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EEOC Sues Staffing Firm and Client Over Alleged Preference for Hispanic Workers

Conciliation Process Fails - Why This Matters

The Equal Employment Opportunity Commission has sued Memphis agency Supreme Staffing, LLC and its client Aaron Thomas Company, Inc. a manufacturer, contract packager and warehouse operator. The lawsuit (copy attached below) filed in Federal Court alleges that the client asked Supreme Staffing to prefer Hispanic applicants over African American applicants, and that Supreme Staffing complied, despite protests by Supreme's former Account Manager (now a government witness).

The lawsuit goes on to allege that Aaron Thomas and Supreme Staffing discriminated against African American employees by segregating them and placing them in less desirable and lower-paying positions.

Another count alleges that "the unlawful employment practices include an ongoing pattern or practice of terminating African Americans at a disproportionally higher rate than non-African American employees because of their race."

The Complaint alleges that conciliation efforts failed:

The Commission engaged in communications with Supreme Staffing to provide Supreme Staffing the opportunity to remedy the discriminatory practices described in the Letters of Determination.
The Commission could not secure from Supreme Staffing an acceptable
conciliation agreement.
On August 22, 2022, the Commission issued to Defendant Supreme Staffing a Notice of Failure of Conciliation advising it that the Commission could not secure a conciliation agreement acceptable to the Commission from Defendant Supreme Staffing.

The EEOC has a duty to offer "conciliation" to a prospective defendant, that is, an informal process aimed at resolving matters prior to the EEOC taking the matter to litigation. The EEOC issued new regulations in 2021 designed to encourage defendants to participate in the voluntary process. You can read about it here: EEOC Revises Conciliation Procedures, Creating Win-Win for Respondents and Claimants | Insights | Holland & Knight (hklaw.com).

When the EEOC has you in its sights, conciliation is often an employer's best path to a resolution. As I have warned before, the EEOC has unlimited resources to litigate a lawsuit. "But wait," you say, "we have Employment Practices Liability Insurance to cover the cost of defense and the payout if we lose." While liability insurance (after deductible) may take care of monetary damages, it will not help with the most problematic (for employers) of all EEOC demands, injunctive relief. From the lawsuit:

Wherefore, the Commission requests that this Court:
A.   Grant a permanent injunction enjoining Defendants Aaron Thomas and Supreme Staffing, its officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them from discriminating against African American candidates for employment and current African American workers because of their race.
B.   Order Defendants Aaron Thomas and Supreme Staffing to institute and carry out policies, practices, and programs which provide equal employment opportunities for all aggrieved individuals, and which eradicate the effects of their past and present unlawful employment practices.

This is basically a demand for a court order that governs how you run your business in perpetuity. Conciliation gives an employer the opportunity to enter into a voluntary Conciliation Agreement with the EEOC, spelling out the steps the employer will take going forward to remedy and prevent discrimination. Unlike a court- issued permanent injunction, Conciliation Agreements are typically of limited duration. And they do not come with the threat of contempt of court if there is a compliance issue.

You can be certain the EEOC's demands in the conciliation process will seem harsh and perhaps unreasonable - that's just the way things work when the government has you in its sights. But if you find yourself in this position, it is important to consider that the alternative may be worse.