The EEOC suffered another defeat this week, being ordered again to pay the fees and costs incurred by an employer after the EEOC’s claims turned out to be without merit. IN EEOC v. Peoplemark, Inc., A split 6th Circuit affirmed an award of approximately $750,000 in fees and costs incurred by a temp agency in defending against one of the EEOC’s criminal-history cases. The EEOC contended that the temp agency’s company-wide policy barring employment to individuals with felony records had a disparate impact on Black candidates.
The temp agency, PeopleMark, had offices in five states. In 2005, a Black candidate, Sherri Scott filed a Charge of Discrimination, alleging that she had been denied employment because she had a felony conviction. In fact, Scott had two felony convictions and had been released from prison less than a month before she applied for a job with PeopleMark.
And it gets worse.
The EEOC “investigated” the Charge, issuing multiple subpoenas and obtaining more than 15,000 pages of documents. Although the evidence did not seem to support the allegations in the Charge, EEOC disagreed and filed suit. The suit, asserted on a class of individuals, alleged that the company's policy prohibited the hiring “of any person with a criminal record,” which disparately impacted Black applicants.
The trouble, though, was that PeopleMark did not have such a policy. Then the EEOC identified approximately 250 individuals it contended to be within the class of aggrieved persons. Well, as it turned out, PeopleMark had hired 57 of the individuals and some others did not have a criminal background in the first place.
The EEOC eventually agreed to dismiss the case but, as you may imagine, PeopleMark was not exactly satisfied and it sought sanctions in the form of fees and costs incurred in the litigation in the amount of approximately $1.3 million.
In March 2011, the U.S. District Court for the Western District of Michigan granted the motion and awarded approximately $750,000 in fees to PeopleMark. On appeal, the 6th Cir. affirmed, finding that the employer was entitled to recover fees from the time that the EEOC learned or should have learned that PeopleMark did not have the policy as the EEOC had alleged.
EEOC v. Peoplemark, Inc., No. 11-2582 (6th Cir. Oct. 7, 2013).