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Affluent Investor | July 27, 2017

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EEOC Keeps Its Losing Streak Intact, Reinforces The Case Against Administrative Law

EEOC

Almost every day, some part of the leviathan that the executive branch of the federal government has become does something that should make us question the whole business of “administrative law.” Recently, I wrote about the EPA’s attempt to expand the scope of its power with an absurd new definition of “navigable waters.”

A recent reminder comes from the Equal Employment Opportunity Commission (EEOC), which has just suffered a severe rebuke from a federal court for another of its far-fetched “disparate impact” suits. Last March I discussed the trip to the woodshed the agency endured in the Kaplan case when the Sixth Circuit slammed its “expert,” whose purported proof of statistical discrimination was seen to be laughable.

The agency has just received similar treatment from the Fourth Circuit in EEOC v. Freeman – exactly the same sort of disparate impact case where a company used background checks to help screen out workers who might not be trustworthy, particularly in jobs involving the handling of money.

The EEOC’s view is that employers are not allowed to have a preference for workers who haven’t done things to bring suspicion upon themselves. Because the background checks done in Kaplan and Freeman adversely affected a higher proportion of minority workers than others, the EEOC claims that the firms were guilty of employment discrimination under the Civil Rights Act of 1964.

In both cases, the EEOC relied on analysis done by psychologist Kevin Murphy and in both the courts ridiculed that reliance. In Freeman, the majority pointed to his “pervasive errors and utterly unreliable analysis.” In his concurring opinion, Judge Agee observed that Murphy’s “problems would be trouble enough standing alone, but they are even more disquieting in the context of what appears to be a pattern of suspect work.” Judge Agee seems to suggest that the EEOC looks for “experts” who will say what it wants to hear, giving a veneer of justification for groundless litigation. Judges have called out similar behavior by “expert witnesses” for plaintiffs’ lawyers in tort litigation.

All of that, however, is beside the fundamental point: The Civil Rights Act did not say that companies violate the law when choices they make have more impact on some groups than others. The law was clearly aimed at instances where individuals were turned away from jobs simply on account of race or other immutable characteristics. Under the law, the EEOC’s intended role was to sue on behalf of individuals who had been refused work on those grounds.

That would have left relatively little for the agency to do. Zealous staffers wanted to impose their utopian vision of perfect fairness on the labor market and thus developed the sweeping concept of “disparate impact” in the late ’60s. Even when a company applied a neutral employment qualification to all job seekers, declared the EEOC, it was guilty of discrimination if that adversely affected a “protected” group more than others. This novel approach gave rise to statistical analysis to “prove” discrimination – examine all the hires and non-hires from enough angles and eventually you’re almost certain to find some gap between the actual and the EEOC’s theoretical ideal.

Its approach to finding discrimination got the Supreme Court’s blessing in Griggs v. Duke Power, where the justices decided they should defer to the agency, ignoring the text and history of the law.

That is the root of the problem. Our courts often give agencies free rein to make up the law.

Congress later decided to approve “disparate impact” and so we’re stuck with an agency that exhibits what Thomas Sowell calls “The Quest for Cosmic Justice” (as he entitled one of his books). EEOC bureaucrats, with the aid of hired “experts” comb through data looking for proof that employment decisions companies make are not perfectly aligned with group proportions. (Another example is the Education Department’s demand that students be disciplined in accordance with group percentages rather than individual deserts.)

It is a poor sort of “law” when a person or firm cannot know if it has committed a violation until told by some agency that it wasn’t sufficiently “fair” in its hiring, based on the agency’s analysis of group impact. Obsessing over groups — increasingly amorphous in our melting-pot society — doesn’t create any more jobs. At most, it shuffles a tiny number of workers around, as some employers have to hire workers they wouldn’t have thought best, and those who would have gotten the jobs have to look elsewhere. This “administrative law” accomplishes nothing other than keeping some government employees busy.

Judges sometimes slap them down in cases where they’ve gone “too far.” Even when we get that result, though, a great deal of money has been squandered on pointless litigation that doesn’t even have the slightest deterrent effect on the bureaucrats, as we see with the EEOC. The cost of such litigation (and of avoiding it) is a huge dead-weight burden on the economy. Ending it would be a great (and real) stimulus.

Until such time as the courts break their bad “deference” habit, a solution might be to impose the English rule (losing plaintiffs have to compensate the defendant for costs imposed) on the bureaucrats. Lose a case and the costs come out of your salaries.

Any presidential candidates interested in that reform?

Article originally published on Forbes.com.

 

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