 
decision from an administrative judge or may receive an immediate final 
decision pursuant to Sec. 1614.110 from the agency with which the 
complaint was filed.
    (g) Where the complainant has received the notice required in 
paragraph (f) of this section or at any time after 180 days have 
elapsed from the filing of the complaint, the complainant may request a 
hearing by submitting a request for a hearing directly to the EEOC 
office indicated in the agency's acknowledgment letter. The complainant 
shall send a copy of the request for a hearing to the agency EEO 
office. Upon receipt of a request for a hearing, EEOC will request that 
the agency provide copies of the complaint file to EEOC and, if not 
previously provided, the complainant.
    8. Section 1614.109 is amended by revising paragraph (a), 
redesignating paragraphs (b) through (g) as paragraphs (d) through (i), 
adding new paragraphs (b) and (c), revising the introductory text of 
redesignated paragraph (f)(3), in redesignated paragraph (g) removing 
the phrases ``findings and conclusions'' and adding, in their place, 
the words ``final decisions'', adding a new paragraph (g)(4), and 
revising paragraph (i) to read as follows:


Sec. 1614.109  Hearings.

    (a) When a complainant requests a hearing, the Commission shall 
appoint an administrative judge to conduct a

[[Page 8604]]

hearing in accordance with this section. Any hearing will be conducted 
by an administrative judge or hearing examiner with appropriate 
security clearances. Where the administrative judge determines that the 
complainant is raising or intends to pursue issues like or related to 
those raised in the complaint, but which the agency has not had an 
opportunity to address, the administrative judge may remand any such 
issue for counseling in accordance with Sec. 1614.105 or for such other 
processing as ordered by the administrative judge.
    (b) Dismissals. Administrative judges shall dismiss complaints 
pursuant to Sec. 1614.107.
    (c) Offer of resolution. Any time after the initial counseling 
session but more than 30 days prior to the hearing, the agency may make 
an offer of resolution of the complaint to the complainant. The offer 
of resolution shall be in writing and shall include a notice explaining 
the possible consequences of failing to accept the offer. The 
complainant shall have 30 days from receipt of the offer of resolution 
to accept or reject it. If the complainant is represented by an 
attorney when the offer is made and fails to accept an offer of 
resolution, and the final decision on the complaint is not more 
favorable than the offer, then, except where the interest of justice 
would not be served, the complainant shall not receive payment from the 
agency of attorney's fees or costs incurred after the date of rejection 
or the expiration of the 30-day period of the offer of resolution if no 
rejection has been made. An acceptance of an offer must be in writing 
and will be timely if postmarked or received within the 30-day period. 
Where a complainant fails to accept an offer of resolution, an agency 
may make other offers of resolution or either party may seek to 
negotiate a settlement of the complaint at any time.
    (f) * * *
    (3) When the complainant, or the agency against which a complaint 
is filed, or its employees fail without good cause shown to respond 
fully and in timely fashion to an order of an administrative judge, or 
requests for the investigative file, for documents, records, 
comparative data, statistics, affidavits, or the attendance of 
witness(es), the administrative judge shall, in appropriate 
circumstances:
* * * * *
    (g) * * *
    (4) Where the administrative judge determines, even though material 
facts remain in dispute, that there is sufficient information in the 
record to decide the case, that the material facts in dispute can be 
decided on the basis of the written record, that there are no 
credibility issues that would require live testimony in order to 
evaluate a witness' demeanor and that the case lacks merit, the 
administrative judge may issue a final decision without a hearing.
* * * * *
    (i) Final decisions by administrative judges. Unless the 
administrative judge makes a written determination that good cause 
exists for extending the time for issuing a final decision, within 180 
days of receipt by EEOC of a request for a hearing, an administrative 
judge shall issue a final decision on the complaint, and shall order 
appropriate remedies and relief where discrimination is found with 
regard to the matter that gave rise to the complaint. The 
administrative judge shall send copies of the entire record, including 
the transcript, and the final decision to the parties by certified 
mail, return receipt requested. The final decision shall contain notice 
of the right of either party to appeal to the Commission, notice of the 
right of the complainant to file a civil action in Federal district 
court, the name of the proper defendant in any such lawsuit and the 
applicable time limits for appeals and lawsuits. A copy of EEOC Form 
573 shall be attached to the decision.
    9. Section 1614.110 is amended by revising the title and first and 
second sentence to read as follows:


Sec. 1614.110  Final decisions by agencies.

    Within 60 days of receiving notification that a complainant has 
requested an immediate decision from the agency, or within 60 days of 
the end of the 30-day period for the complainant to request a hearing 
or an immediate final decision where the complainant has not requested 
either a hearing or a decision, the agency shall issue a final 
decision. The final decision shall consist of findings by the agency on 
the merits of each issue in the complaint, or, as appropriate, the 
rationale for dismissing any claims in the complaint and, when 
discrimination is found, appropriate remedies and relief in accordance 
with subpart E of this part.* * *
    10. Section 1614.204 is amended by revising paragraph (b), removing 
the words ``recommend that the agency'' from paragraphs (d)(2), (d)(3), 
(d)(4), and (d)(5), removing the word ``recommend'' and replacing it 
with the word ``decide'' in paragraph (d)(6), revising paragraph 
(d)(7), paragraph (e)(1), paragraph (g)(2) and paragraph (l)(3) to read 
as follows:


Sec. 1614.204  Class complaints.

* * * * *
    (b) Pre-complaint processing. An employee or applicant who wishes 
to file a class complaint must seek counseling and be counseled in 
accordance with Sec. 1614.105. A complainant may move for class 
certification at any reasonable point in the process when it becomes 
apparent that there are class implications to the claim raised in an 
individual complaint. If a complainant moves for class certification 
after completing the counseling process contained in Sec. 1614.105, no 
additional counseling is required.
* * * * *
    (d) * * *
    (7) The administrative judge shall transmit his or her decision to 
accept or dismiss a complaint to the agency and the agent. The 
dismissal of a class complaint shall inform the agent either that the 
complaint is being filed on that date as an individual complaint of 
discrimination and will be processed under subpart A or that the 
complaint is also dismissed as an individual complaint in accordance 
with Sec. 1614.107. In addition, it shall inform the agent of the right 
to appeal the dismissal of the class complaint to the Office of Federal 
Operations or to file a civil action and shall include EEOC Form 573, 
Notice of Appeal/Petition.
    (e) (1) Within 15 days of receiving notice that the administrative 
judge has accepted a class complaint or a reasonable time frame 
specified by the administrative judge, the agency shall use reasonable 
means, such as delivery, mailing to last known address or distribution, 
to notify all class members of the acceptance of the class complaint.
* * * * *
    (g) * * *
    (2) The complaint may be resolved by agreement of the agency and 
the agent at any time as long as the administrative judge finds the 
agreement to be fair and reasonable.
* * * * *
    (l) * * *
    (3) When discrimination is found in the final decision and a class 
member believes that he or she is entitled to individual relief, the 
class member may file a written claim with the head of the agency or 
its EEO Director within 30 days of receipt of notification by the 
agency of its final decision. The claim must include a specific, 
detailed showing that the claimant is a class member who was affected 
by a personnel action or matter resulting from the discriminatory 
policy or practice, and that this discriminatory

[[Page 8605]]

action took place within the period of time for which the agency found 
class-wide discrimination in its final decision. Where a finding of 
discrimination against a class has been made, there shall be a 
presumption of discrimination as to each member of the class. The 
agency must show by clear and convincing evidence that any class member 
is not entitled to relief. The period of time for which the agency 
finds class-wide discrimination shall begin not more than 45 days prior 
to the agent's initial contact with the Counselor and shall end not 
later than the date when the agency eliminates the policy or practice 
found to be discriminatory in the agency decision. The agency shall 
issue a final decision on each such claim within 90 days of filing. 
Such decision must include a notice of the right to file an appeal or a 
civil action in accordance with subpart D of this part and the 
applicable time limits.
    11. Section 1614.401 is amended by redesignating paragraphs (b) 
through (d) as paragraphs (c) through (e), revising paragraph (a) and 
adding a new paragraph (b) to read as follows:


Sec. 1614.401  Appeals to the Commission.

    (a) A complainant may appeal an agency's final decision or the 
agency's dismissal of a complaint.
    (b) A complainant or an agency may appeal an administrative judge's 
final decision or an administrative judge's dismissal of a complaint.
* * * * *
    12. Section 1614.403 is revised to read as follows:


Sec. 1614.403  How to appeal.

    (a) The complainant, agency, agent, grievant or individual class 
claimant (hereinafter appellant) must file an appeal with the Director, 
Office of Federal Operations, Equal Employment Opportunity Commission, 
at P.O. Box 19848, Washington, DC 20036, or by personal delivery or 
facsimile. The appellant should use EEOC Form 573, Notice of Appeal/
Petition, and should indicate what is being appealed.
    (b) The appellant shall furnish a copy of the appeal to the 
opposing party at the same time it is filed with the Commission. In or 
attached to the appeal to the Commission, the appellant must certify 
the date and method by which service was made on the opposing party.
    (c) If an appellant does not file an appeal within the time limits 
of this subpart, the appeal will be untimely and shall be dismissed by 
the Commission.
    (d) Where an appellant appeals a dismissal, any statement or brief 
in support of the appeal must be submitted to the Office of Federal 
Operations within 30 days of receipt of the dismissal. Where an 
appellant appeals a final decision, any statement or brief in support 
of the appeal must be submitted within 30 days of filing the notice of 
appeal.
    (e) The agency must submit the complaint file to the Office of 
Federal Operations within 30 days of notification that the complainant 
has filed an appeal or within 30 days of submission of an appeal by the 
agency.
    (f) Any statement or brief in opposition to an appeal must be 
submitted to the Commission and served on the opposing party within 30 
days of receipt of the statement or brief supporting the appeal.
    13. Section 1614.404 is amended by adding a new paragraph (c) to 
read as follows:


Sec. 1614.404  Appellate procedure.

* * * * *
    (c) When either party to an appeal fails without good cause shown 
to comply with the requirements of this section or to respond fully and 
in timely fashion to requests for information, the Office of Federal 
Operations shall, in appropriate circumstances:
    (1) Draw an adverse inference that the requested information would 
have reflected unfavorably on the party refusing to provide the 
requested information;
    (2) Consider the matters to which the requested information or 
testimony pertains to be established in favor of the opposing party;
    (3) Issue a decision fully or partially in favor of the opposing 
party; or
    (4) Take such other actions as appropriate.
    14. Section 1614.405 is amended by revising the third sentence of 
paragraph (a) and revising paragraph (b) to read as follows:


Sec. 1614.405  Decisions on appeals.

    (a) * * * The decision on an appeal from a final decision shall be 
based on a de novo review, except that the review of the factual 
findings in a decision by an administrative judge issued pursuant to 
Sec. 1614.109(h) shall be based on a substantial evidence standard of 
review. * * *
    (b) A decision issued under paragraph (a) of this section is final 
within the meaning of Sec. 1614.408 unless the Commission reconsiders 
the case. A party may request reconsideration within 30 days of receipt 
of a decision of the Commission, which the Commission in its discretion 
may grant, if the party demonstrates that:
    (1) The appellate decision involved a clearly erroneous 
interpretation of material fact or law; or
    (2) The decision will have a substantial impact on the policies, 
practices or operations of the agency.
    15. Section 1614.407 is removed and sections 1614.408 through 
1614.410 are redesignated sections 1614.407 through 1614.409.
    16. Section 1614.501 is amended by revising the last sentence of 
the introductory text of paragraph (e)(1), and revising paragraph 
(e)(1)(iv) to read as follows:


Sec. 1614.501  Remedies and relief.

* * * * *
    (e) Attorney's fees or costs--(1) * * * In a final decision, the 
agency, administrative judge, or Commission may award the applicant or 
employee reasonable attorney's fees or costs (including expert witness 
fees) incurred in the processing of the complaint.
* * * * *
    (iv) Attorney's fees shall be paid for all services performed by an 
attorney, provided that the attorney provides reasonable notice of 
representation to the agency, administrative judge or Commission. 
Written submissions to the agency that are signed by the representative 
shall be deemed to constitute notice of representation.
* * * * *
    17. Section 1614.502 is amended by revising the first sentence of 
paragraph (a), revising paragraph (b) introductory text and paragraph 
(b)(2) and adding a new paragraph (b)(3) to read as follows:


Sec. 1614.502  Compliance with final Commission decisions.

    (a) Relief ordered in a final decision on appeal to the Commission 
is mandatory and binding on the agency except as provided below. * * *
    (b) Notwithstanding paragraph (a) of this section, when the agency 
requests reconsideration and the case involves removal, separation, or 
suspension continuing beyond the date of the request for 
reconsideration, and when the decision orders retroactive restoration, 
the agency shall comply with the decision to the extent of the 
temporary or conditional restoration of the employee to duty status in 
the position specified by the Commission, pending the outcome of the 
agency request for reconsideration.
* * * * *
    (2) When the agency requests reconsideration, it may delay the 
payment of any amounts ordered to be paid to the complainant until 
after the request for reconsideration is resolved. If the agency delays 
payment of any

[[Page 8606]]

amount pending the outcome of the request to reconsider and the 
resolution of the request requires the agency to make the payment, then 
the agency shall pay interest at the rate set by the IRS for the 
underpayment of taxes compounded quarterly from the date of the 
original appellate decision until payment is made.
    (3) The agency shall notify the Commission and the employee in 
writing at the same time it requests reconsideration that the relief it 
provides is temporary or conditional and, if applicable, that it will 
delay the payment of any amounts owed but will pay interest as 
specified in paragraph (b)(2) of this section. Failure of the agency to 
provide notification will result in the dismissal of the agency's 
request.
* * * * *
[FR Doc. 98-4165 Filed 2-19-98; 8:45 am]
BILLING CODE 6570-01-P