This essay is adapted from a paper originally commissioned as part of the Economic Policy Institute’s Unequal Bargaining Power (UBP) initiative. The project was made possible because of a general operating grant from the Bernard and Anne Spitzer Charitable Trust and support from the William and Flora Hewlett Foundation.
Over a half century after transformative civil rights laws such as Title VII of the Civil Rights Act of 1964 made discrimination illegal, our nation is still grappling with its history of racial injustice and ongoing systemic discrimination. Although America’s anti-discrimination laws have led to substantial progress in tackling egregious discrimination, many structural forms of discrimination remain entrenched in our employment systems. The promise of these laws has not been fully realized because the nation’s enforcement system does not effectively confront the fundamental power imbalance underpinning the employment relationship. Many of the legal doctrines and organizational practices that predominate today fall short of creating meaningful accountability for discrimination. Because workers encounter a vast information asymmetry, along with economic vulnerability, the predominant complaint-driven system of enforcement often creates insurmountable hurdles to challenging systems that perpetuate discrimination. Our legal system has also empowered employers to write contractual rules that strip away employee rights and undermine accountability for discrimination. In addition, federal anti-discrimination laws create gaps in coverage for many of our most vulnerable workers, leaving them without fundamental civil rights protections.
The COVID-19 crisis has exacerbated the harm of long-standing occupational segregation and deep economic inequality. Black, Latinx, Native American, and Asian American workers are facing disproportionately higher rates of unemployment than white workers. Moreover, Black and Latinx workers are overrepresented in hazardous and low-paying jobs deemed essential. Workers are increasingly fearful of filing complaints in an unstable job market. Even more troubling, research indicates that Black workers are twice as likely as white workers to report that they or someone at work may have been punished or fired for raising safety concerns about COVID-19.
The momentum building for racial justice in response to police killings of Black Americans has put a sharp focus on inequality and structural racism. Thus, we are in a critical moment to re-examine employment discrimination, our current enforcement system, and the power imbalances in the employment relationship that undermine workers’ civil rights. There is an urgent need to restructure our enforcement system to shift the power imbalance and ensure meaningful accountability.
Employment Discrimination and Our Current Enforcement System: Too Much Burden on Workers
Structural racism, gender stereotypes, and other biases are embedded in many employment practices that lead to discrimination and hostile work environments. Decades of research show that job applicants with “non-white-sounding” names are substantially less likely to obtain an interview when compared with those with “white-sounding” names with the same qualifications. In the corporate sector, women remain underrepresented at every level, and women of color and women with disabilities report facing more barriers to advancement and receiving less support from managers than other women.
Today many long-standing employment practices, such as segregated job recruiting and referral networks, and subjective hiring and promotion criteria, operate to perpetuate occupational segregation. Occupational segregation—where one demographic group is over- or underrepresented among types of jobs—has persisted for decades and is a key driver of racial and gender gaps in earnings. Differences in education or skills explain only a small part of these inequities. Its origins stem from slavery and Jim Crow laws that explicitly excluded Black people from nearly all occupations but for a handful of low-paid ones. Black people who did become professionals were prohibited from serving white clientele. In addition, labor markets have devalued work performed by immigrants and women in industries like agriculture and domestic work. In the decade following the passage of the Civil Rights Act of 1964, which outlawed employment discrimination, occupational segregation declined dramatically. However, progress on integrating jobs stalled in the 1980s, and millennial workers today experience nearly as much racial and ethnic segregation in the workplace as prior generations.
Our anti-discrimination laws have been weakened by an enforcement system that does not create meaningful accountability or incentivize employers to identify structural barriers to prevent discrimination. At the root of the problem is a system that places far too much of the burden, responsibility, and risk of addressing discrimination on workers without confronting the inherent power and information asymmetries between workers and employers.
Currently, the primary means of enforcing our anti-discrimination laws is for individual workers to come forward and file complaints with their employer or a government agency. Under Title VII and most federal employment discrimination laws, workers must first file a formal charge of discrimination with the U.S. Equal Employment Opportunity Commission (EEOC) or a state or local fair employment agency before they can sue their employer in court. Even before employees reach the EEOC, most employers rely on a formal complaint process in which employees are expected to file an internal complaint.
Further exacerbating this problem, workers must contend with gross asymmetries of information and power as compared to employers, a situation that often creates insurmountable barriers for employees to raising complaints. The operation of anti-discrimination laws and institutional structures fail to confront these vast information and power imbalances; instead, they often act to tip the scales further in favor of employers. As a result, many workers do not come forward to report discrimination, and, with little chance of accountability for harm, organizations often do not prioritize addressing discrimination.
To confront these information and power asymmetries, our current enforcement system must be restructured so that the responsibility of enforcement does not fall almost entirely on workers. Instead, employers—who have the information and power to address discrimination—should bear a greater responsibility to prevent discrimination and to audit their policies and processes for disparities and bias. Furthermore, government enforcement agencies need sufficient resources for effective enforcement of the law, especially on behalf of the most vulnerable workers. And government agencies can strengthen enforcement by developing stronger relationships with stakeholders, including with worker organizations, to educate workers on their rights, better understand problems on the ground, and identify patterns of violations to inform enforcement.
Power and Information Asymmetries: Workers’ Lack of Access to Information
The asymmetry of power and information in all aspects of the employment relationship, from hiring to pay and complaint reporting, makes it challenging for workers to discover and prove discrimination. Before workers can bring a complaint, they must first have some evidence that they have been subjected to discrimination. Yet, under our employment structures, most workers have little or no access to this information. As a result, employers are unlikely to be held accountable for discrimination, which further incentivizes inaction to address or prevent it.
Information about recruitment and hiring discrimination
The asymmetry of information and power is perhaps nowhere more apparent than in the recruitment and hiring process. Researchers have found that hiring discrimination against Black and Latinx workers has declined little or not at all over a 25-year period, with white applicants receiving 36 percent more callbacks than Blacks and 24 percent more callbacks than Latinx applicants. Another study found that Asian-named applicants were 20 percent less likely to receive callbacks from large employers and nearly 40 percent less likely to receive callbacks from smaller employers.
Organizational and cultural factors play a critical role in amplifying workplace discrimination. Subjective decision-making has long been known to allow biases to influence workplace decisions. In the hiring and promotion processes, employers often consider cultural “fit,” yet employers may use this to replicate the current workforce. In a 2014 study on hiring discrimination by fine-dining restaurants, testers who were people of color had a lower likelihood of receiving a job interview and, if interviewed, a lower likelihood of receiving a job offer, resulting in a 22 percent net rate of discrimination for applicants of color. Restaurant employers often relied significantly on assessments of an applicant’s personality or other “soft skill” criteria, but these criteria were significantly influenced by gender and race bias, resulting in the exclusion of workers of color and female workers.
In recruitment, discrimination manifests in commonly adopted structures such as referrals based on social networks and personal connections. A 2017 survey of 53,000 employees, in which about one-third of those surveyed had received a referral, found that referrals overwhelmingly benefit white men.
Job applicants typically have little or no information regarding employers’ recruiting practices, resume screening decisions, and other hiring-related decisions and processes. Applicants are rarely provided with an explanation as to why they were denied a job. Nor do they have information regarding the other applicants or the decision-making process of the employer. The asymmetry of information between workers and employers in detecting discrimination is particularly problematic in light of studies suggesting that “targets of discrimination often underestimate the significance of discrimination in their own lives, even as they recognize it as a problem facing their group.” As a result, many instances of hiring discrimination go undetected.
Employers’ increasing use of technology-driven hiring assessments, including those driven by artificial intelligence, has heightened the problem of worker and employer information asymmetry. Major employers across industries are now using data-driven, predictive hiring tools such as online job advertisements and gamified selection assessments. Hiring assessment technology can operate to replicate and deepen existing inequities by relying on inaccurate, biased, or unrepresentative data that can produce discriminatory decisions. Even the most sophisticated tech companies struggle to ensure their AI systems are not discriminatory. Two years ago, Amazon abandoned an AI screening program because the system was reported to have taught itself to prefer male candidates, based on the company’s past hiring patterns.
Hiring assessment technology has the potential to help expand the applicant pool by measuring abilities rather than relying on proxies for talent, such as an elite college degree or employee referrals. By moving away from traditional criteria, employers could potentially hire from a more diverse pool of qualified candidates. But without sufficient oversight to ensure systems are designed to prevent and monitor for bias, automated systems create a substantial risk of making potentially discriminatory decisions virtually unchecked. Because technology provides a sense of objectivity and scientific analysis, discriminatory decisions can become magnified and rapidly expanded.
Information about pay and wage discrimination
Employees’ lack of access to information also contributes to pay discrimination. As with other employment decisions, many workers lack access to their co-workers’ pay information. Most employers do not make this information available and do not report this information to enforcement agencies. According to a 2017 report by the Institute for Women’s Policy Research, only about 17 percent of private companies practice pay transparency (making employee pay information public). In fact, 41 percent of private companies discourage and 25 percent explicitly prohibit discussion of salary information among their employees, even though the National Labor Relations Act prohibits employers from retaliating against nonsupervisory employees and job applicants who discuss wages with other employees. Without this information, workers and enforcement agencies are unable to challenge pay disparities. Moreover, in pay discrimination lawsuits, employers frequently oppose discovery of information or seek to seal documents regarding their pay practices. Given the low likelihood of accountability, employers are often incentivized not to conduct regular pay audits or to proactively evaluate pay-setting processes to minimize bias.
Information about discrimination in promotions and work conditions
Employees also face information asymmetries with respect to discrimination in promotions, performance evaluations, and discipline. This is particularly the case where the discrimination at issue is more subtle or when a pattern of behavior or culture of discrimination may be difficult for employees to prove. For instance, women face harsher discipline for workplace misconduct than men do. One recent study of a financial advisory industry found that following an incident of misconduct, female advisers were 20 percent more likely to lose their jobs. Similarly, research shows that Black workers receive extra scrutiny from their bosses, are more likely to have their job performance monitored, and are disproportionately punished for mistakes on the job. Detecting such discrimination requires access to company-wide data and can therefore be difficult to identify and prove.
As with hiring decisions, employers are increasingly relying on data and technology-driven tools to evaluate worker performance, raising the risk of biased decisions without accountability. Customer ratings have become an increasingly important performance measure for workers. Yet these systems, while appearing neutral, can operate with bias that adversely impacts workers based on protected categories. For example, studies have found evidence of racial and gender bias in online marketplace platforms. On Fiverr, a freelance services platform, researchers found evidence that Black and Asian American workers received lower ratings than white workers.
Retaliation undermines workers’ power
One of the greatest barriers for workers in bringing a complaint of discrimination is the risk of retaliation and harm to their career. Although employers are prohibited from retaliating against employees under all federal employment discrimination laws, data show employers frequently do retaliate. In 2019, 53 percent of private-sector charges filed with the EEOC included an allegation of retaliation. A 2018 report by the Center for Employment Equity found that 68 percent of sexual harassment charges during 2012-16 included a retaliation charge and 64 percent of those who filed sexual harassment charges reported losing their job as a result of their complaint.
People of color, women, and others in marginalized groups are particularly at risk of retaliation in the form of interpersonal costs, such as being ostracized by their co-workers or damage to their reputation. However, courts have often found that ostracization by co-workers is not sufficient to rise to an “adverse action” by the employer, which an employee must prove to win on a claim of retaliation.
Moreover, the costs and risks of coming forward are often greater for vulnerable workers, including low-wage and immigrant workers. Research has shown that workplace harassment is more likely to occur in organizations that are male-dominated and highly hierarchical, with a significant power imbalance among employees. Because power imbalances are often severe in the workplaces of low-wage workers, who are disproportionately women of color and immigrant women, these workers are at heightened risk for discrimination and especially harassment. Yet they are the most likely to keep silent, due to greater barriers in coming forward; many cannot afford to risk losing their jobs. Undocumented immigrant workers may not come forward out of fear of disclosure of their immigration status. Placing the overwhelming burden of enforcement on these workers fails to reckon with the reality created by power imbalances.
Power imbalances undermine workers’ access to complaint systems
Employers’ human resources staff and internal grievance processes often serve to protect employers from liability rather than address and prevent discrimination. In 2016, before the #MeToo movement went viral, the EEOC’s Taskforce on the Study of Harassment in the Workplace found that HR trainings and procedures are “too focused on protecting the employer from liability.” As a result, HR systems often respond to complaints as a threat to the organization. Workers who report discrimination through formal complaint mechanisms often face employers seeking to discredit them and failing to investigate complaints promptly and thoroughly. Companies rarely punish perpetrators, and instead more often transfer the victim to a different department or location.
In the 30 years since Anita Hill testified at Clarence Thomas’s Supreme Court confirmation hearings and brought attention to workplace sexual harassment, HR departments have been accepted as having primary responsibility for an organization’s efforts to prevent and address concerns of discrimination. Yet there is an inherent tension in the structure of most HR departments. In most organizations, HR is given multiple roles with often conflicting interests, including to recruit and maintain top talent, protect employers from discrimination complaints and liability, run an internal complaint process and conduct investigations, and prevent discrimination and improve workplace culture.
To ensure that the needs of employees are protected, organizations should consider separating the core functions of HR departments, providing employees their own advocates in internal complaint systems and establishing neutral and independent mechanisms to help resolve concerns. HR personnel cannot change workplace climate and culture on their own; institutional change requires support, resources, and buy-in from the top. As the EEOC report stated, “in working to create change, the leadership must ensure that any team or coalition leading the effort to create a workplace free of harassment is vested with enough power and authority to make such change happen.”
The challenges of current employer complaint systems must be examined in the context of their development in response to two Supreme Court decisions, issued over 20 years ago, on the same date, that established an affirmative defense—the Faragher-Ellerth defense—for employers against Title VII claims for harassment that creates a “hostile environment.” Employers have structured their complaint processes and discrimination policies to ensure that they can shield themselves from liability through this defense. Federal courts have subsequently consistently held that employers satisfy their duty to prevent harassment by merely having an anti-harassment policy and grievance procedure in place, rather than actually assessing whether the policies and procedures are effectively implemented. Moreover, federal courts have routinely held that when an employer has a grievance procedure in place, an employee’s delay in reporting or failure to report is per se unreasonable. As a result, employers can easily shield themselves from liability through symbolic compliance efforts.
However, in a recent court decision in Minarsky v. Susquehanna County, the U.S. Third Circuit Court of Appeals held that the fact that the employer had an anti-harassment policy was insufficient in and of itself to show that the employer had exercised reasonable care to prevent sexual harassment. The court also found that the employee’s failure to report the sexual harassment internally may have been reasonable in light of evidence that the employer did not respond effectively to prior complaints, noting “national news regarding a veritable firestorm of allegations of rampant sexual misconduct that has been closeted for years, not reported by the victims.” This decision reflects an important shift to require employers to show effective action.
Enforcement strategies to address power imbalances
In order to create a more effective enforcement system, we must confront the fundamental problem of a system that places the primary burden of enforcement on workers. We need to correct power disparities and create enforcement mechanisms that place a greater responsibility on entities with the most information and power to address discrimination in the workplace.
The solutions to the problems of information asymmetries and unequal bargaining power must work together. These solutions include (1) policies that encourage greater employer transparency and require data collection to support accountability; (2) investments that give workers, advocates, and government agencies the tools and resources that they need to take action against harassment and discrimination; and (3) revitalized legal doctrines and frameworks that align with the language and broad purpose of Title VII and other anti-discrimination laws.
Data collection, transparency, and accountability
To address information and power asymmetries that make it difficult for workers to identify and prove discrimination, employers should be required to collect data regarding their employment practices and decisions and disclose certain information to enforcement agencies, workers and their unions, and the public.
Studies have shown that when companies set up transparency and accountability structures, such as collecting and tracking data, identifying gender and racial disparities, and devising hiring and promotion plans to address disparities, the diversity of employees at the management level improves. Moreover, greater pay transparency can help to hold managers accountable and reduce pay disparities by gender and race. Greater transparency and accountability also ensure that employers establish policies and procedures to guide employment decisions that are fairly and consistently applied.
The growing use of hiring assessment technology has heightened the need for greater transparency and accountability in hiring screens. Civil rights leaders have released an important set of “civil rights principles” to guide tech developers, employers, and policymakers in the development, use, and auditing of hiring assessment technologies. These principles recognize that to prevent discrimination and advance equal opportunity, hiring assessment technologies must be explainable, job-related, and audited.
Improving internal complaint systems
Employers need to strengthen their internal complaint systems to move from a liability avoidance mindset to preventing discrimination and retaliation. Leadership must ensure that human resources departments have the resources and leadership-backing to support anti-discrimination efforts and HR should regularly reinforce training regarding workplace civil rights to increase employees’ comfort with the complaint process. Employers should also track discrimination complaints and outcomes to identify potential patterns.
In order to resolve concerns and to better protect employees, employers should provide alternative mechanisms to report discrimination. One potential model is the ombuds office, which acts as a neutral party that helps to facilitate options for resolving concerns. Another potential model is an employee assistance plan, which provides free, confidential assistance to employees. Some employers have embraced tech-enabled third-party complaint and ombuds processes that use anonymous and aggregated data to reveal trends and identify systemic issues within an organization. Regular workplace climate surveys can also aid employers in identifying problem areas.
Increased enforcement by federal, state, and
Greater transparency is an important first step, but meaningful access to civil rights protections requires consistent enforcement with reliable anti-retaliation protections. The government plays a fundamental role in rebalancing power disparities. More robust government enforcement is particularly critical because of the information asymmetry workers face and the high costs of bringing a private lawsuit. The EEOC has the power to investigate charges of discrimination, including the ability to subpoena employer information that may be necessary to support the filing of a complaint.
Employees—particularly low-wage workers—rarely have the resources to take on a much-better-resourced employer. Increased enforcement by federal agencies alleviates costs to individual workers. To increase government enforcement, the EEOC requires increased resources and staffing. Since 1980, the U.S. workforce has increased by 50 percent, but the EEOC has a smaller budget today than in 1980, adjusted for inflation, and had 42 percent fewer staff as of 2020. Due to an increase in its budget in FY 2021, the agency was able to authorize the hiring of 450 more staff. However, the agency’s staffing levels remain far below its levels in the 1980s. The FY 2022 Budget requests a 10 percent increase in the EEOC’s budget.
Even when employees do not feel comfortable coming forward to file a charge of discrimination, commissioners of the EEOC have authority to open a commissioner’s charge under Title VII and the Americans with Disabilities Act. Commissioner’s charges often address claims of systemic discrimination and are an important tool for the EEOC to root out problems in cases where workers may fear retaliation.
Commissioner’s charges also enable the EEOC to investigate and address discriminatory practices in cases where workers are unlikely to have information, including regarding hiring. During 2011-2015, 75 percent of commissioner’s charges focused on discrimination in hiring. With additional resources, the EEOC could also strengthen its ability to use its data to understand the workforce demographics of an employer, industry, or region. This could inform commissioner’s charges and identify potential systemic issues, such as barriers to hiring that lead to occupational segregation.
The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) plays a significant role in ensuring the government does business with companies that adhere to non-discrimination and affirmative action requirements. OFCCP has enforcement authority over Executive Order 11,246, which requires the inclusion of an equal opportunity clause in each government contract and subcontract. Importantly, government contractors must take “affirmative action” to address employment discrimination. Thus, unlike the EEOC, which operates under a primarily complaint-driven system, OFCCP’s work has a proactive focus on conducting audits to review and evaluate contractors’ compliance with affirmative action requirements and other anti-discrimination laws. With oversight responsibility for over 120,000 federal contractor establishments employing over 20 percent of the labor force, OFCCP needs a vast increase in its budget to ensure effective oversight of contractors’ compliance with their affirmative action and nondiscrimination obligations. OFCCP’s current capacity is limited, with 42 percent fewer staff today than in 2010. The FY2022 Budget requests a 33 percent increase in OFCCP’s budget, which would allow it to increase its staff by 41 percent.
In addition to the EEOC and OFCCP, state and local enforcement agencies play a critical role in filling enforcement gaps by providing alternative avenues to address discrimination in the workplace. Some states and local jurisdictions have broader anti-discrimination protections. It would therefore be beneficial for the EEOC to proactively engage state and local enforcement agencies that are leading strong enforcement efforts to increase collaboration, data sharing, and learning between agencies.
Enforcement and accountability through greater collaboration with worker organizations
Unions, worker centers, and other worker organizations have played a critical role in ensuring that workers’ civil rights are protected, and those efforts can be further strengthened. Although some unions have had a history of discriminatory practices, which requires intentional focus to overcome, unions have historically played an important role in driving down racial wage gaps because Black workers have been more likely to be in unions, and those in unions have benefitted from the largest increase in wages. Wages for union jobs are, on average, 16 percent higher than for non-union jobs. The significant decline in the unionized workforce over the last several decades has particularly impacted Black workers. A 2012 study found that if union representation had remained steady over the last several decades, the weekly wage gaps between Black and white workers would be nearly 30 percent lower for women and 3-4 percent lower for men.
Unions can enhance their role in enforcement and addressing discrimination in the workplace by pursuing justice for members facing discrimination and by bargaining with employers for concrete measures to protect workers’ civil rights; examples of the latter include establishing pay transparency and making raise and promotion processes clearer. Unions continue to protect workers through collective bargaining agreements that contain anti-discrimination language that workers can enforce through a grievance process—which is usually faster and less expensive than legal proceedings. Unions can also obtain information and demographic data regarding employer hiring, pay, and other practices as part of the collective bargaining process. In a 2018 decision, the National Labor Relations Board held that “[a] union may . . . be entitled to information that is relevant and necessary to determining whether a particular employment action is discriminatory, even if the employment action itself is not a mandatory subject” of bargaining, because “the elimination of race and sex discrimination is a mandatory subject of bargaining.”
Another approach is for government enforcement agencies to better focus resources on industries and workplaces where violations are most likely to occur; agencies can gain insight into problems on the ground by engaging with community organizations, unions, and worker centers. Several cities have implemented successful programs to build collaborative models.
Launched by a worker organization called the Coalition of Immokalee Workers, the Fair Food Program has constructed a partnership among farmworkers, growers, and major retail buyers that purchase from the growers. Through organizing efforts, the Coalition obtained buyers’ commitments to consider farmworkers’ working conditions when making purchases. The program provides for regular audits by the Fair Food Standards Council (FFSC), an independent investigation and enforcement body funded by buyers. The program also set up an alternative complaint system, through which workers can file complaints with the FFSC and have access to investigators; the investigators look into complaints, seek to resolve them, and enforce against retaliation.
Legal System Creates Gaps in Protections
The efficacy of our current enforcement scheme in protecting workers’ civil rights is undermined by significant gaps in Title VII coverage that leave many workers, particularly low-wage workers and workers of color, without protection. Title VII’s protections apply only to employers with 15 or more employees. Yet, as of 2017, over 12 million workers worked for firms with fewer than 10 employees. Across all industries in the United States, Title VII consistently excludes about 14 percent of the workforce.
One group of workers largely left unprotected under our federal anti-discrimination laws are 2.2 million domestic workers. Over 91 percent of these workers are women and 52 percent are Black, Asian American, Pacific Islander, or Latinx. Because they are isolated and work out of public view, domestic workers are particularly vulnerable to harassment, discrimination, and exploitation; at the same time, most are not protected under our federal anti-discrimination laws. Migrant farmworkers on H-2A visas are also highly vulnerable. Nationally, 22 percent of farmworkers on H-2A visas are left uncovered by Title VII, with an even higher rate of 31 percent in the South due to the lack of protection under state laws.
In addition, the increasing reliance on business models that outsource labor through independent contractors or subcontracts, such as through temporary staffing agencies, is weakening worker power and undermining enforcement. Independent contractors face exclusion from most federal anti-discrimination laws. Almost 10 million U.S. workers are treated as independent contractors. Between 10 percent and 30 percent of audited employers misclassified workers as independent contractors, according to federal and state studies. Online platform companies have accelerated the shift toward precarious work by classifying their workers as independent contractors and not employees. By doing so, companies create major hurdles for workers who must first prove their employee status to avail themselves of anti-discrimination protections.
Discrimination in hiring has been a problem for many temporary staffing agencies, which refer applicants based on client preferences for workers by race, color, sex, national origin, age, or absence of a disability. As litigation by the EEOC has documented, many agencies either refuse to hire Black workers or send them to the least desirable jobs, while hiring Latinx workers and subjecting them to hazardous working conditions, harassment, and lower pay. Where a staffing agency adheres to the discriminatory preferences of a client company, workers must prove that the host company is a joint employer responsible for the discriminatory hiring decisions. The heightened insecurity of temporary work exacerbates the imbalance of power and makes it difficult for workers to organize and challenge discrimination.
Addressing gaps in coverage
To address these significant gaps, states have passed legislation to expand worker protections. A number of states and the District of Columbia have already enacted measures to ensure that their anti-discrimination laws cover employers with fewer than 15 employees at various size thresholds. States and cities have also passed legislation explicitly protecting domestic workers under state anti-discrimination laws, often as part of broader legislation called the Domestic Workers Bill of Rights. States have also passed laws to protect independent contractors from discrimination in employment or contracting and have enacted legislation to address the misclassification of employees as independent contractors.
For temporary workers, greater transparency by staffing agencies on the demographics of those they hire would be a first step to identifying patterns of discrimination. Private employers with more than 100 employees (and federal contractors with at least 50 employees) are required to report the demographic data of their workforces to the EEOC on annual EEO-1 surveys. Temporary staffing agencies file this survey for their internal staff positions but are exempt from reporting on their temporary worker employees referred out to host companies. During the Obama Administration, the EEOC identified the need to study the issue of collecting these data from temporary staffing agencies to enable government enforcement agencies to use those data to inform enforcement. Despite notable advances, these remaining gaps in legal protections still leave far too many workers vulnerable to discrimination.
Power imbalances in employer practices undermine accountability
Employers have exploited their vast information and power to set terms of employment that further undermine workers’ ability to enforce their civil rights. Often buried in a stack of onboarding paperwork, “click through” online contracts, or a long employee handbook, these provisions force employees to give up federally protected rights as a condition of employment or in settlement of a claim. They are also used to intimidate employees from reporting problems to enforcement agencies, initiating complaints with their employer, or sharing their experiences with other workers. Legal protections for workers are essential to ensure that employers do not exploit power asymmetries.
One of the most potent strategies employers have adopted to limit their accountability is the use of forced arbitration clauses. These clauses now cover over 55 percent (60 million) of American workers. They typically require that employees bring “any dispute” exclusively to the employer’s dispute resolution program, which culminates in a binding arbitration decision in a private forum. Arbitration claims are less likely to succeed and the damages awarded are likely to be significantly lower than in court.
The EEOC and other government enforcement agencies maintain authority to investigate charges regardless of whether an aggrieved party may be subject to a forced arbitration provision. Yet, when workers are barred from going to court, they are often deterred from reporting discrimination to the EEOC. If concerns are never brought to enforcement agencies, they are deprived of critical information to help identify patterns of discrimination. Because the employer is a party to arbitration more frequently than the worker, research also shows that companies overwhelmingly prevail in arbitration.
A series of Supreme Court decisions have further shifted power away from workers and propelled employers toward an increasing use of forced arbitration clauses. The court has grounded this shift in an expansive interpretation of the Federal Arbitration Act (FAA), passed in 1925. For decades the FAA was understood to apply only to commercial disputes, not employment disputes. The Supreme Court’s first major ruling expanding the applicability of the FAA to employment contracts was issued in 1991, when only about 2 percent of workers were bound by such clauses. This share increased to nearly 25 percent by the early 2000s, when another Supreme Court ruling held that arbitration can be a condition of employment.
Forced arbitration removes one of the most powerful incentives for employers to correct problems by preventing workers from holding companies publicly accountable. Also troubling is the fact that forced arbitration clauses typically state that they apply to “any dispute” arising out of the employment relationship. Therefore, even the enforceability of other suspect contract provisions, such as class action bans, nondisclosure agreements, and non-compete and no-rehire provisions, discussed below, are never evaluated by a court or made public.
Bans on class and collective actions
Provisions waiving workers’ rights to pursue a class action are common in arbitration agreements. The problem of class action bans affects low-wage workers in particular. The time and expense needed to bring individual claims makes it all but impossible for low-wage workers to file individual lawsuits. Class action bans also deprive workers of the ability to come together collectively to demonstrate the existence of widespread problems. The prospect of a class action can help keep employers vigilant in monitoring for systemic problems.
The use of nondisclosure agreements (NDAs) has been a long-standing practice as both a condition of employment and in settlements of a dispute. A 2017 study found that nearly one-in-three workers is bound by an NDA. NDAs are particularly common in the tech industry, where 65 percent of workers have them with their employers, and 38 percent of those workers say that their NDA prevents them from speaking out about “injustices in the workplace.”
Although courts have the power to void confidentiality agreements in civil cases in which disclosure benefits the public interest, NDAs are often covered by an arbitration agreement, and so disputes about the NDA must go before a private arbitrator rather than a court. Given that an NDA may implicate important public interests, workers should have a choice as to whether to pursue their claims in court or in arbitration.
No-rehire and non-compete clauses
Two additional contract mechanisms that have become common—no-rehire clauses and non-compete clauses—also deter worker complaints and exacerbate power imbalance between workers and employers. Employers often include no-rehire clauses in settlement agreements to bar a departing worker’s ability to apply for a position with the employer in the future. In addition, employers have increasingly included noncompete clauses in employment agreements that restrict an employee’s ability to work for rival companies in the same industry after they leave a job. Because these clauses limit employment opportunities, they can intimidate workers into staying at companies in which they may be facing discrimination. As with forced arbitration agreements and NDAs, workers rarely have the power to limit the scope of no-rehire clauses and non-competes. This is particularly the case with the latter. Nearly all workers who are asked to sign a non-compete agreement sign it.
An issue of growing concern is the increased use of noncompete agreements for low-wage workers. One study found that 29 percent of responding employers where the average hourly wage was less than $13 use noncompete agreements for all their workers. Courts can and do strike down non-compete agreements that are unnecessarily restrictive, but low-wage workers typically cannot afford to seek legal advice and have little bargaining power to negotiate these terms.
Ultimately, these nonnegotiable contracts undermine workers’ rights and bargaining power. The Supreme Court’s failure to acknowledge the inherent power imbalance between workers and employers in interpreting the FAA to have supremacy over other federal laws makes arbitration programs a formidable mechanism to bar workers from exercising their federally protected rights.
Legislation limiting NDAs, no-rehire provisions, and forced arbitration clauses
To address these problematic employer practices, new legal protections are needed, including a comprehensive bill to amend the FAA and clarify its scope. The Forced Arbitration Injustice Repeal (FAIR) Act is proposed legislation that would prohibit pre-dispute forced arbitration and class action bans primarily by amending the FAA. A number of states, including New Jersey, New York, California, Tennessee, and Washington, have passed legislation in recent years restricting the use of nondisclosure agreements in some types of employment situations. Vermont was the first state to address no-rehire provisions when it passed legislation in 2018.
Legal standards and doctrines fail to confront information and power asymmetries in the employment relationship
Even if workers are able to navigate the complaint process and are not bound by a forced arbitration clause, workers who file lawsuits face substantial barriers due to onerous legal standards. These rules create enormous evidentiary hurdles for workers and disregard the reality of extreme information asymmetry.
Employment discrimination plaintiffs face hurdles at the outset in defeating employers’ motions to dismiss, due in part to two decisions by the Supreme Court in the late 2000s that heightened pleading standards. In discrimination cases, plaintiffs generally must allege sufficient facts to plausibly support that the plaintiff is a member of a protected class, was qualified, and suffered an adverse employment action, and that the employer had a discriminatory motivation. Very often, plaintiffs are unable to access critical information regarding their claims until the discovery process, when employers are required to provide information. For this reason, many workers do not even file a lawsuit.
Summary judgment standard
Plaintiffs who survive the motion to dismiss face an even greater hurdle at the summary judgment stage before a full trial. In order to defeat an employer’s motion for summary judgment, an employee must show that a genuine dispute as to a material fact exists. In employment discrimination cases, summary judgment motions are the “tool of choice” for employers to defeat workers’ claims. Such motions are extremely difficult for employees to defeat, because the employer must merely articulate a non-discriminatory business reason for its action and the employee then bears the burden of providing sufficient evidence to show that the employer’s reason is false or should not be believed. Employers are unlikely to express discriminatory intent explicitly, so plaintiffs must instead rely on circumstantial evidence, which is difficult for plaintiffs to obtain given the information asymmetries described above.
The “intent” standard
One of the most fundamental hurdles for workers is the intent standard. This standard essentially requires victims of discrimination to show that the person who fired or failed to hire them was motivated by discriminatory animus, ill will, or malice. But the language of Title VII does not impose an intent standard. Title VII prohibits an employer from discriminating against an employee “because of” the employee’s race, sex, or other protected status. The statute does not speak to “intent” or the particular mental state or motivation of the employer. This judge-made intent standard creates an often-insurmountable hurdle for plaintiffs to prove a specific state of mind of their employer.
The Supreme Court’s recent landmark decision in Bostock v. Clayton County, holding that Title VII prohibits employment discrimination on the basis of sexual orientation or transgender status, provides a promising opening to rethink the intent standard. The court held that “[i]f the employer intentionally relies in part on an individual employee’s sex when deciding to discharge the employee—put differently, if changing the employee’s sex would have yielded a different choice by the employer—a statutory violation has occurred.” This decision opens the door for courts to apply a standard that focuses on causation rather than applying an “intent” standard. Employers should be responsible when their policies harm employees “because of” a protected basis.
Judicial doctrines such as “stray remarks” and “business judgment rule”
Courts have effectively heightened the burden of proof for plaintiffs through judicially created tools that essentially convert factual issues that should be decided by a jury at trial into questions of law that courts can use to dispose of cases at summary judgment. For example, courts have found that evidence of discriminatory statements, particularly those that are made on an “infrequent basis” or by non-decision-makers, are “stray remarks” that should not be considered as evidence to defeat summary judgment motions. A number of federal courts have also adopted a “business judgment rule” in employment discrimination cases under which they defer to business management decisions unless employers act in a manner that cannot be attributed to any rational business purpose. This practice undermines plaintiffs’ ability to present evidence that the employer’s stated reason is simply a pretext for discrimination.
Class certification standards
Heightened standards for employees to bring class actions have also made it harder for workers to band together to share resources and challenge systemic problems. In 2011, the Supreme Court in Wal-Mart v. Dukes held that a class of nearly 1.5 million female employees could not be certified in a sex discrimination case against Wal-Mart, because the employees had failed to demonstrate a common issue of law or fact that would satisfy the “commonality” requirement of Rule 23(a), the federal procedural rule governing class actions. The Wal-Mart decision has allowed employers to drag out lawsuits through excessive litigation over class certification. Class actions are important because they allow individual employees with small claims and limited resources to pool their resources. Moreover, a finding of class-wide liability shifts the burden of proof in favor of the plaintiff.
Judicial skepticism and lack of diversity
Workers who file lawsuits face the significant hurdle of judicial skepticism toward employment discrimination claims. The federal judiciary lacks diversity and consists disproportionately of those who have represented corporate interests. In cases that went to trial before a judge, plaintiffs in federal employment discrimination cases won less than 20 percent of the time, whereas plaintiffs in all other civil cases won over 45 percent of the time. Courts’ attitudes are influenced by the widespread misperception that employment discrimination cases are easy to win and that there is an excessive number of plaintiff nuisance suits. Judges are often reluctant to infer racial discrimination on the basis of circumstantial evidence, even though courts have long recognized that racial discrimination is subtle and can be inferred from circumstantial evidence.
A lack of racial and gender diversity on the federal bench also impacts outcomes in employment discrimination cases. As of August 2019, 80 percent of sitting federal judges were white and 73 percent were male. Studies have found that plaintiffs in workplace harassment cases are more likely to succeed on their claims if they appear before a judge of the same race. Given the critical role of courts in enforcing workers’ civil rights, much more work needs to be done to ensure a fair and diverse judiciary, including the appointment of federal judges who have represented workers and litigated civil rights cases.
As workers come together to demand greater workplace equity, and America’s institutions make powerful statements in support of Black Lives Matter and racial justice, we have reached a pivotal moment for revitalizing the nation’s anti-discrimination laws and enforcement systems. By rebalancing the extraordinary power disparities that have contributed to the under-enforcement of our civil rights laws and reforming legal doctrines and employer practices that minimize employer liability, we can empower workers to stand up and confront civil rights violations in their workplaces. To do this, laws should require greater transparency of employment decisions such as hiring and pay setting, as well as on the demographics of each workplace to evaluate and eliminate bias from current employment processes. Our nation must also invest in greater enforcement resources for government agencies as well as worker organizations to balance the vast resource and information asymmetries between workers and employers.