Here is the latest issue of “This & That” Tuesday. I hope you find it to be informative and useful.

EEOC’s FY 2011 Enforcement Statistics

• Received a record 99,947 charges of employment discrimination
• Obtained $91 million in relief from its litigation efforts, and $455.6 million in relief through its combined enforcement, mediation, and litigation programs
• Resolved 112,499 charges – representing, for the second year in a row, a greater number of charges resolved than charges received
• Set new records in its mediation program, with both a record number of resolutions (9,831) and benefits ($170 million)
• Filed 300 lawsuits, 261 of which were “merits” lawsuits (defined as direct suits and interventions by the EEOC alleging violations of the substantive provisions of the statutes it enforces, as well as suits to enforce administrative settlements), and 39 of which were subpoena enforcement or other actions. Of the 261 merits lawsuits, 23 were large class actions involving allegations of systemic discrimination
• Conducted public outreach and education programs reaching approximately 540,000 people

As the statistics reflect, charges of retaliation were the most numerous in fiscal year 2011, with 37.4% of the 99,947 total charges containing allegations of retaliation under any of the statutes enforced by the EEOC. Charges containing allegations of race and sex discrimination were the second and third most numerous, with 35.4% and 28.5% of all charges received containing such allegations, respectively. Notably, although allegations of race and sex discrimination were still quite numerous, these numbers actually represent a slight decline from the previous year. In contrast, the number of charges containing allegations of age and disability discrimination increased in fiscal year 2011, with 23.5% and 25.8% of total charges received, respectively, containing such allegations.  Also, in its first full year of enforcing GINA, the EEOC received 245 charges alleging violations of that Act.

With regard to disability discrimination, the increase of charges containing such allegations is not a surprise, as charge activity in this area has been steadily increasing over the past three years. In addition, disability discrimination has been a major focus of the agency’s recent enforcement efforts. ADA claims produced the highest increase in monetary relief: the administrative relief obtained for disability discrimination charges increased by almost 35.9% to $103.4 million compared to $76.1 million in the previous fiscal year.

Piggly Wiggly Stores to Pay $40,000 in Race and Sex Discrimination Suit

The owners of two Piggly Wiggly supermarkets in Hartsville and Lafayette, Tenn., will pay $40,000 to settle a race and gender discrimination lawsuit filed by the EEOC.

In its lawsuit, the EEOC asserted that the Piggly Wiggly locations violated federal law by maintaining policies and practices that intentionally failed to hire African-Americans because of their race for positions at the company’s Piggly Wiggly stores. The EEOC further charged that the company maintained a segregated work force and an established practice of not hiring males for cashier positions at the same locations.

Using race or gender as a basis for hiring decisions or job assignments violates Title VII of the Civil Rights Act of 1964. The EEOC filed suit after first attempting to reach a pre-litigation voluntary settlement through its conciliation process. In addition to monetary relief, the four-year consent decree entered by the Court requires Defendant  to establish a written policy which provides that all job assignments will be made without consideration to gender; establish guidelines and procedures for processing employment applications; provide Title VII training on race and gender discrimination to its managers; meet recordkeeping and reporting requirements; and post a notice about the lawsuit and settlement at its store locations.

California's Interests and Public Policy Trump Contract's Choice-of-Law Provision

The ninth circuit ruled (Ruiz case) that California’s interests and public policy superseded a choice-of-law provision stating that Georgia law would govern disputes between a company and its purported independent contractor. The court reaffirmed that companies with California ties must consider the state’s unique employment laws and public policy even when crafting employment agreements and restrictive covenants for contemplated use outside California.

In Ruiz, delivery truck drivers sued under federal and California law claiming that the company they provided services to failed to pay overtime as well as vacation and severance compensation. The defendant company asserted that the drivers, each of whom had signed independent contractor agreements, were not entitled to such pay. Citing the Georgia choice-of-law provision in the independent contractor agreements, the company argued that the drivers could not satisfy their burden under Georgia law and overcome the presumption of independent-contractor status. In finding that Georgia law controlled, the trial court analyzed only whether that state had a “substantial relationship to the parties or their transaction.” The trial court concluded that a substantial relationship existed because the defendant company was incorporated in and had its principal office in Georgia.

On appeal, the Ninth Circuit agreed with the trial court’s substantial-relationship analysis but ultimately overturned the court’s ruling because it failed to consider two additional factors required under California’s choice-of-law framework. First, the trial court did not analyze whether Georgia law conflicted with California public policy. Second, the court failed to consider whether California had a “materially greater interest” in the case’s outcome.

Based on the direct conflict between Georgia law and California public policy as well as California’s materially greater interest in the case’s outcome, the Ninth Circuit concluded that the trial court should have disregarded the Georgia choice-of-law provision in the independent contractor agreements. Accordingly, the Ninth Circuit overturned the trial court’s decision and sent the case back to the trial court to apply California law to determine whether the drivers were employees or independent contractors.

The Ruiz decision emphasizes that California courts will likely disregard a choice-of-law provision in a non-compete agreement when the covenanting employee resides and provides services in California. Consequently, an employer should not expect that California courts will honor choice-of-law provisions in non-compete agreements even though the employer’s primary business operations are outside the state.