[Federal Register Volume 86, Number 9 (Thursday, January 14, 2021)]
[Rules and Regulations]
[Pages 2974-2986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00701]
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EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
29 CFR Parts 1601 and 1626
RIN 3046-AB19
Update of Commission's Conciliation Procedures
AGENCY: Equal Employment Opportunity Commission
ACTION: Final rule.
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SUMMARY: The Equal Employment Opportunity Commission (EEOC or
Commission) is amending its procedural rules governing the conciliation
process to bring greater transparency and consistency to the
conciliation process and help ensure that the Commission meets its
statutory obligations regarding conciliation.
DATES: This rule will become effective February 16, 2021. However, this
Rule shall only apply to conciliations for charges for which a Letter
of Determination invitation to engage in conciliation has been sent to
respondent on or after the effective date.
FOR FURTHER INFORMATION CONTACT: Andrew Maunz, Legal Counsel, Office of
Legal Counsel at [email protected]. Requests for this document in
an alternative format should be made to the EEOC's Office of
Communications and Legislative Affairs at (202) 663-4191 (voice) or
(202) 663-4494 (TTY).
SUPPLEMENTARY INFORMATION:
Introduction
On October 9, 2020, the Commission published a Notice of Proposed
Rulemaking (NPRM) outlining proposed revisions designed to update the
Commission's conciliation procedures for charges alleging violations of
Title VII of the Civil Rights Act of 1964 (Title VII), the Americans
with Disabilities Act (ADA), the Genetic Information Nondiscrimination
Act (GINA), and/or the Age Discrimination in Employment Act (ADEA). 85
FR 64079. The NPRM described the Commission's obligations to engage in
conciliation to resolve these charges, as articulated in Title VII and
other statutes and explained by the Supreme Court in Mach Mining, LLC
v. EEOC, 575 U.S. 480 (2015).
Conciliation is an essential component of Title VII's statutory
framework that Congress designed to prohibit, identify, and eradicate
discriminatory employment practices. See Alexander v. Gardner-Denver,
Co., 415 U.S. 36, 44 (1974); Ford Motor Co. v. EEOC, 458 U.S. 219, 228
(1982) (``[t]he `primary objective' of Title VII is to bring employment
discrimination to an end.''); Griggs v. Duke Power Co., 401 U.S. 424,
429-30 (1971) (the objective of Title VII was to break down
discriminatory employment practices that ``favor an identifiable group
. . . over other employees''). Rather than simply afford victims a
cause of action for damages as in other statutory regimes, Congress
settled on a framework that ``preferred'' cooperation and voluntary
compliance, over litigation. Mach Mining, 575 U.S. at 486 (citation
omitted). The Supreme Court explained that Title VII was designed to
encourage `` `. . . `voluntary compliance' and ending discrimination
far more quickly than could litigation proceeding at its often
ponderous pace.'' Ford Motor, 458 U.S. at 228. ``Delays in litigation
unfortunately are now commonplace, forcing the victims of
discrimination to suffer years of underemployment or unemployment
before they can obtain a court order awarding them the jobs unlawfully
denied them.'' Id. Conciliation was designed--and remains--a critical
component of the Commission's mission to eliminate discriminatory
employment practices, if possible, without litigation.
The Commission issued conciliation regulatory procedures in 1977
and has not changed them significantly since that time. See 85 FR at
64079. The NPRM described various challenges confronting the
Commission's conciliation program. Notably, approximately one-third of
respondents who receive a reasonable cause finding refuse to
participate in conciliation. Overall, more than half of the cases in
which the Commission finds reasonable cause that discrimination
occurred are not resolved through conciliation. Id. at 64080.\1\ In
order to increase the effectiveness of the EEOC's conciliation program
and more frequently achieve the agency's statutory mission, the NPRM
proposed certain targeted and straightforward revisions to the
Commission's conciliation procedures. See 85 FR at 64083-84. The
primary objective of these revisions is to make conciliation a more
powerful mechanism to halt and remedy unlawful discriminatory
employment practices in a greater percentage of charges without
litigation--either by the Commission or by employees. The Commission
aims to accomplish this with these revisions by implementing
requirements regarding the information that it must provide in
preparation for and during conciliation, particularly with respect to
its findings and demands. At their core, they ensure the Commission
will provide certain information--the essential facts and the law
supporting the claim, findings, and demands. Compliance with these
requirements should put beyond reasonable dispute in most, if not all,
cases the Commission's compliance with Mach Mining. More important, it
will facilitate as a matter of course in all cases respondents'
identification of the specific discriminatory practices at issue. This
will directly facilitate voluntary prospective remedial action
regarding the policy or practice, notwithstanding respondents' position
during conciliation or subsequent litigation. And by eliminating such
discriminatory practices without litigation, the Commission
accomplishes its primary statutory objective in conciliation to purge
unlawful discrimination in employment. Moreover, by providing
information regarding the basis for the Commission's
[[Page 2975]]
finding and demands, the respondent will be able to more effectively
assess its potential liability. This increased information will enhance
the conciliation process for all parties to conciliation and may focus
discussions in a way more likely to achieve a meeting of the minds or,
alternatively, clearly distill areas of disagreement that may aid the
Commission in subsequent litigation.
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\1\ The Commission's failure to conciliate cases may have
significant ramifications. Each year, failed conciliations leave
many victims of discrimination to fend for themselves. As explained
below, too often many of these individuals do not commence an action
in court because they cannot obtain an attorney and the prospect of
litigating is too daunting. Many of those who litigate do so without
counsel, potentially placing victims at a disadvantage. Even those
represented by counsel may not prevail--and those who do obtain
relief sought may not receive it until several years after the
discrimination at issue. By conciliating more cases, the Commission
will be getting more victims relief, preventing more future
discrimination, and ensuring that relief is more timely obtained.
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The Commission recognizes that currently, certain information is
generally provided to employers prior to a cause finding and in the
Letter of Determination, all of which occur prior to conciliation. The
Commission also recognizes that the respondent is generally the holder
of its own records and information. This rule is not meant to replace
those disclosures or duplicate them,\2\ but instead to ensure that the
information the Commission provides about its position and findings
enables respondents to properly evaluate their potential liability and
the Commission's settlement offer, and ultimately, result in
respondents becoming more likely to participate and resolve the charge.
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\2\ In many instances, these previous disclosures will satisfy
the Commission's disclosure requirements under the final rule
because the rule only requires disclosure of the information if the
Commission has not already done so.
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The comment period for the NPRM closed on November 9, 2020. The
Commission received a total of 58 comments in response to the NPRM--15
in favor, 33 in opposition, and 10 non-responsive. Commenters on both
sides of the proposal included organizations and individuals. The
Commission also received a comment from members of Congress in support
of the rule. Former officials and employees of the Commission also
submitted comments against the proposed changes. At least one commenter
submitted two comments.
As explained in greater detail below, the Commission has carefully
considered each of the comments it received. Based on these
submissions, the Commission is publishing this final rule that, while
similar to the proposed rule in most respects, nevertheless contains
certain modifications, which are explained below.
Comments in Support of Proposal and the Commission's Responses
Several commenters agreed that there are challenges in the
Commission's conciliation practices and procedures as recounted in the
proposed rule. Specifically, they echoed and illustrated the ways in
which the Commission's procedures and practices complicated and
prevented the communication necessary to conciliate charges and stop
employment practices that the Commission has determined after an
investigation to be discriminatory. Commenters highlighted illustrative
examples of conciliations in which the commenters allege the Commission
issued large demands, with minimal explanation and insufficient support
for the Commission's position. The commenters noted that in these and
similar circumstances, the Commission's communications did not describe
the act or practice alleged to be discriminatory, why it violated
federal law, and which person or class was unlawfully harmed. 42 U.S.C.
2000e-5(b); Mach Mining, 575 U.S. at 488. The Commission agrees that
without this basic information, the respondent may not be able to
evaluate the merit of the Commission's position or demand, weigh the
demand against the risk and expense of possible litigation and take
directed action to ameliorate the problem. Even more important, a
demand without commensurate support does not ``inform the employer
about the specific allegations'' in a way that ``endeavors to achieve
voluntary compliance.'' Mach Mining, 575 U.S. at 488, 494. Indeed, it
is axiomatic that a party cannot adequately evaluate a claim or related
demand without understanding the factual and legal basis for it. A lack
of information can also impact the employer's ability to evaluate its
practices or provide potentially helpful information to the Commission
that may facilitate conciliation or, at a minimum, inform the
Commission's subsequent litigation assessment. In the commenters' view,
this short-circuits the conciliation process before meaningful
communication between the parties even commences. Without this
information, a respondent cannot engage in this analysis and determine
whether the offer presented by the EEOC is the best way to resolve the
case under the circumstances.
Commenters emphasized the importance of a thorough understanding of
the opposing party's position during discussions aimed at reaching a
resolution prior to litigation. As one commenter put it, the lack of
factual and legal support for a demand or response leaves both the
Commission and the employer with an ``asymmetrical view'' of their own
position and a lack of understanding of the other side's position. One
law firm asserted that the ubiquity of the EEOC's ``no facts'' strategy
during conciliation indicates it is deeply engrained in the agency's
culture. In the commenter's experience, the dearth of factual and legal
support for demands frequently implies weaknesses in the underlying
reasonable cause determinations. As another law firm put it: ``[w]hen
the conciliation process becomes simply a series of demands,
unsupported by relevant facts or legal authority, it is at best a
futile and resource-consuming exercise, and at worst, an attempt to
bring the weight of the federal government to bear on and extort an
employer with little proof of wrongdoing.''
Members of Congress who submitted comments highlighted that on
several occasions they had identified issues with the Commission's
conciliation process; these issues were distinct from the examples
provided by law firm and industry commenters.
The commenters in favor of the proposed rule agreed that the
Commission's proposal addresses the principal challenges in its
conciliation procedures and processes in ways that are likely to result
in more meaningful conciliations and, ultimately, more agreements.
Specifically, commenters stated that the proposed changes would
``entice'' more respondents to participate in conciliation. Commenters
also noted that establishing these requirements through regulations, as
opposed to through sub-regulatory guidance or employee training, would
bring more certainty to the conciliation process. As articulated by the
Ranking Member of the House Committee on Education and Labor, ``[t]hese
commonsense requirements will increase transparency in the conciliation
process and facilitate quicker resolutions of charges as the employer
will have more information about the underlying charge, EEOC's
position, and the employer's legal obligations.''
Commission Response: The Commission recognizes the importance of an
effective conciliation program in its mission to identify and eradicate
discriminatory employment actions and practices and, in so doing,
obtain relief for its victims without the delay, expense, and
uncertainty of possible litigation. The Commission also appreciates the
place of primacy that conciliation holds in Title VII's statutory
framework. By providing information concerning the factual and legal
bases for its position for charges where it has found reasonable cause,
the Commission believes it places itself in a stronger position to
achieve conciliation in more cases--eliminating a greater number of
unlawful employment practices and obtaining relief for victims of
discrimination
[[Page 2976]]
earlier than it can through litigation. By providing such information,
the Commission can alleviate criticisms that demands are excessive or
not supported by the evidence and the law. Providing this information
should facilitate respondents' identification and redress of
discriminatory practices regardless of the outcome of conciliation.
Provided with this information, the Commission believes that a greater
number of respondents will be more likely to engage in the conciliation
process and comply voluntarily to resolve the charge. And by employing
its revised conciliation procedures, the Commission will satisfy the
requirements of 42 U.S.C. 2000e-5(b), as elucidated in Mach Mining. The
Commission hopes that this final rule will reduce collateral attacks on
the conciliation process during Commission litigation. In the event of
such a challenge, the Commission will be able to demonstrate that it
has met the conciliation requirements of the statute by submitting an
affidavit stating that it has taken the required steps. See Mach
Mining, 575 U.S. at 494-95. Ultimately, the Commission has concluded
that the final rule will improve its ability to carry out in more cases
its statutory mandate to eliminate discriminatory employment practices
and achieve relief for workers ``far more quickly than could litigation
proceeding at its often ponderous pace.'' Ford Motor Co., 458 U.S. at
228.
As noted above, by improving the Commission's effectiveness to
carry out its conciliation responsibilities, the final rule also
affords considerable benefits to charging parties. As the EEOC is only
able to litigate a small fraction of cases that fail conciliation, in
most cases where conciliation fails, workers must fend for themselves
in court to obtain relief. This means that charging parties must file
and litigate their own lawsuits to secure any relief. Many choose not
to sue. And, as several commenters noted, those that decide to seek
legal action may be in the position of having to litigate without
counsel. Even those who obtain counsel frequently fail to obtain
significant relief and, if they prevail, may wait years for discovery,
motions, trial, and appeals to conclude. By resolving more cases
through conciliation, more victims of discrimination will obtain relief
than would have otherwise and even the ones that would have obtained
relief through litigation eventually, will receive relief more quickly,
without incurring the expense and risk of litigation.
Suggestions by Commenters: Several commenters who supported the
proposed rule also suggested what they saw as improvements. The
Commission addresses each of the suggestions below:
1. Extend the time period by which respondents must respond to the
Commission's conciliation offer beyond fourteen days: Several
commenters stated that the Commission should give respondents more than
14 days to respond, especially in certain complex and systemic cases.
Commission response: The Commission declines to change the language
or the requirement as it was originally proposed in sections
1601.24(d)(5) and 1626.12(b)(5) because the Commission concludes that
these sections contain sufficient flexibility to allow longer response
periods in appropriate cases. The proposed rule stated that respondents
will be provided ``at least 14 days.'' There will certainly be cases
where the Commission extends this period beyond 14 days, and the
language allows the Commission to make this determination on a case-by-
case basis. As a result, the Commission leaves unchanged the proposed
language in the final rule.
2. Allow anonymity in circumstances only where charging parties or
aggrieved individuals are at risk of retaliation: Several commenters
urged the Commission to limit the charging parties or aggrieved
individuals to whom it grants anonymity in conciliation under sections
1604.24(d)(1) and 1626.12(b)(1). Specifically, commenters suggested
that the Commission grant anonymity only to current employees of the
respondent because they, unlike former employees or failed applicants,
are at risk of retaliation. Commenters indicated that it is often
difficult to respond to the Commission's findings of discrimination,
particularly in individual cases, when they do not know the identity or
circumstances of a particular victim. Although conciliation is not
intended to provide an opportunity to challenge the cause finding, one
commenter noted that that a respondent could face an allegation that it
did not hire an individual because of her race and that if the identity
of the individual is withheld, it would not be able to determine if
there were other reasons the individual was not hired, such as failing
to show up for her interview.
Commission response: The Commission acknowledges that it in some
cases it may be difficult for respondents to evaluate the merits of the
Commission's conciliation proposal if the respondent is unaware of the
identity of the victim(s). Respondents do receive the name of the
charging parties when they are notified of the charge soon after it is
filed. Some commenters suggest that anonymity be limited to only
current employees recognizing their concern about potential
retaliation. However, the Supreme Court has noted that former, current,
and prospective employees are protected from retaliation. See Robinson
v. Shell Oil Co., 519 U.S. 337, 345-46 (1997). Therefore, the
Commission does not adopt this proposed change.
3. Requiring the charging party to participate in conciliation: One
commenter suggested that the charging party should be required to
participate in the conciliation, similar to a mediation.
Commission response: The Commission declines to adopt this proposed
change. In conciliation, the Commission does not merely serve as the
advocate of the charging party or aggrieved individual. Rather, the
Commission's core objective is to vindicate the public's interest and
eliminate discriminatory employment policies and practices. In some
cases, but not all, this will achieve relief for the charging party as
well as other workers and potential employees. Given these varied
interests, conciliations take different forms and the charging party's
participation varies from case to case for a myriad of reasons. The
Commission believes it is important to the Commission's ability to
achieve the broader purposes of conciliation to preserve its
flexibility regarding the involvement of the charging party in each
case. See EEOC v. Waffle House, Inc., 534 U.S. 279, 291 (2002) (``The
statute clearly makes the EEOC the master of its own case and confers
on the agency the authority to evaluate the strength of the public
interest at stake.''). As a result, the Commission declines to mandate
the charging party's participation in every instance.
4. Commission must respond to all counteroffers and affirmative
defenses: Multiple commenters stated that the rule should require the
Commission to respond to all counteroffers a respondent makes and that
the Commission must respond to all affirmative defenses that are raised
during conciliation.
Commission response: Conciliation is, first and foremost, the means
Congress ``preferred'' the Commission to use to target and eliminate
discrimination in employment. Indeed, Congress did not afford the
Commission authority to commence litigation until 1972. Conciliation is
not a rigid, structured, bargaining framework. As the Supreme Court
made clear in Mach Mining, Congress afforded the Commission wide
[[Page 2977]]
latitude to pursue voluntary compliance with a statutory provision,
``every aspect'' of which ``smacks of flexibility.'' Mach Mining, 575
U.S. at 492; 42 U.S.C. 2000e-5(b). And like the Supreme Court in that
case, the Commission declines to infuse the conciliation process with a
rigid code of rules that handcuffs the agency by limiting the broad
strategic leeway Title VII affords to it to execute its mission. See
Mach Mining, 575 U.S. at 492 (rejecting the petitioner's ``proposed
code of conduct'' and ``bargaining checklist'' because ``Congress left
to the EEOC such strategic questions about whether to make a bare-
minimum offer, to lay all its cards on the table, or to respond to each
of an employer's counter-offers, however far afield.''). The Commission
meets its statutory obligation by providing the basic factual and legal
information for the respondent to evaluate the claim and identify the
discriminatory action or practice. But once this is accomplished, the
Commission retains ``discretion over the pace and duration of
conciliation efforts, the plasticity or firmness of its negotiating
positions, and the content of its demands for relief.'' Id. The
Commission declines to adopt such proposals because they damage the
flexibility critical to its ability to conciliate claims without any
concomitant benefit.
5. Disclosures should be made in writing: In the NPRM, the
Commission solicited comments on whether the disclosures described in
the proposed rule should be made in writing. 85 FR at 64081. Several
commenters advocated written disclosures in order to ensure clarity.
Significantly, one commenter contended that written disclosure of all
material should be required so that all parties have a complete and
unambiguous understanding of the Commission's position. Another
commenter explained that written disclosures are more effective than
mere oral exchanges in the negotiation process. This commenter noted
that if the parties are required to communicate and exchange
information in writing, it is less likely that the parties will be
unclear as to the other parties' positions and information exchanged
during the process.
Commission response: The Commission agrees that written disclosures
help ensure clarity throughout the conciliation process. The Commission
further agrees that providing information in writing will ensure full
transparency of the conciliation process. Exchanging information in
writing, where appropriate, eliminates confusion and promotes more
accurate and complete information regarding the relevant issues. For
these reasons, the Commission will keep the ``written'' reference that
was in the NRPM and clarify that the other disclosures be in writing.
However, for sections 1601.24(d)(3) and 1626.12(b)(3), the requirement
that the disclosure be in writing shall apply only to the initial
conciliation proposal made by the EEOC. In order to preserve the
Commission's flexibility in conciliation, in recognition of the fact
that demands are made at various times in a sequence of offers and
counteroffers, and in order to avoid the increased burden on its staff
to prepare a written explanation to accompany each change of position,
the Commission has determined that disclosures explaining the basis for
its requests for relief for subsequent offers and counteroffers need
not be in writing and may be issued orally.
6. Mediators should handle conciliation, not investigators: One
commenter urged the Commission to assign mediators to handle
conciliations instead of investigators.
Commission response: The Commission disagrees with this comment and
shall not adopt it. As the Commission has maintained throughout this
process, it is not looking fundamentally to change its conciliation
structure with this rule. Investigators remain in the best position to
handle conciliation discussions as they are familiar with the case and
the issues surrounding it. Furthermore, the process and purpose of
conciliation is different than mediation. Accordingly, the Commission
rejects this proposal.
7. The Commission should disclose additional information: A number
of commenters stated that the Commission should make certain
disclosures under sections 1601.24(d)(1), such as the identity of
harassers or at-fault supervisors and potential class sizes.
Commission response: The Commission agrees that these disclosures
will allow respondents to better assess their potential liability by
identifying discriminatory practices, policies, and actions, and as a
result advance the Commission's conciliation efforts to identify and
eliminate discriminatory employment practices. However, the identities
of harassers or supervisors may not be known at the time of
conciliation. Similarly, sometimes class size may not have been fully
determined. Accordingly, the final rule makes the disclosures
references in the last two sentences of Sec. 1601.24(d)(1) mandatory,
only if known to the Commission.
8. Establish a ``good faith'' standard: A few commenters requested
that the Commission impose a ``good faith'' standard on itself during
conciliation.
Commission Response: At the outset, the Commission rejects the
notion that it does not undertake its statutory responsibilities in
good faith. All Commission employees are expected to approach
conciliation in good faith and endeavor to achieve conciliation and its
purposes within the framework of the Commission's procedures. In those
situations where a respondent may disagree with the Commission's
strategy in a particular case or a hard line taken in discussions does
not mean that Commission personnel are not acting in good faith. The
Commission declines to impose upon itself a standard as suggested that
could open a door to collateral litigation. For these reasons the
Commission declines to adopt such a standard, preferring the
straightforward approach as updated by the final rule.
9. Alter the privilege standard: Several commenters requested that
the Commission revise provisions concerning privilege contained in
sections 1601.24(e) and 1626.12(c). Specifically, these commenters
argued that the Commission should preclude itself from claiming
privilege on the underlying facts it gathers and limiting the
discretion of Commission employees in identifying privileged material.
Commission response: The Commission declines to make specific
statements regarding privilege beyond that which is set forth in the
proposed rule. The Commission will continue to claim all privileges to
which it is entitled by law. The Commission declines to amend the rule
to outline specific criteria for employees to follow concerning
assertions of privilege.
10. Confidentiality of conciliations: Multiple commenters asked
that the Commission prohibit itself from seeking publication of the
conciliation, through terms in the conciliation agreement. One
commenter explains that, in their experience, it is common for the
Commission to require, as a condition of successful conciliation, that
a respondent agree to waive confidentiality and allow the Commission to
issue a public press release announcing some or all of the terms of the
parties' agreement. The commenter contends that this serves not only to
deter employers from entering conciliation at the outset but can serve
to lead a case that might otherwise be resolved via conciliation to
instead fail to be resolved in conciliation.
Commission response: The Commission will not make this change.
[[Page 2978]]
Section 706 of Title VII clearly requires approval to disclose
information concerning conciliation. 42 U.S.C. 2000e-5(b) (``Nothing
said or done during and as a part of such informal endeavors may be
made public by the Commission, its officers or employees, or used as
evidence in a subsequent proceeding without the written consent of the
persons concerned.''). As the Commission has explained, conciliation is
a ``favored'' method to identify and eliminate illegal discrimination
in employment. Publication of conciliation results--or certain elements
of those results--often furthers this objective. There are valid
reasons for the Commission to seek approval to publicize certain
successful agreements and the Commission will continue to do so where
appropriate.
11. Limit disclosure of individual's information to another
aggrieved individual: Some commenters were concerned that sections
1601.24(f) and 1626.12(d) would result in disclosure of information
about other victims to the charging party or to other aggrieved
individuals that may violate a victim's privacy.
Commission response: The Commission agrees with this concern and
has included language in the rule that information may be shared with
charging parties ``except for information about another charging party
or individual'' to ensure that information about an individual is not
disclosed to another charging party or aggrieved individual. Although
objected to by some commenters who opposed the rule, the Commission
will not be taking out the ``upon request'' language regarding
disclosures to charging parties. It is important for the Commission to
maintain its discretion and flexibility with how it engages with
aggrieved individuals during the conciliation process. Moreover, the
burden on staff to provide this information to all identified aggrieved
parties would be substantial in class cases.
12. Commission should always make initial offer: One commenter
advocated a requirement that the Commission always make the initial
offer in conciliation.
Commission Response: The Commission will not add this requirement
to the final rule. Although the Commission agrees that often it is
appropriate for the Commission to make the initial offer in
conciliation, this is not always the case. There are circumstances in
which a respondent may prefer to make the initial offer or where such
an outcome is otherwise appropriate or more likely to secure terms
``acceptable to the Commission.'' 42 U.S.C. 2000e-5(f)(1). The
imposition of such a procedural requirement could operate to impede the
Commission's ability to execute this critical statutory obligation to
eliminate unlawful discriminatory practices. Therefore, the Commission
declines to make this change.
13. Provide more details to support demands for monetary damages:
Several commenters contend that the Commission should require more
explanation for the basis of its damages requested in conciliation. One
commenter argues that the Commission will often take the position with
respect to compensatory or punitive damages that a charging party is
entitled to the maximum statutory cap on compensatory and punitive
damages from the start. Consequentially, the commenter urges the
Commission to make clear that an initial offer should not routinely
rely on the maximum statutory damages cap in an attempt to leverage a
higher final settlement. Likewise, another commenter echoes this
sentiment and states that the final rule should provide that merely
reciting the statutory maximums for compensatory or punitive damages
does not satisfy the rule's requirements.
Commission Response: The Commission believes that the descriptions
provided in sections 1601.24(d)(3) and 1626.12(b)(3) in the NPRM are
sufficient because the language covers all requests for damages and
relief, including punitive damages. Under the final rule, whatever the
Commission's offer--including if it is the statutory cap--must be
accompanied by an explanation based on the facts of the case.
Furthermore, the commenters' suggestions risk taking away the
flexibility that the Commission is seeking to maintain while also
increasing transparency in conciliation.
14. Add language about providing funds to third parties: One
commenter suggested adding language to the rule that would expressly
encourage terms allowing distribution of excess settlement funds to
third parties, such as charities.
Commission response: The Commission declines to add this provision.
While these type of clauses may be appropriate in certain
circumstances, the Commission is aware that they have recently been
subject to greater scrutiny. For these reasons, and to ensure maximum
flexibility in conciliation and avoid unnecessary encumbrances on its
discretion, the Commission concludes that it would be inappropriate to
include such a provision in its regulations. See Frank v. Gaos, 139 S.
Ct. 1041 (2019).
Comments Opposing the Rule Change and the Commission's Responses
The EEOC also received comments opposing the rule change. These
comments included concerns about the length of the comment period,
particularly during the COVID-19 pandemic; whether the rule was
premature in light of a pilot program; whether the rule favored
employers over workers; whether the rule would undermine the
Commission's ability to prevent and remedy discrimination; the rule's
potential economic impact; the rule's relationship to the Mach Mining
case; and whether the Commission sufficiently justified the rule's
impact on its enforcement mission.
Comments Regarding the Length of the Comment Period: Several
commenters claimed that a 30-day comment period was too short and asked
that it be extended, some citing Executive Order 13563 and arguing that
it provides comment periods should generally be at least 60 days.
Others suggested that a short time period deprives the public of a
sufficient opportunity to weigh in, citing the COVID-19 pandemic.
Commission Response: The Administrative Procedure Act (APA)
requires that agencies give ``interested persons an opportunity to
participate'' in rulemaking, but it does not establish specific time
periods in which a rule must be open for public comment. 5 U.S.C.
553(c). Neither does Executive Order 13563, which provides that an
agency ``afford the public a meaningful opportunity to comment through
the internet on a proposed regulation, with a comment period that
should generally be at least 60 days.'' The language of the APA and
Executive Order 13563 anticipates that some rules are extensive and
complex, running scores or hundreds of pages in the Federal Register;
others are far less so. As a result, the ``60 days'' benchmark is
neither mandatory nor necessarily appropriate for all rules. Here, as
with all EEOC rulemakings, the Office of Management and Budget reviewed
the NPRM before publication and agreed that the 30-day comment period
was appropriate in light of the contents of the proposed rule.\3\ The
comment period must afford the public a meaningful opportunity to
comment. This has occurred. The depth and breadth of the substantive
comments the
[[Page 2979]]
Commission received evidences that interested persons had a meaningful
opportunity to comment.
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\3\ Similarly, Section 6(a) of Executive Order 12866 states that
in ``most cases'' the comment period should be ``not less than 60
days.''
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In addition, the Commission conducted a meeting that called
attention to the proposed rule. Specifically, on August 18, 2020, the
Commission held a public meeting to discuss and vote on the NPRM.
Notice of the meeting was published in the Federal Register which
identified the topic of the meeting. The public was invited to listen
to the meeting live. Press reports before and after the meeting
reported the discussion of the proposed rule. The transcript of the
meeting was timely uploaded on to the EEOC website.\4\ As a result, the
public had notice of this proposed rule from several sources and ample
opportunity to research and evaluate the proposal, beginning nearly two
months before the NPRM was published in the Federal Register. The
Commission concludes that the length of the comment period on this rule
was appropriate and declines to extend it.
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\4\ See https://www.eeoc.gov/meetings/meeting-august-18-2020-discussion-notice-proposed-rulemaking-conciliation.
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Allegation that the Rule is Premature Because of the Ongoing Pilot
Program: Some commenters contend that the NPRM fails to acknowledge the
Commission's ongoing pilot program regarding conciliation procedures
and that the Commission should wait to finalize the rule until after
the pilot has concluded and been studied. Others argued that the public
too should be given the opportunity to study the pilot and incorporate
those efforts in further comments regarding this rule. Some commenters
expressed concern that the results of the pilot program could be at
odds with the rule, suggesting the Commission should delay the final
rule to ensure harmony with the results of the pilot.
Commission response: In May of 2020, the EEOC launched a six-month
pilot program. The pilot was extended in November 2020. This pilot made
only a single change to the conciliation process.\5\ Specifically, the
pilot added a requirement that conciliation offers of certain amounts
be approved by the certain levels of management prior to being shared
with respondents. This requirement adds additional oversight by
management to ensure that conciliation proposals are in line with the
facts of the case. The pilot program is not related to this rulemaking;
it addresses a different aspect of conciliation. It does not
incorporate or add any of the changes to the conciliation procedures
that were proposed or are being implemented in this final rule. Given
the lack of overlap or connection between the pilot program and this
rule, the results of the pilot are not relevant to this rulemaking and
there is no reason to delay the latter so that the Commission or the
public may study the former. As this rule is neither related to nor
dependent on the pilot or its outcome, the Commission declines the
delay sought by these commenters.
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\5\ Concurrently with the pilot, the agency conducted refresher
training on conciliation practices. In addition to training on the
pilot, the refresher training included an emphasis on the pre-
determination interview (PDI) requirement, which is conducted before
the Commission issues its reasonable cause finding. While some
overlap may occur between what employees are already expected to
disclose during the PDI and what this final rule ensures is
disclosed during conciliation, the pilot did not require any new
disclosures.
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Comments that the Rule Primarily Benefits Employers and
Respondents: Some commenters faulted the rule for requiring the
Commission to disclose certain information to respondent automatically,
while only providing the information to charging parties and aggrieved
individuals upon request. Others raised concerns that the new rules
could turn the conciliation process into ``quasi-litigation'' by making
conciliation more formal and could generate collateral litigation.
Still others expressed concern that the disclosures contemplated could
potentially reveal the Commission's litigation strategy and
inadvertently assist respondents in litigation.
Commission Response: The Commission appreciates the concerns
expressed regarding the circumstances under which disclosures are made
to respondents versus charging parties and aggrieved individuals.
However, because the Commission is mindful of the need to maintain
flexibility with respect to how staff engage with charging parties and
aggrieved individuals, and recognizes the burden disclosure would
impose upon staff, the Commission will retain the language ``upon
request''.
The Commission is implementing the final rule to improve
conciliation. The final rule should enhance the Commission's
effectiveness in executing its statutory mandate to identify and
eliminate discriminatory employment practices and obtain appropriate
relief for victims without litigation, as Congress preferred. The rule
accomplishes this end by requiring that the Commission provide certain
basic information--the facts and law in support of the claim and who or
what class of victims was affected by the allegedly discriminatory
practice--that it already develops. By providing this information,
respondents can better identify and correct the discriminatory action,
policy, or practice. By facilitating such a result without litigation,
the Commission achieves its primary goal of ending the discriminatory
practice and potentially impacting other employees who may have been
affected by the practice. As a result, the primary beneficiaries of
more effective conciliations are victims and potential victims of
discrimination, as well as the public. The Commission intends for these
improvements to encourage more respondents to engage in the process,
thus increasing the likelihood of voluntary compliance, and successful
conciliations. These results should also provide benefits to
discrimination victims by obtaining relief far sooner than would be
possible in litigation. Without successful conciliation, employees and
applicants are, in most cases, left to fend for themselves to try and
obtain relief through litigation. For these reasons, the Commission
disagrees with commenters' assertion that the final rule primarily
benefits employers.
Nothing in the final rule is intended to create new causes of
action for respondents or others; to the contrary, the rule is designed
to alleviate concerns that the Commission has failed to meet its
conciliation obligation, as explained in Mach Mining. Should the
Commission's conciliation efforts be challenged in litigation, the
final rule provides a framework that allows the Commission to easily
demonstrate it has met the requirements laid out in Mach Mining, by
simply affirming through an affidavit that it followed the procedures
described in the statute. Thus, rather than raising the likelihood of
collateral litigation over conciliation, the final rule will have the
opposite effect by providing a guidepost for the Commission to follow
in meeting its conciliation obligations. Furthermore, as the Commission
pointed out in the NPRM, the confidentiality provisions of Title VII
are inherent barriers to a probing judicial review of conciliation and
protects the information disclosed. See 85 FR at 64080-81. For these
reasons, the Commission has determined that this final rule will not
unnecessarily open its conciliation process to judicial review or
collateral attacks from employers.
The Commission appreciates the concerns expressed regarding the
circumstances under which disclosures are made to respondents versus
charging parties and aggrieved individuals. However, because the
Commission is mindful of the need to maintain flexibility regarding how
staff engage
[[Page 2980]]
with charging parties and aggrieved individuals, and in recognition of
the burden disclosure would impose upon staff, the Commission will
retain the language ``upon request'' as it relates to charging parties
and aggrieved individuals. As noted above, the level of engagement by a
charging party or aggrieved individual can vary from conciliation to
conciliation. Furthermore, as also noted above, the Commission must
also focus on the public interest when attempting to resolve the case
through conciliation.
The rule is designed to improve the conciliation process by making
it more meaningful and effective. Adequate information must be provided
to the respondent to allow it to address the discriminatory conduct as
well as assess its potential liability. The rule protects disclosure of
privileged information, which will protect any confidential attorney
work product related to litigation strategy.
Concerns That the Rule Would Undermine the Commission's Ability to
Prevent and Remedy Discrimination and Would Harm Workers: Some
commenters expressed concern that compliance with this rule would
divert resources that otherwise would be used to directly serve
charging parties. For example, some commenters stated that the new rule
would cause the Commission to initiate fewer actions in court or
somehow disincentivize the Commission from issuing cause findings.
There was also concern that the disclosures required by the proposed
rule could lead to retaliation against workers.
Commission response: The law requires that the Commission provide
information to respondents regarding ``the alleged unlawful employment
practice.'' Mach Mining, 575 U.S. at 488. The Commission has determined
that, at a minimum, this must include factual and legal information
sufficient to support its reasonable cause finding and any demand that
it has made. This affords a respondent with basic information about the
claim, such as the action or practice that the Commission has
determined to be discriminatory in violation of Title VII, and the
person or categories of persons it has harmed. Id. Instead of being
``extensive'' or ``burdensome,'' the disclosures required by the final
rule are straight forward. The Commission's employees already engage in
the analysis and work outlined in the rule such that compliance with
the rule will not ``divert'' resources away from services currently
provided to the victims of discrimination. In every case where there is
a finding of discrimination, the Commission develops facts, identifies
aggrieved parties, evaluates the scope and potential of class or
systemic allegations, analyzes legal theories, and calculates potential
damages. The rule requires that some of this information be
communicated to respondent so that it may evaluate the claim to be
conciliated. In communicating this information, the Commission will
support its conciliation demand and reinforce its reasonable cause
finding, thereby increasing the likelihood of voluntary resolution of
charges, just as Congress preferred.
However, in recognition of the complications that could arise with
respect to conciliations already in progress, this rule will only apply
to conciliations for charges for which a Letter of Determination
invitation to engage in conciliation has been sent to respondent on or
after the effective date.
Concerns that the rule will cause fewer cases in which reasonable
cause is found are inconsistent with the requirements of the final
rule. The Commission's mission in conciliation is to identify and
designate for elimination unlawful discriminatory employment practices,
as well as to obtain relief for victims of discrimination. Whenever the
investigation of a charge reveals that unlawful discrimination has
likely occurred, the Commission will issue a finding of reasonable
cause. This rule merely requires that certain basic information
regarding such a charge be provided to the respondent. The Commission
is confident that this information will support its findings of
reasonable cause and convey the strength of the Commission's
determination.
The Commission also rejects the assertion that the final rule will
somehow frustrate its mission. The Commission's mission is to prevent
and remedy unlawful employment discrimination. While litigation is a
useful tool in achieving that end, it is not the exclusive means to
achieve that result. Indeed, as noted above, Congress favored
conciliation over litigation as a means to eliminate discriminatory
employment practices. Furthermore, there is no reason to believe that
the new rule will cause Commission employees to find reasonable cause
in fewer cases where such a finding is merited pursuant to the facts
and the law.
Section 706 of Title VII directs the Commission, after it finds
reasonable cause, to endeavor to eliminate discrimination through
informal methods of conference, conciliation, and persuasion. Congress
further directed that the EEOC could only commence a civil action if,
and only if, conciliation fails. By so doing, Congress made it clear
that conciliation is the preferred method to address discrimination.
See Mach Mining, 575 U.S. at 486 (``in pursuing the goal of bringing
employment discrimination to an end, Congress chose `cooperation and
voluntary compliance' as its preferred means''). This rule advances
that choice.
Commenters' concerns that disclosures could result in retaliation
against aggrieved parties are misplaced. The rule provides protection
for all workers reasonably susceptible of retaliation, which, of
course, is prohibited by Title VII. The Commission will vigorously
pursue employers who engage in retaliation against employees who
attempt to vindicate their rights.
Concerns About Economic Impact: Some commenters expressed concern
that the rule does not take into account the negative economic effects
of discrimination. Others lodged concerns that the rule claims economic
benefits of more conciliations, while ignoring the additional costs to
the Commission. One commenter said the Commission relied on ``trickle-
down economics'' to claim that cost savings would benefit the economy
overall.
Commission response: Concerns that the rule does not take into
account the negative economic effects of discrimination are misplaced.
The Commission is aware of the economic effects of unlawful
discrimination and uses every tool available to it to prevent and end
unlawful discrimination. Conciliation is an important part of that. The
more cases the Commission successfully conciliates, the greater the
number of unlawful employment practices it eliminates and the greater
number of incidents of discrimination are remedied, achieving its
statutory mission. The Commission believes the final rule will lead to
greater participation and more successful conciliations, which will
have positive economic impacts for employees, employers, and the public
at large.
The Commission disagrees with the comments that this rule will
increase the rates of discrimination or allow discrimination to go
unpunished or unaddressed. These comments fail to explain how the rule
will cause more employers to engage in unlawful discrimination or to
discriminate more extensively. To the contrary, this rule requires the
Commission to provide to respondents factual and legal information
about the claim to be conciliated. This will allow the respondent to
better identify and address any underlying policy or practice that is
discriminatory, even if
[[Page 2981]]
the respondent elects to contest the particular charge or litigate for
other reasons. And as more such policies and practices are identified
and eliminated, fewer workers will suffer unlawful discrimination.
Concerns That the Rule is Inconsistent with Mach Mining and
Statutory Authority: Some commenters argued that the rule is
inconsistent with the Supreme Court decision in Mach Mining, and that
because the changes are not required by statute or court decision the
Commission should not make them. For example, a number of commenters
pointed to the language of the Mach Mining decision that said Title
VII's conciliation provision ``smacks of flexibility'' to argue that
the Commission's proposed rule was contrary to the Court's holding. Id.
at 492. Others believe conciliation is already successful and fear that
these additional procedures will introduce an unnecessary rigidity that
will compromise that success. Still others suggest that any changes to
the Commission's conciliation process should be accomplished through
internal guidance or pilots instead of rulemaking. Some commenters also
claimed that the proposal was inconsistent with the language of Title
VII itself, primarily citing to the use of ``informal'' in the statute
regarding conciliation, and was therefore outside of the Commission's
authority.
Commission response: The Commission disagrees that the final rule
conflicts with Mach Mining. In Mach Mining, the Supreme Court began by
emphasizing the importance of conciliation. The Court noted that Title
VII ``imposes a duty on the EEOC to attempt conciliation of a
discrimination charge prior to filing a lawsuit.'' Mach Mining, 575
U.S. at 486. That ``obligation,'' as the Court has held repeatedly, is
``mandatory, not precatory'' and ``is a key component of the statutory
scheme. In pursuing the goal of bringing employment discrimination to
an end, Congress chose cooperation and voluntary compliance as its
preferred means.'' Id. (punctuation and citations omitted). When
undertaken effectively, conciliation should ``end discrimination far
more quickly than could litigation proceeding at its often ponderous
pace.'' Ford Motor, 458 U.S. at 228.
The Court found that Title VII ``provides certain concrete
standards pertaining to what that endeavor must entail.'' Mach Mining,
575 U.S. at 488. Based on the statutory language describing the
``attempt'' the Commission must undertake in conciliation, namely
``informal methods of conference, conciliation, and persuasion,'' the
Court explained that ``[t]hose specified methods necessarily involve
communication between parties, including the exchange of information
and views.'' Id. (citing 42 U.S.C. 2000e-5(b)). Not only does Title VII
require ``communication,'' the Court continued, but ``[t]hat
communication . . . concerns a particular thing: The `alleged unlawful
employment practice.' '' Id. (citing 42 U.S.C. 2000e-5(b)).
Specifically, the Court held, in order ``to meet the statutory
condition, [the Commission] must tell the employer about the claim--
essentially, what practice has harmed which person or class--and must
provide the employer with an opportunity to discuss the matter in an
effort to achieve voluntary compliance.'' Id. If ``the Commission does
not take those specified actions, it has not satisfied Title VII's
requirement to attempt conciliation.'' Id.
Beyond these basic requirements that are mandatory in all cases,
the Court recognized that the Commission enjoys broad discretion
regarding the way in which it conducts conciliations. Id. at 492. The
Court's statement regarding ``flexibility'' cited by commenters was in
support of ``the latitude Title VII gives the Commission to pursue
voluntary compliance with the law's commands.'' Id. The Commission is
not required ``to devote a set amount of time or resources'' or take
``any specific steps or measures'' in conciliation. Id. The Commission
``alone decides whether in the end to make an agreement or resort to
litigation,'' including ``whenever [it is] unable to secure terms
acceptable to the Commission.'' Id. Once it has satisfied its
obligations, the Commission decides how it will respond to the
respondent and negotiate and how long it will do so. Id. (stating that
``Congress left to the EEOC such strategic decisions as whether to make
a bare-minimum offer, to lay all its cards on the table, or to respond
to each of an employer's counter-offers, however far afield. So too
Congress granted the EEOC discretion over the pace and duration of
conciliation efforts, the plasticity or firmness of its negotiating
positions, and the content of its demands for relief.'').
The Commission's final rule focuses on the requirement that it
communicate about the ``claim.'' Id. at 488. The Supreme Court held
that the Commission must, at a minimum, communicate to the respondent
``what practice has harmed which person or class'' in order to comply
with its conciliation obligation and that courts may review such
efforts to ensure compliance with Title VII. See id. The Commission has
determined that the final rule comprehensively and thoroughly covers
the information required to make it compliant with Mach Mining. If
respondents raise specious challenges, the Commission will be in a
strong position to respond and, as appropriate, seek sanctions or other
relief.
Some commenters point out that the rule is not mandated by Mach
Mining or Title VII. While the requirements set out in the rule are not
spelled out in either the Court's opinion or the statute, the final
rule--or any regulation--need not be required by the Supreme Court or a
statute to be appropriate. In fact, both Title VII and Mach Mining make
clear that the Commission ``must tell the employer about the claim--
essentially, what practice has harmed which person or class--and must
provide the employer with an opportunity to discuss the matter in an
effort to achieve voluntary compliance. Mach Mining, 575 U.S. at 488.
The Commission is exercising its ``wide latitude'' and ``expansive
discretion'' over the conciliation process to clarify the contents of
statutorily required communications to respondents in such a way that
its satisfaction of the requirements will be clear. Id. at 488-89. The
Commission has concluded that a recitation and summary of the factual
and legal basis is a core component of any ``communication about the
claim''. This would include the identification of the action or
practice the Commission has deemed discriminatory, the reason for its
conclusion, as well as ``what person or class'' has been unlawfully
harmed--all so that the respondent might be able to bring itself into
compliance. With this rule the Commission is implementing a procedure
to ensure that it satisfies the conciliation requirements of Title VII,
as elucidated in Mach Mining.
Some commenters argue that the final rule imposes ``rigid'' or
``extensive'' burdens that will curtail the Commission's
``flexibility'' and ``discretion''. As noted above, the final rule
requires the Commission to provide certain basic information that the
Commission has concluded will categorically satisfy the minimum
statutory requirements of its ``communication'' with respondents. Since
EEOC staff already perform this work, this rule does not require the
reallocation of resources, and is neither extensive nor voluminous.
Contrary to assertions in many comments, this does not weaken the
Commission's position in conciliation or litigation in that it does not
require the Commission to ``lay all its cards on the table,'' ``devote
a set
[[Page 2982]]
amount of time or resources,'' or ``take any specific steps or
measures'' in any conciliation. Once the information has been provided,
the Commission ``alone decides'' in each case how it will respond to a
particular respondent, the manner and particulars of how it will
negotiate, and how long it will do so. See id. at 492. The Commission
``alone decides whether in the end to make an agreement or resort to
litigation,'' including ``whenever [it is] unable to secure terms
acceptable to the Commission.'' Id. The final rule ensures clear and
consistent satisfaction of statutory requirements in accordance with
the Court's opinion in Mach Mining while maintaining the Commission's
flexibility to conciliate as it deems appropriate.\6\
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\6\ As the Court explained in Mach Mining and the Commission
noted above, ``Congress left to the EEOC such strategic decisions as
whether to make a bare-minimum offer, to lay all its cards on the
table, or to respond to each of an employer's counter-offers,
however far afield. So too Congress granted the EEOC discretion over
the pace and duration of conciliation efforts, the plasticity or
firmness of its negotiating positions, and the content of its
demands for relief.'' Id. at 492. The final rule does nothing to
limit or curtail this discretion that the Commission has applied for
decades in pursuit of its mission to eradicate unlawful employment
discrimination.
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While several commenters expressed a preference for internal
guidance or pilot programs rather than a rule, the Commission has
previously implemented Quality Enforcement Practices and internal
guidance to enhance its conciliation efforts, changes that resulted in
significant training of EEOC staff. While these changes improved the
conciliation process, the Commission believes more should be done to
build on that progress and has concluded the structure and
predictability of a rule is the best way to make sure that it is
consistently satisfying its statutory conciliation obligations. As
already noted in the NPRM and above, less than half the cases for which
the Commission finds reasonable cause are resolved through
conciliation. The Commission aims to achieve more success, including
fewer cases in which the respondent opts out of the process entirely.
The Commission's purpose is to enhance the processes that will improve
its ability to remedy unlawful discrimination without the need to
resort to litigation.
Some commenters argued that conciliation is already successful and
that the allegedly rigid procedures imposed in the final rule are
unnecessary. One commenter noted that following Mach Mining, the amount
of collateral litigation attacking conciliation decreased and the
number of successful conciliations increased. An increase in successful
conciliations is admirable and the Commission recognizes and commends
the achievements of its employees in the conciliation process. Nothing
in the final rule diminishes or recharacterizes that success. To the
contrary, the final rule aims to build upon that success. As noted in
the NPRM, from fiscal years 2016 to 2019, the Commission successfully
conciliated approximately 41.23% of those cases in which it found
reasonable cause. This amounts to only a slight increase over the
previous four fiscal years. Also, during these years, employers
continued to decline to participate in conciliation in approximately
33% of such cases. 85 FR at 64080. The Commission is concerned about
the overall rate of successful conciliation and that one-third of
employers refuse to participate in conciliation. While there may be
many reasons why an employer refuses to conciliate, at least some of
these respondents may be motivated, at least in part, by the belief
that the current conciliation process is flawed and not worth the
effort. The Commission is not targeting a specific percentage of
successful conciliations or employer participation. However, the
Commission is making minor changes that it believes will allow it to
continue to improve its processes and, in so doing, identify and
eliminate more discriminatory employment practices.
Finally, this final rule is consistent with section 706 of Title
VII's use of ``informal'' when describing the Commission's efforts to
resolve cases after finding reasonable cause, and in turn, the
Commission's procedural rulemaking authority. The Commission's final
rule does not establish a ``formal'' process, but instead provides
basic procedures for information sharing that are fundamental to any
settlement discussion. The rule does not establish ``quasi-litigation''
with formal rules of evidence or rules of procedure that would be found
in federal court. It instead establishes base level procedures, but
otherwise leaves conciliation as an informal process that can be
adjusted as needed by the case.
Concerns that the Commission Did Not Justify How the Rule Furthers
Its Enforcement Mission: A few commenters contended that the Commission
had not presented any statistics or other data to support its belief
that the proposed changes would make successful conciliation more
likely or increase respondents' participation in conciliation. In
addition, one commenter, argued that many respondents simply have no
interest in conciliating, for reasons beyond the Commission's control.
In support of this position, the commenter described instances in which
employers agreed to resolve a matter after the Commission had filed
suit for a higher amount than what the Commission offered in
conciliation. Finally, other commenters challenged the portions of the
proposed rule requiring that the Commission disclose information
obtained that caused it to doubt there was reasonable cause on a
variety of grounds.
Commission response: The Commission has explained the reasons it
believes that the final rule is reasonably likely to increase
participation in conciliation. These provisions should encourage
greater confidence that the communications in the conciliation process
will include the sort of information that the Court determined were
required. Providing such basic factual and legal information will
encourage more employers to participate and will provide them with a
better understanding of the Commission's position.
As explained above, there are many reasons that respondents elect
not to conciliate and, as the commenter explained, some of these
reasons are beyond the Commission's control. A decision by a respondent
to settle a case during litigation for more than what it could have
settled during conciliation actually supports the Commission's reason
for the rule change. In these situations, a respondent was willing to
reach an agreement with the Commission after it received more
information about the strength of the case against them, which they
obtained in the litigation process. By better explaining its case in
conciliation, the Commission makes it more likely that respondents will
understand the risk of litigation and be more willing to resolve the
matter during conciliation, freeing the Commission's resources to
litigate other more challenging cases.
The Commission's Office of Enterprise, Data, and Analytics (OEDA)
has conducted a comprehensive analysis of the reasons why conciliations
fail.\7\ Their analysis identifies two primary reasons charges are not
resolved through conciliation: (1) The respondent's choice not to
participate and (2) the parties cannot agree on monetary relief. OEDA's
statistics also indicate that in cases
[[Page 2983]]
where employers agree to participate in conciliation, there is more
than a 50% chance of achieving resolution. Getting more employers to
agree to participate is the first step to getting more resolutions. By
providing basic information about the facts and legal arguments behind
the claim, the Commission increases the likelihood that the respondent
will recognize the merit of the Commission's position and conciliate.
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\7\ The need to complete this analysis was cited by a commenter
opposed to the proposed rule as a reason not to move forward. The
analysis has been completed and is consistent with the changes made
in the final rule.
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Finally, the Commission has decided to remove from the final rule
any requirement that it disclose material information that caused it to
doubt its determination of reasonable cause. After reviewing the points
raised by several commenters, the Commission is concerned about the
potential for collateral challenges that this requirement may create.
As the Commission has stated above, the purpose of this final rule is
not to create or encourage potential new avenues for dilatory
litigation on conciliation. Based on its review of the comments, the
Commission believes the litigation risks of this part of the proposal
outweigh the increase in transparency that would be achieved
specifically by this provision. The Commission expects that its
personnel will continue to evaluate, weigh, and proactively address
evidence that runs contrary to a reasonable cause finding in its
summary under Sec. 1601.24(d)(2). In cases where the facts or the law
suggest that reasonable cause is lacking, existing protocols require
field personnel not to make such a finding. And the Commission's
employees adhere to these protocols--and their professional
obligations--in evaluating cases. For these reasons and after carefully
considering the comments regarding this proposal, the Commission has
removed this requirement from the final rule.
Final Regulatory Revisions
After considering all comments received, the Commission is
finalizing the proposed rule as modified in the discussion above.\8\
These changes will bring more clarity, transparency, and consistency to
the conciliation process. They will encourage more respondents to
participate and the Commission to better articulate it positions at the
outset of conciliation. The final rule sets out procedures that will
support the Commission's ability to meet statutory obligations to
attempt to conciliate, i.e., to ``tell the employer about the claim--
essentially, what practice has harmed which person or class--and
provide the employer with an opportunity to discuss the matter in an
effort to achieve voluntary compliance.'' Mach Mining, 575 U.S. at 488.
As the Court noted, conciliations ``necessarily involve communication
between parties, including the exchange of information and views.'' Id.
This final rule ensures that the Commission's exchange of information
occurs in an open, transparent manner. These changes should make the
conciliation process more successful and, in so doing, enhance the
Commission's fulfilment of its mission to eliminate unlawful
discrimination in employment.
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\8\ As noted in the NPRM, the language in Sec. 1626.12 is
slightly different in some places than the language of 1601.24 due
to the different conciliation language in the ADEA. 85 FR at 64081
n. 10. This includes the fact that the ADEA does not require that
conciliation start after a reasonable cause finding, so the
provisions in 1601.24 that are dependent on a reasonable cause
finding are not found in Sec. 1626.12. See 29 U.S.C. 626(d)(2). A
letter from former employees of the Commission took issue with the
Commission using the phrase ``allegations'' in the ADEA portion of
this rule. The reason that Commission used the phrase
``allegations'' instead of referencing a reasonable cause finding is
because the ADEA section that describes the Commission's
conciliation obligations is not dependent on a reasonable cause
finding, unlike Title VII. See 29 U.S.C. 626(d)(2).
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Regulatory Procedures
Executive Order 12866
This rule has been determined to be significant under E.O. 12866 by
the Office of Management and Budget because it raises novel legal or
policy issues arising out of legal mandates or the President's
priorities. The rule will not have an annual effect on the economy of
$100 million or more, nor will it adversely affect the economy in any
material way. Thus, it is not economically significant for purposes of
E.O. 12866 review. However, the rule will have many benefits as
demonstrated by the following cost-benefit analysis.
The rule imposes no direct costs on any third parties and only
imposes requirements on the EEOC itself. The rule, if implemented, will
likely require the EEOC to conduct training of staff to ensure that it
is complying with the new regulation. While these changes and training
would likely be absorbed within the Commission's normal operating
expenses, any additional expenses that the agency would incur could be
offset by cost savings derived from these changes. For example,
charging parties often file Freedom of Information Act (FOIA) requests
with the Commission after receiving a ``right to sue notice'' in order
to receive the charge file. If more cases are resolved in conciliation,
these cases would not result in right to sue notices and the Commission
would receive fewer FOIA requests, resulting in cost savings for the
government.
Furthermore, while the parties ultimately determine whether a
conciliation agreement is reached, if the Commission is able to
conciliate more cases successfully, it will benefit employees,
employers, and the economy as a whole. With respect to employees, an
increase in successful conciliations will result in more employees
receiving remedies for the discrimination they suffered within an
accelerated timeframe. Many employees who receive reasonable cause
findings are unable to obtain any relief without conciliation because
they do not pursue litigation for fiscal, emotional, or other reasons,
or even if they do pursue litigation, ultimately do not attain relief.
Even employees who ultimately would otherwise be successful in
litigation may benefit from a conciliation because they would then
receive remedies sooner and avoid the time, cost, stress, and
uncertainty of litigation.
Employers will also benefit from the EEOC conciliating cases more
successfully. In some cases, conciliations may provide an opportunity
for employers to more quickly correct any discriminatory conduct or
policies and seek compliance assistance from the EEOC. Additionally,
while employers pay $45,466 \9\ on average to settle cases in
conciliation, they will save time, resources, and money by avoiding
(often costly and lengthy) litigation. It is difficult to quantify the
average cost of litigating an employment discrimination case for an
employer because the cost of a case depends on several factors, such as
the complexity of the case, length of the litigation, and the
jurisdiction in which it is litigated.\10\
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\9\ This was the average for fiscal year 2019.
\10\ This analysis focuses only on an employer's litigation
costs because most plaintiff-side attorneys use contingency-fee
arrangements for pursuing claims, in which the attorney receives a
portion of the recovery and charges little or nothing if no recovery
is obtained. See Martindale-Nolo Research, Wrongful Termination
Claims: How Much Does a Lawyer Cost? (Nov. 14, 2019), available at
https://www.lawyers.com/legal-info/labor-employment-law/wrongful-termination/wrongful-termination-claims-how-much-does-a-lawyer-cost.html (noting that 75% of plaintiffs lawyers in employment
litigation use contingency fee arrangements and another 15% use a
combination of a contingency fee and hourly rate). Thus, more
frequent conciliation will save litigation costs for those few
plaintiffs who pay their attorneys an hourly rate.
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The stage at which litigation concludes has a large effect on
litigation costs--attorneys' fees and other litigation expenses are
significantly higher for cases that go through trial, as
[[Page 2984]]
opposed to those that end in summary judgment. For example, in 2013,
one experienced defense attorney estimated that the average attorney's
fees for employers for cases that end in summary judgment was between
$75,000 and $125,000; while cases that go to trial average between
$175,000 and $250,000 in fees.\11\ Factoring for inflationary changes
in legal fees, the present value of those costs is closer to $83,000 to
$139,000 for cases ending in summary judgment and $195,000 to $279,000
for cases that end after a trial.\12\ Taking the middle of each range
in present value results in average costs of $111,000 for cases ending
in summary judgment and $237,000 for cases that end after trial. The
Commission recognizes that many employers will find these fee estimates
to be low, but because there is insufficient, publicly available data
for calculating the amount that employers have expended in defending
against a charge through conciliation \13\ and which otherwise would be
subtracted for purposes of this analysis, the Commission believes such
a conservative estimate is appropriate.
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\11\ John Hyman, How Much Does it Cost to Defend an Employment
Lawsuit, in Workforce, (May 14, 2013), available at https://www.workforce.com/news/how-much-does-it-cost-to-defend-an-employment-lawsuit.
\12\ These calculations were made using the Department of Labor
Bureau of Labor Statistics's (BLS) Consumer Price Index calculator,
available at https://www.bls.gov/data/inflation_calculator.htm.
These increases are likely conservative, as they are similar to
increases in legal service costs over a shorter time frame.
Historical data for the BLS Producer Price Index for Legal Services
in the Mid-Atlantic region, available at https://www.bls.gov/regions/mid-atlantic/data/producerpriceindexlegal_us_table.htm,
reveals that average costs for employment and labor legal services
increased from 100 in December 2014 (the earliest data available) to
109.9 in April 2020 (the most recent non-``preliminary'' data), an
increase of approximately 10%. Similarly, the U.S. Department of
Justice's USAO Attorney's Fees Matrix, which only measures the
change in fees between 2015-2020 across the legal field, reveals a
roughly 12% change in hourly rate for the most experienced attorneys
in the District of Columbia. See https://www.justice.gov/usao-dc/page/file/1305941/download.
\13\ ``There do not appear to be any reliable statistics on the
percentage of employers who retained outside counsel to defend
charges filed with the EEOC.'' Philip J. Moss, The Cost of
Employment Discrimination Claims, 28 Maine Bar J. 24, 25 (Winter
2013). Supposing ``conservatively'' that 50% of employers relied on
outside counsel at an hourly rate averaging $250 (in 2013) and
invested 20 hours in cases during the EEO process, Id., employers
would average $2,500 in legal costs during the EEO process ($250 x
20 hours x 0.5), which in present value would average $2,792. The
costs for employers who use in-house counsel or human resource
professionals to handle their EEOC charges are more difficult to
quantify.
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To determine the average amount spent on attorney's fees, the
Commission also must consider the number of cases that were the subject
of conciliation that are either resolved at summary judgment or proceed
to trial. The majority of cases of employment discrimination are not
tried.\14\ Some studies suggest that two-thirds or more of employment
discrimination lawsuits that are filed in court end in summary
judgment.\15\ Those statistics, however, include cases filed in court
after the EEOC dismissed the charge without a reasonable cause
determination. In conciliation cases, by contrast, the EEOC has
conducted an investigation and found reasonable cause to conclude that
discrimination may have occurred. The Commission believes it is
reasonable to assume that more of these latter cases will survive
summary judgment. With this assumption, the average litigation cost for
employers is $174,000.\16\
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\14\ Paul D. Seyfarth, Efficiently and Effectively Defending
Employment Discrimination Cases, 63 AmJur Trials 127, Sec. 81
(Supp. 2020) (``It is an undeniable fact that most employment
discrimination cases do not get tried; they are either settled or
disposed of via summary judgment.'').
\15\ Charlotte S. Alexander, Nathan Dahlberg, Anne M. Tucker,
The Shadow Judiciary, 39 Rev. of Lit. 303 (2020) (Table 3) (finding
that among summary judgment motions in employment cases handled by
magistrate judges in the Northern District of Georgia, 78% are
granted in part or in full); Deborah Thompson Eisenberg, Stopped at
the Starting Gate: The Overuse of Summary Judgment in Equal Pay
Cases, 57 N.Y. L. Sch. L. Rev. 815, 817 (2012/2013) (finding that
approximately two-thirds of all equal pay act cases end at the
summary judgment stage).
\16\ Average summary judgment fees ($111,000) + average trial
fees ($237,000)/2 = $174,000. This figure is within the range of
other estimates for average attorney fee costs. See AmTrust
Financial, Employment Practices Liability (EPLI) Claims Trends,
Stats & Examples, available at https://amtrustfinancial.com/blog/insurance-products/top-trends-employment-practices-liability-claims
(asserting that attorney fee costs in 2018 averaged $160,000, which
in present value would amount to $167,000); Moss, supra note 7
(citing Blasi and Doherty, California Employment Discrimination Law
and its Enforcement: The Fair Employment and Housing Act at $0,
UCLA-RAND Center for Law and Public Policy (2010)) (estimating costs
to employers in state-level employment discrimination cases in
California in 2010 at $150,000, which taken to present value would
average approximately $180,000).
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Resolving more cases through conciliation will be beneficial to the
economy as a whole because the litigation costs that the parties save
can be put towards more productive uses, such as expanding businesses
and hiring more employees. It is difficult to quantify how many cases
in which the Commission finds reasonable cause end up being litigated
in court because, if the EEOC decides to not litigate the case, the
Commission does not track lawsuits filed by private plaintiffs. The
Commission believes that cases in which the EEOC found reasonable cause
are the most likely to be litigated by a private plaintiff because the
EEOC has already determined that there is reasonable cause to believe
that the case has merit. While not all cases in which reasonable case
is found and conciliation is unsuccessful are litigated, there is
reason to believe that a significant portion are. The Commission itself
files lawsuits in roughly 10% of the cases in which reasonable cause is
found and conciliation is not successful.\17\ It is reasonable to
believe that private plaintiffs file lawsuits in at least an additional
40% of cases, so that overall half the cases in which reasonable cause
is found, but conciliation is unsuccessful, end up being litigated in
court.\18\
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\17\ For fiscal year 2019, the Commission filed 157 lawsuits.
EEOC Litigation Statistics, https://www.eeoc.gov/statistics/eeoc-litigation-statistics-fy-1997-through-fy-2019. Overall, in fiscal
year 2019, there were 1,427 cases in which the Commission found
reasonable cause but conciliation was unsuccessful. https://www.eeoc.gov/statistics/all-statutes-charges-filed-eeoc-fy-1997-fy-2019.
\18\ To give some sense of the scope of cases, federal courts
reported that 42,053 ``Civil Rights'' cases were filed in federal
court during the most recent year. https://www.uscourts.gov/sites/default/files/data_tables/fcms_na_distprofile0630.2020.pdf. While
not all these civil rights cases involve employment discrimination,
and this number would include cases where a private plaintiff filed
suit after the EEOC did not find reasonable cause, it illustrates
that the assumption--that half of the roughly 1,400 cases in which
conciliation is unsuccessful end up in court--is likely a low
estimate.
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Using the numbers above, if the Commission successfully conciliated
only 100 more cases each year, that would save the economy over $4
million in litigation costs.\19\
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\19\ 100 successful conciliations x $45,466 (average
conciliation for fiscal year 19) = $4,546,600. However, this number
is offset by the litigation costs saved in 50 cases (assuming half
the cases would have ended in in litigation): 50 x $174,000 =
$8,700,000. $8,700,000-$4,546,600 = $4,153,400 in savings for every
100 cases that are conciliated.
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Therefore, the Commission's rule, which establishes basic
information disclosure requirements that will make it more likely that
employers have a better understanding of the EEOC's position in
conciliation and, thus, make it more likely that the conciliation will
be successful, will result in significant economic benefits when it is
successfully implemented.
Executive Order 13771
This rule is not expected to be an E.O. 13771 regulatory action
because it will not impose total costs greater than $0. As described
above, the Commission's rule will result in more successful
conciliations and therefore, overall cost reduction, so this is
considered a deregulatory action. Details on the expected impacts of
the rule can be found in the Commission's analysis above.
[[Page 2985]]
Paperwork Reduction Act
This rule contains no new information collection requirements
subject to review by the Office of Management and Budget under the
Paperwork Reduction Act (44 U.S.C. chapter 35).
Regulatory Flexibility Act
The Commission certifies under 5 U.S.C. 605(b) 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 of
the federal government and does not impose a burden on any business
entities. For this reason, a regulatory flexibility analysis is not
required.
Unfunded Mandates Reform Act of 1995
This rule will not result in the expenditure by State, local, or
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year, and it will not significantly or
uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.
Congressional Review Act
While the Commission believes the rule is a rule of agency
procedure that does not substantially affect the rights or obligations
of non-agency parties and, accordingly, is not a ``rule'' as that term
is used by the Congressional Review Act (Subtitle E of the Small
Business Regulatory Enforcement Fairness Act of 1996), it will still
follow the reporting requirement of 5 U.S.C. 801. This is not a ``major
rule'' as the term is defined in 5 U.S.C. 804(2).
List of Subjects in 29 CFR Parts 1601 and 1626
Administrative practice and procedure, Equal Employment
Opportunity.
For the Commission.
Janet Dhillon,
Chair.
For the reasons set forth in the preamble, the Commission amends 29
CFR parts 1601 and 1626 as follows:
PART 1601--PROCEDURAL REGULATION
0
1. The authority citation for part 1601 continues to read as follows:
Authority: 42 U.S.C. 2000e to 2000e-17; 42 U.S.C. 12111 to
12117; 42 U.S.C. 2000ff to 2000ff-11.
0
2. Amend Sec. 1601.24 by adding paragraphs (d), (e), and (f) to read
as follows:
Sec. 1601.24 Conciliation: Procedure and authority.
* * * * *
(d) In any conciliation process pursuant to this section, after the
respondent has agreed to engage in conciliation, the Commission will:
(1) To the extent it has not already done so, provide the
respondent with a written summary of the known facts and non-privileged
information that the Commission relied on in its reasonable cause
finding, including identifying known aggrieved individuals or known
groups of aggrieved individuals for whom relief is being sought, unless
the individual(s) has requested anonymity. In the event that it is
anticipated that a claims process will be used subsequently to identify
aggrieved individuals, to the extent it has not already done so,
identify for respondent the criteria that will be used to identify
victims from the pool of potential class members. In cases in which
that information does not provide an accurate assessment of the size of
the class, for example, in harassment or reasonable accommodation
cases, the Commission shall provide more detail to respondent, such as
the identities of the harassers or supervisors, if known, or a
description of the testimony or facts we have gathered from identified
class members during the investigation. The Commission will disclose
the current class size and, if class size is expected to grow, an
estimate of potential additional class members to the extent known;
(2) To the extent it has not already done so, provide the
respondent with a written summary of the Commission's legal basis for
finding reasonable cause, including an explanation as to how the law
was applied to the facts. In addition, the Commission may, but is not
required to, provide a response to the defenses raised by respondent;
(3) Provide the respondent with the basis for monetary or other
relief, including the calculations underlying the initial conciliation
proposal and an explanation thereof in writing. A written explanation
is not required for subsequent offers and counteroffers;
(4) If it has not already done so, and if there is a designation at
the time of the conciliation, advise the respondent in writing that the
Commission has designated the case as systemic, class, or pattern or
practice as well as the basis for the designation; and
(5) Provide the respondent at least 14 calendar days to respond to
the Commission's initial conciliation proposal.
(e) The Commission shall not disclose any information pursuant to
paragraph (d) of this section where another federal law prohibits
disclosure of that information or where the information is protected by
privilege.
(f) Any information the Commission provides pursuant to paragraph
(d) of this section to the Respondent, except for information about
another charging party or aggrieved individual, will also be provided
to the charging party, upon request. Any information the Commission
provides pursuant to paragraph (d) of this section about an aggrieved
individual will also be provided to the aggrieved individual, upon
request.
PART 1626--PROCEDURES--AGE DISCRIMINATION IN EMPLOYMENT ACT
0
1. The authority citation for part 1626 continues to read as follows:
Authority: Sec. 9, 81 Stat. 605, 29 U.S.C. 628; sec. 2, Reorg
Plan No. 1 of 1978, 3 CFR, 1978 Comp., p. 321.
0
2. Revise Sec. 1626.12 to read as follows:
Sec. 1626.12 Conciliation efforts pursuant to section 7(d) of the
Act.
(a) Upon receipt of a charge, the Commission shall promptly attempt
to eliminate any alleged unlawful practice by informal methods of
conciliation, conference, and persuasion. Upon failure of such
conciliation the Commission will notify the charging party. Such
notification enables the charging party or any person aggrieved by the
subject matter of the charge to commence action to enforce their rights
without waiting for the lapse of 60 days. Notification under this
section is not a Notice of Dismissal or Termination under Sec.
1626.17.
(b) In any conciliation process pursuant to this section the
Commission will:
(1) If it has not already done so, provide the respondent with a
written summary of the known facts and non-privileged information that
form the basis of the allegation(s), including identifying known
aggrieved individuals or known groups of aggrieved individuals, for
whom relief is being sought, but not if the individual(s) has requested
anonymity. In the event that it is anticipated that a claims process
will be used subsequently to identify aggrieved individuals, if it has
not already done so, identify for respondent the criteria that will be
used to identify victims from the pool of potential class members;
[[Page 2986]]
(2) If it has not already done so, provide the respondent with a
written summary of the legal basis for the allegation(s). In addition,
the Commission may, but is not required to provide a response to the
defenses raised by respondent;
(3) Provide a written basis for any monetary or other relief
including the calculations underlying the initial conciliation
proposal, and an explanation thereof. A written explanation is not
required for subsequent offers and counteroffers;
(4) If it has not already done so, advise the respondent in writing
that the Commission has designated the case as systemic, class, or
pattern or practice, if the designation has been made at the time of
the conciliation, and the basis for the designation; and
(5) Provide the respondent at least 14 calendar days to respond to
the Commission's initial conciliation proposal.
(c) The Commission shall not disclose any information pursuant to
paragraph (b) of this section where another federal law prohibits
disclosure of that information or where the information is protected by
privilege.
(d) Any information the Commission provides pursuant to paragraph
(b) of this section to the respondent, except for information about
another charging party or aggrieved individual, will also be provided
to the charging party, upon request. Any information the Commission
provides pursuant to paragraph (b) of this section to the respondent
about an aggrieved individual will be provided to the aggrieved
individual, upon request.
0
3. Amend Sec. 1626.15 by adding a new sentence to the end of paragraph
(d) to read as follows:
Sec. 1626.15 Commission enforcement.
* * * * *
(d) * * * Any conciliation process under this paragraph shall
follow the procedures as described in Sec. 1626.12.
* * * * *
[FR Doc. 2021-00701 Filed 1-13-21; 8:45 am]
BILLING CODE 6570-01-P