By Sam Hananel
WASHINGTON — It started with allegations of hangman’s nooses, graffiti and racist comments targeting a handful of black workers at a trucking company warehouse in Chicago Ridge, Ill.
Four years later, the Equal Employment Opportunity Commission had turned the case into a major class action lawsuit alleging more than 170 employees of Yellow Transportation Inc. were victims of a racially hostile work environment.
When the company agreed in June to settle the case for $11 million, it became the EEOC’s latest victory in a systemic strategy to bring more large-scale bias cases against prominent companies — all in the name of cracking down on discrimination in the workplace.
Instead of filing a lawsuit on behalf of one worker at a time, the commission increasingly is trying to super-size cases. Investigators look for patterns of discrimination against dozens or even hundreds of workers at a single company in areas such as hiring, pay, promotion or termination.
The EEOC, which enforces the nation’s workplace antidiscrimination laws, is optimistic that larger settlements that generate widespread publicity will send a strong message to employers about complying with the law.
While the tactic has won praise for deterring discrimination, business groups complain the EEOC is overreaching, driving up their legal bills and making their investments riskier. Federal courts also have rapped the commission, saying in particular cases that it overstepped its bounds.
Many corporate targets, such as Yellow Transportation — now YRC Worldwide Inc. — often decide it’s cheaper to settle without admitting guilt than to endure years of costly litigation against the government.
“They’ve gotten every employer’s attention,” said Chicago lawyer Gerald Maatman, who represents companies sued by the EEOC. “It’s a commission that, under the Obama administration, has dramatically expanded its enforcement efforts to send a message to corporate America.”
The systemic effort has surged from less than 50 active investigations in 2006 to almost 600 last year. In 2011, more than 40 companies — from Denny’s restaurants to United Airlines to Verizon — paid out more than $60 million in settlements or unfavorable court judgments after the EEOC brought systemic discrimination cases.
The surge in bigger cases comes as Republicans and business groups accuse the Obama administration of hampering business growth with burdensome regulations and policies.
The Supreme Court’s decision in Dukes v. Walmart last year, which made it harder for individuals to bring large-scale bias claims, could encourage the EEOC to file more such cases on its own. The EEOC is not bound by the same rules as private citizens for establishing class certification.
“We’re not a rich agency, so we’re trying to have the most impact that we can with the resources that we have,” EEOC general counsel P. David Lopez said.
Last year, for example, the commission reached a $20 million settlement with Verizon Inc. after alleging the company unfairly fired or disciplined hundreds of disabled workers for missing work. Technology firm 3M paid $3 million to settle age discrimination charges after the company laid off hundreds of workers older than 45. And Pepsi Beverages Co. paid $3.1 million to settle allegations it used background checks to screen out more than 300 black job applicants.
“They’re searching to make a lawsuit as large as they can make it to have the biggest impact possible, so they’re trying to find victims, rather than handling claims of victims that come to them,” Maatman said.
Lopez says that’s part of the commission’s duty.
“We are a law enforcement agency,” he said. “What we are trying to do is enforce the law, and part of that means we need to identify any victims of discriminatory practices.”
Harry Glasper, one of the early plaintiffs in the Yellow Transportation case, said he wasn’t sure anything would be done to improve conditions at work before the EEOC got involved. When he complained about a noose that was hung from his forklift, he said, his boss told him it was “just guys having fun” and that he should throw it away and get back to work.
“I was just so in awe of the EEOC and the actual research they had done,” said Glasper, 57, of Park Forest, Ill. “They had pulled all of the atrocities together. They were able to document this stuff and get the proof. I had gotten to the point where I never thought anything would be done about it.”
Lopez, who was named by President Barack Obama in 2009, is the first career EEOC attorney to be named general counsel; the job typically goes to people from outside the government. He made his mark helping the agency develop large, high-impact cases against companies such as Walmart, UPS and AutoZone.
The commission decided in 2006 to make systemic cases a priority but was hamstrung by major budget cuts during the Bush administration. EEOC staffing levels were trimmed by almost 25 percent. Spending was restored once Obama took office, and the agency has hired hundreds of new investigators and experts to tackle the cases.
“If you are just resolving one person’s complaint, and it’s a policy affecting many people, you’re not making an impact,” said Julie Schmid, acting director of the EEOC’s Minneapolis office, which negotiated the Pepsi settlement. “You’re not doing the best you can.”
At the same time, the commission is facing growing resentment in the business community, and some courts are questioning its tactics.
“Unfortunately, we have seen that the EEOC can sometimes be too quick on the trigger in bringing these kinds of cases against employers without adequate foundation and plunging ahead to force an employer into a settlement,” said Randel Johnson, the U.S. Chamber of Commerce’s vice president of labor issues.
In three recent cases, federal judges said the commission had no basis to bring class action lawsuits and ordered the EEOC to pay the attorney fees and costs of corporate defendants. Last year, a judge awarded $2.6 million in fees to Ohio-based uniform maker Cintas Corp., finding the EEOC failed to show the company discriminated against women applying for service sales representative positions.
Another judge awarded $750,000 to Peoplemark Inc., a Kentucky-based temporary staffing company, saying the commission could not support its claim that using criminal convictions to screen job applicants resulted in a disparate impact on minorities. The EEOC is appealing both decisions.
In a third case, a judge’s award of about $4.5 million to Iowa-based CRST Van Expedited Inc. later was thrown out by the 8th U.S. Circuit Court of Appeals. The appeals court still found the EEOC was premature in filing a lawsuit on behalf of more than 100 women who claimed they were sexually harassed by male truck drivers at the company.
“I think the agency’s gotten scuffed up a bit in some of these recent decisions,” said Ron Cooper, who served as EEOC general counsel during the Bush administration. “The agency needs to have its ducks in a row when it files the lawsuit, and not just have a general thought that there’s a problem and hope to discover support in the course of litigation.”
Lopez defended his tactics.
“Our litigation success rate is 90 percent, better than the private bar,” he said. “We want to bring solid cases.”