United States Department
of the Interior
OFFICE OF THE SECRETARY
Washington, D.C. 20240
May 18, 2000
EQUAL OPPORTUNITY DIRECTIVE NUMBER 2000-03
(Supplement)
TO:
Bureau and Office Equal Opportunity Officers
FROM:
E. Melodee Stith - Director
Office for Equal Opportunity
SUBJECT:
'New Chapter to EEOCs Management Directive 110 - Settlement
Authority
On May 17, 2000, the U.S. Equal Employment
Opportunity Commission (EEOC) released the attached new chapter to its
Management Directive 110 which sets forth the authority for settlement
of federal sector discrimination disputes. The guidance is intended to
facilitate and expedite the settlement of federal sector EEO cases at all
stages of the complaint process. Please ensure that all Bureau personnel
involved in processing complaints, negotiating settlements, and providing
related personnel services are aware of this new guidance, which can also
be found at www.eeoc.gov.
The New Chapter 12 on Settlement Authority
states that agencies have broad authority to settle EEO disputes by applying
the full range of remedies a court could order if the case were to go to
trial. Moreover, agencies are authorized to enter into settlements of claims
brought under Title VII of the Civil Rights Act, the Age Discrimination
in Employment Act, the Equal Pay Act, and the Rehabilitation Act without
a finding of discrimination or an admission of wrongdoing.
The guidance notes that agencies and their employees may be creative in crafting settlements. For instance, settlement of EEO complaints may contain monetary payments that are independent of any personnel action, providing that the payment does not exceed the amount of back pay, attorneys fees, costs or damages the employee would be entitled to in the case if discrimination has been found. The new chapter also points out that settlement of EEO disputes may contain terms affecting the retirement status of the complainant. It explains that, in such cases, all appropriate contributions to the retirement funds must be made.
In issuing the new guidance and the attached Questions and Answers on the chapter, .the EEOC indicated that it worked closely with the Office of Personnel Management in developing the new Chapter 12 on to ensure consistency in approach and guidance. It is a continuance of EEOCs efforts to improve and streamline the federal sector EEO complaint process.
Attached:
Chapter
12 of MD-lb
Questions
and Answers on New Chapter
cc: Carolyn Cohen, Director,
Personnel Policy
Bureau
and Office Personnel Officers
The US. Equal Employment Opportunity Commission
CHAPTER 12
SETTLEMENT AUTHORITY
I. INTRODUCTION
Public policy favors the amicable settlement
of disputes. It is clear that this policy in favor of settlement of disputes
applies particularly to employment discrimination cases. See, ~ Sears
Roebuck & Co. v. Equal Employment Opportunity Comm., 581 F.2d 941
(D.C. Cir. 1978); Shaw v. Library of Congress, 479
F. Supp. 945 (D.D.C. 1979). Agencies are encouraged to seek resolution
of EEO complaints through settlement at any time during the administrative
or judicial process. Agencies and EEO complainants should be creative in
considering settlement terms. In this chapter, we discuss the authority
for settlements of EEO disputes and various options for those settlements.
II.AUTHORITY
Title VII of the Civil Rights Act of 1964
expressly encourages the settlement of employment discrimination disputes
without litigation. Courts have consistently encouraged the settlement
of discrimination claims and have upheld those settlements when challenged.
See, ~ Occidental Life Insurance Co. v. Equal Employment Opportunity
Comm., 432 U.S. 355 (1977); Alexander v. Gardner-Denver Co.,
415 U.S. 36 (1974).
The Supreme Court held in Chandler v.
Roudebush, 425 U. S. 840 (1976), that federal employees have the same
rights under the employment discrimination statutes as private sector employees,
thus recognizing the right of federal employees to enter into voluntary
settlements with federal agencies. As a result, section 717 of Title VII
of the Civil Rights Act of 1964 authorizes agencies to fashion settlements
of EEO disputes in resolution of such claims. The same analysis applies
to disputes brought under section 501 or 505 of the Rehabilitation Act
of 1973, section 15 of the Age Discrimination in Employment Act of 1967
and the Equal Pay Act. ~ Matter of Albert Li Parker, 64 Comp.
Gen. 349 (1985).
Conciliation and voluntary settlement are
critical to efforts to eradicate employment discrimination, both in the
public and private sectors. The legislative history of section 717 of Title
VII is unequivocal in stressing that the broadest latitude exists in determining
the appropriate remedy for achieving this end.~1~
The Equal Employment Opportunity Commissions
strong support for settlement attempts at all stages of the EEO complaint
process is codified in 29 C.F.R. § 16
14.603, which states, "Each agency shall make reasonable efforts to voluntarily
settle complaints of discrimination as early as possible in, and throughout,
the administrative processing of complaints, including the pre-complaint
counseling stage." Settlement agreements entered into voluntarily
and knowingly by the parties are binding on the parties. Settlements may
not involve waiver of remedies for future violations. Settlements of age
discrimination complaints must also comply with the requirements of the
Older Workers Benefits Protection Act, 29 U.S.C. § 626,
involving waivers of claims. That is, a waiver in settlement of an age
discrimination complaint must be knowing and voluntary.
The Department of Justice Office of Legal
Counsel has affirmed the broad authority of agencies to settle EEO disputes
by applying remedies a court could order if the case were to go to trial.
In an opinion interpreting the authority of an agency to settle a Title
VII class complaint, the Departments Office of Legal Counsel advised that
a complainant can obtain in settlement whatever the agency concludes, in
light of the facts and recognizing the inherent uncertainty of litigation,
that a court could order as relief in that case if it were to go to trial.
In the case it reviewed, which alleged discrimination in classification
decisions, the Office of Legal Counsel determined that the agency could
agree not to reclassify positions of specific employees downward because
a court could enjoin reclassification of the positions of those employees
if the court found some cognizable danger of recurrent violation. The Office
of Legal Counsel found the proposed settlement valid under Title VII even
though the Office of Personnel Management contended that the agencys authority
to reclassify pursuant to applicable statutes, rules and regulations cannot
be superseded by settlement.
The relief provided by an agency to settle
an EEOdispute cannot be greater than the relief a court could order if
that particular dispute were to go to trial. For example, assume that a
GS-9 employee files an EEO complaint alleging discrimination in the denial
of a promotion to the level of a GS-l1. If the employee has met the time-in-grade
and any other job-related requirements, it is appropriate to offer in settlement
a retroactive promotion to GS- 11. It would not be appropriate, however,
to propose a promotion to a GS- 12 position for which the employee has
not met the requirements. However, if an individual was denied promotion
to a GS- 11 position and one or more individuals who got the promotion
at that time was subsequently promoted to GS-12 based on a career ladder,
then it may be appropriate to offer a GS -12 position in settlement of
the complaint.
On the other hand, parties are encouraged
to be creative in resolving an employment dispute and may agree to settle
a complaint for relief that may be different than that which a court might
order, as long as it is no greater than what a court might order. For example,
an agency may settle a complaint involving the termination of an employee
by agreeing to pay for or provide outplacement services to help the former
employee find a new job, provided that the cost of the outplacement services
does not exceed the total monetary relief a court could order if the complainant
were to prevail in the case. In another example, an agency could agree
to reassign a complainant to a different supervisor or office in a settlement
of a complaint alleging discriminatory failure to promote, where the complainant
and the supervisor who made the promotion decision do not get along.
III.TITLE VII AUTHORITYINDEPENDFTNT
OF BACK PAY ACT
The Comptroller General of the United States has considered objections to settlements of EEO disputes in a number of cases. In these decisions, the Comptroller General has confirmed the authority of agencies to enter into settlements of EEO claims and considered ancillary questions about settlements.
In one of these decisions, the Comptroller
General affirmed that Title VII contains authority for remedying employment
discrimination and this authority is independent of the authority contained
in the Back Pay-Act to provide back pay only where a finding-has been made
of "an unwarranted and unjustified personnel action." 5 U.S.C. §
5596.
"The connection between Title VII and the Back Pay Act arises only because
EEOC has provided in its regulations on remedial actions that when discrimination
is found, an award of back pay under Title VII is to be computed in the
same manner as under the Back Pay Act regulations." Matter of
Equal Employment Opportunity Commission. Informal Settlement of
Discrimination Complaints, 62 Comp. Gen. 239, 242 (1983). The
authority to award back pay is derived from Title VII; the regulations
borrow the formula for calculating the amount of back pay owed from the
Back Pay Act.
The independent Title VII authority to
settle EEO claims is significant because unlike the Back Pay Act, section
717 of Title VII does not limit awards of back pay to situations where
there has been a finding of an unjustified or unwarranted personnel action.
Thus, there is no impediment to an award of back pay as part of a settlement
without a finding of discrimination.
When evaluating the risk of litigation versus the cost of settlement, agencies should include the cost of a federal retirement annuity in their consideration if an annuity would become payable immediately. This reflects the actual cost to the government of the proposed settlement and should be considered when deciding whether the settlement is in the interest of the government. This calculation may lead an agency to explore alternative solutions such as purchasing a private annuity. The purchase of a private annuity may not be desirable in all instances, but can be considered as a possible alternative. Following are some examples that reflect this calculation:
• An employee at a GS-14, step 10, separates at age 50 with 25 years of service. His only annuity eligibility is for a deferred annuity at age 62. The present value of this deferred benefit (when the employee is age 50) is $259,992. If, under the terms of a settlement agreement, his separation is changed to an involuntary separation (thus entitling him to an immediate discontinued service retirement benefit), the value of the benefit is $691,546. Thus, the cost to the government resulting from the settlement is the difference, or an additional $431,554.
• An employee at a GS-l4, step 10, separates at age 55 with 30 years of service, and therefore is eligible for an immediate annuity. The value of this annuity is $843,800. If, in settlement, she is retroactively promoted to a GS- 15, step 10, for three years, the value of her annuity becomes $992,669. This means the settlement costs the government an additional $148,869 in retirement annuities.
• An employee at GS-14, step 10, separates at age 56 with 30 years of service and is eligible for an immediate annuity valued at $825,588. If, pursuant to a settlement, he is retroactively considered a law enforcement officer for 20 years of his federal career, the value of his retirement benefit becomes $1,027,344. Thus, the settlement adds $201,756 to the governments cost of his retirement.
• An employee at a GS-l4, step 10, separates at age 50 with 25 years of service. When the employee is 55, the value of her deferred annuity payable at age 62 is $364,653. If the employee is returned to the agencys rolls for five years, enabling her to retire immediately, her retirement benefit has a value of $1,044,361. This settlement would add $679,708 to the governments costs.
• In settlement, the level of a GS-12,
step 10, employee is retroactively changed to GS-14, step 10, for a period
of three years. Assuming that she is entitled to an immediate annuity,
the value of her retirement benefit is raised from $582,132 to $817,945.
Thus, the additional cost to the government of this settlement is $235,813.
IV. NO FINDING OFDISCRIMINATION
NECESSARY FOR SETTLEMENTS
It has long been the practice in both the
private sector and the federal sector for employers and agencies to enter
into settlements that contain cash payments where there has been neither
a finding of discrimination, either judicially or administratively, nor
an admission by the employer or agency of any wrongdoing.
The Comptroller General has supported these
settlements, stating "it is beyond question that an agency has the general
authority to informally settle a discrimination complaint and to award
back pay with a retroactive promotion or reinstatement in an informal settlement
without a specific finding of discrimination." Matter ofEqual
Employment Opportunity Commission, Informal Settlement ofDiscrimination
Complaints, 62 Comp. Gen. 239, 242 (1983).
V. CASH AWARDS WITHOUTCORRESPONDING
PERSONNEL ACTIONS
Settlements of EEO disputes may contain
monetary payments that are independent of any personnel action, provided
that the monetary payment does not exceed the amount of back pay, attorneys
fees, costs or damages( the employee would have been entitled
to in the case if discrimination had been actually found.
The Comptroller General has considered
settlements of EEO disputes comprised of monetary payments unconnected
to personnel actions on at least two occasions and held that they were
authorized and appropriate.
We conclude that Federal agencies have
the authority in informally settling discrimination complaints filed under
Title VII of the Civil Rights Act of 1964, as amended, to make awards of
backpay, attorneys fees or costs, without a corresponding personnel action
and without a finding of discrimination, provided that the amount of the
award agreed upon must be related to backpay and may not exceed the maximum
amount that would be recoverable under Title VII if a finding of discrimination
were made.
~ 62 Comp. Gen. at 244; Matter ofAlbert
D. Parker, 64 Comp. Gen. 349 (1985).
VI. PERSONNEL ACTIONS WITHLUMP
SUM PAYMENTS
An agency may informally settle an EEO
complaint by providing a retroactive personnel action, but providing for
a lump sum payment in lieu of back pay. As long as the settlement does
not exceed the relief to which the complainant would be entitled if a finding
of discrimination had been made, it is authorized.
If the settlement provides for a retroactive
personnel action, all appropriate contributions to the retirement funds
must be made. Settlements may resolve claims actually made and also claims
that could be made, provided that the factual predicate for the claims
that could be made has occurred. For example, an agency may settle a complainants
formal complaint alleging failure to promote and include relief for the
complainants retaliation claim, which has not been raised, except in the
settlement discussions.
Since the Civil Rights Act of 1991 provided
for award of compensatory damages in appropriate cases, settlements often
provide for one lump sum amount covering monetary relief even when there
is a personnel action involved as well. In these cases, parties can agree
to an overall figure in the settlement that represents damages, back pay
and attorneys fees. That figure can reflect the maximum amount a court
could award, and need not be limited to an amount that the agency believes
a complainant can prove in court. The settlement agreement does not need
to contain a separate breakdown of the lump sum showing individual amounts
of back pay, damages and fees. The lump sum agreed to by the parties can
be equal to or less than the total amount of back pay, damages and fees
that would be awarded if a finding of discrimination were made. A lump
sum cannot, under any circumstances, exceed the amount that the agency
concludes, in light of the facts and recognizing the inherent uncertainty
of litigation, a court could award if a lawsuit were brought.
If a lump sum settlement is intended to
award enhanced retirement benefits as part of its terms, the rates of basic
pay or grade and step deemed to be received by the complainant, and the
periods during which each rate of pay was received, must be specified in
the settlement terms. OPM advises that if this specific information is
not set out in the settlement document, the terms of the settlement will
not be included in the calculation of the complainants retirement benefits.
VII. IMPLEMENTING SETTLEMENTAGREEMENTS
There may be some instances where a proposed
informal settlement appears to be at odds with normal personnel procedure
or practice contained in regulations implementing Title 5 of the United
States Code or processing guidance of the Office of Personnel Management.
Such situations could arise where Office of Personnel Management regulations
or guidance foresee personnel actions taken in the normal course of business
and do not generally discuss personnel actions taken pursuant to court
order or a settlement. Title VII provides authority to enter into settlements
of EEO complaints~6~, and, likewise, Title VII provides authority
for agencies to effectuate the terms of those settlements.
Chapter 32, Section 6(b) of OPMs Guide
Xo Processing Personnel Actions describes the procedure for documenting
personnel actions taken as the result of a settlement agreement, court
order, EEOC or MSPB decision. The purpose of this procedure is to protect
the privacy of the employee.
Rather than including personal and irrelevant
settlement information on the employees SF-SO, the SF-50 may be processed
with the computer code "HAM." ("HAM" is a computer code that prints on
the SF-SO a citation to 5 C.F.R. § 250.10
1.) If an agencys computer system does not permit the use of the citation
"HAM," then the SF-50 may cite to 5 C.F.R. § 250.101.
This section of the Code of Federal Regulations indicates that the personnel
action is processed under an appropriate legal authority.
1. S. Rep. No. 92-4 15, 92nd Cong., 1st Sess. 15 (1971), reprinted in Senate Comm. on Labor and Public Welfare, 92nd Cong., 2d Sess., Legislative History of the Equal Employment Opportunity Act of 192~, at 424 (Comm. Print 1972).
2. One of the mechanisms for settling complaints is the offer of resolution, which is set forth in 29 C.F.R. § 16 14.109(c). Offers of resolution are not, however, the only way to settle complaints; they are a particular method, which, in certain circumstances, can limit an agencys liability for attorneys fees and costs.
3. Section (f)(2) of OWBPA in conjunction with sections (f)(l)(A) through (E) set forth-the minimum standards. A settlement agreement is knowing and voluntary when the complainant is given a reasonable period of time to consider the settlement agreement, and the waiver is worded in a reasonably understandable way, specifically refers to rights or claims under the ADEA, and does not waive future rights. In addition, the settlement agreement must provide something of value in exchange for the waiver and must advise the complainant to consult with an attorney before signing the agreement.
4. Attorneys fees are not available during the administrative process of complaints brought under the Age Discrimination in Employment Act or the Equal Pay Act.
5. EEOC has the authority to award compensatory damages during the administrative process. Gibson v. West, 527 U.S. 212 (1999). Agencies, therefore, are authorized to pay compensatory damages in a settlement during the administrative process. Compensatory damages should be calculated separately from back pay, other benefits and fees, and are limited to no more than $300,000.
6. As noted earlier in this chapter, the
same analysis applies to EEO complaints filed under the Rehabilitation
Act of 1973, the Age Discrimination in Employment Act of 1967, and the
Equal Pay Act of1963.
Return to Home Page
The US. Equal Employment Opportunity Commission
Questions and Answers
New Chapter on Settlement Authority
Management Directive 110
The U.S. Equal Employment Opportunity Commission
has issued a new chapter 12, entitled Settlement Authority, as part of
its federal sector Management Directive, MD 110. The chapter explains the
standards governing the settlement of EEO disputes in the federal sector.
By giving both agencies and their employees useful and detailed information
about the options they have in settling EEO cases, it will make it more
likely that parties in these disputes will be able to resolve their differences
on their own. This new chapter helps implement EEOCs long-standing policy
of strong support for settlements of EEO cases in appropriate circumstances.
Q: What gives federal agencies the
legal authority to settle EEO disputes?
A: All of the statutes enforced by the
EEOC -- Title VII (prohibiting employment
discrimination on the basis of race, color, sex, national origin, or religion),
the Rehabilitation Act (protecting federal employees with disabilities
against discrimination), the Age Discrimination in Employment Act (protecting
employees age 40 and over from discrimination) and the Equal Pay Act (guaranteeing
equal pay to men and women performing substantially equal jobs) authorize
agencies to enter into settlements of claims brought under the statutes.
Q: Must an agency admit that it
unlawfully discriminated or took an unjustified or unwarranted personnel
action to settle an EEO dispute?
A: No. Agencies do not have to admit to
wrongdoing in order to settle an EEO claim. Because the legal authority
to settle these cases is found within the EEO laws themselves, the Back
Pay Act requirement that there must be a finding of an unjustified or unwarranted
personnel action to justify a payment of back pay in connection with other
personnel claims doesnt apply.
Q: What types of settlements may
parties to an EEO dispute agree to?
A: Agencies have significant flexibility
in structuring settlement agreements. As long as the parties agree, they
can settle for any relief that a court could order if the case were to
go to trial. For example, an agency and an employee may agree to a retroactive
or prospective personnel action, back pay, attorneys fees, costs, and/or
monetary damages. Remedies can also include more creative measures such
as the provision of out-placement services to a discharged employee, so
long as the costs dont exceed what the employee would be entitled to under
the EEO laws.
Q: Can agencies settle EEO cases for
cash payments to the employee, but no corresponding personnel actions?
A: Yes. Settlements may involve monetary
payments without any personnel action, provided that the monetary payment
does not exceed the amount of back pay, attorneys fees, costs and/or damages
the employee would be entitled to in the case if discrimination had been
found. For example, if the parties agree, they could settle a case involving
a claim of a discriminatorily denied promotion with a cash payment to the
employee but no promotion.
Q:Could an agency settle a case for
a retroactive personnel action but no, or only partial, back pay.
A:Yes, again. For example, an agency and
employee might agree to a retroactive personnel action and a lump sum cash
payment which does not specify to what extent it includes back pay, damages,
and/or attorneys fees. The parties could also agree to a retroactive personnel
action, such as a promotion, without any accompanying back pay or monetary
payment. As long as the personnel action and the monetary payments do not
exceed the -employees legal entitlements, such a settlement would be acceptable.
Q: Can settlements of EEO disputes contain
terms affecting the retirement status of the complainant?
A: Yes. However, if a settlement provides
for a retroactive personnel action, all appropriate contributions to the
retirement funds must be made before that personnel action can have an
effect on the employees retirement pension or status. In addition, the
rates of basic pay or grade and step deemed to be received by the complainant,
and the periods during which each rate of pay was received must be specified
in the settlement terms.
Q: Did the EEOC consult with the Office
of Personnel Management in preparing the new chapter?
A:Yes. EEOC worked with OPM to ensure consistency
in approach and guidance.
The U S. Equal Employment Opportunity Commission
FOR IMMEDIATE RELEASE CONTACT: Reginald Welch
Wednesday, May 17, 2000 David Grinberg
(202) 663--4900
TTY: (202)663--4494
EEOC ISSUES NEW CHAPTER TO MANAGEMENT DIRECTIVE 110 TO SPEED UP SETTLEMENT OF FEDERAL SECTOR BIAS COMPLAINTS
WASHINGTON -- The
U.S. Equal Employment Opportunity Commission (EEOC) today released a new
chapter to its Management Directive 110 setting forth the authority for
settlement of federal sector discrimination disputes. The guidance contained
in the chapter is intended to facilitate settlement of federal sector EEO
cases at all stages of the complaint process.
"The Commission strongly supports the earliest
possible settlement of EEO complaints in appropriate cases," said EEOC
Chairwoman Ida L. Castro. "By spelling out the standards for settling such
cases, this new chapter will enable federal agencies and employees to resolve
disputes in a more efficient and expeditious manner."
Chapter 12 on Settlement Authority states
that agencies have broad authority to settle EEO disputes by applying the
full range of remedies a court could order if the case were to go to trial.
Moreover, agencies are authorized to enter into settlements of claims brought
under Title VII of the Civil Rights Act, the Age Discrimination in Employment
Act, the Equal Pay Act, and the Rehabilitation Act without a finding of
discrimination or an admission of wrongdoing.
The guidance notes that agencies and their
employees may be creative in crafting settlements. For instance, settlement
of EEO complaints may contain monetary payments that are independent of
any personnel action, providing that the payment does not exceed the amount
of back pay, attorneys fees, costs or damages the employee would be entitled
to in the case if discrimination has been found.
The new chapter also points out that settlement
of EEO disputes may contain terms affecting the retirement status of the
complainant. It explains that, in such cases, all appropriate contributions
to the retirement funds must be made.
The EEOC worked closely with the Office
of Personnel Management in developing the new Chapter 12 on Settlement
Authority to ensure consistency in approach and guidance. "The issuance
of this new chapter marks another step in the Commissions unwavering efforts
to improve and streamline the federal sector EEO complaint process," added
Chairwoman Castro. "It is apparent that it still takes too long to resolve
EEO disputes, which has led to frustration and a lack of faith in the system
by federal workers and their representatives. The Commission is working
hard to address the matter."
Since becoming EEOC Chairwoman in October
1998, Ms. Castro has led an unprecedented effort to improve the federal
governments EEO complaint process by increasing its fairness, effectiveness,
and efficiency. while consulting broadly with agency stakeholders. Some
of the important measures the EEOC has implemented under her leadership
include the following:
Thispagewas last modified on May 17, 2000.
Return to Home Page