EEOC charges are on the rise, filed by former employees hoping for a large settlement check and current employees trying to reverse a personnel action and avoid being fired. Of course there are cases where employees actually were wrongly discriminated against, but many, many claims are completely without merit. When an employee loses their job, it’s human nature to look for someone or something to blame; people rarely look in the mirror and admit, “I deserved to be fired.” Instead, some are quick to assume it must have been discrimination, while others feel they are simply “entitled” to whatever they can force the employer to pay.

As an employer, once you are notified that a charge has been filed against your company, the EEOC will invite you to participate in pre-investigation mediation. Here are five reasons to think twice before agreeing.

  1. Show me the money. Your willingness to participate in an EEOC mediation signals the employee that you are bringing your check book and there will be money on the table. The employee is dreaming of huge verdicts they’ve read about in the press (and they don’t realize most of those awards were either reversed on appeal or significantly reduced by the trial judge). If you have no intention of paying a settlement to the employee, don’t go to the mediation. You will not convince them that they have not been wronged. Instead, they will be disappointed that that they are not leaving with a large check, and your logical and well-reasoned argument explaining that the company did nothing wrong will only inflame them and make them more likely to press the case forward.
  2. People are watching. Yes, EEOC mediation settlements are supposed to be confidential. But when you pay money to an employee to settle a claim, word gets out. You do not want everyone whom you fire or even discipline to think they can get easy money quickly by filing an EEOC charge and going to mediation.
  3. Validation. Even if you don’t pay the employee a settlement at mediation, your mere participation validates that there is something to the claim. This encourages the employee to press forward, because you have now made it an interactive process. The better strategy is to take a hard line now; you can always reevaluate later whether this is a claim that should be settled.
  4. Most employees won’t file a lawsuit. Filing an EEOC charge is easy. The EEOC even does the paperwork for the employee. There are no filing fees and they don’t need a lawyer. But the majority of employees who file EEOC charges won’t end up suing the company. There are several reasons for this. First, most individuals can’t afford to hire an attorney and pay an hourly fee. They will have to find a lawyer who will take their case on contingency. And most contingency lawyers are reluctant to take a case that doesn’t have a strong settlement value, particularly against a company that has a reputation for not settling claims. If you are aggressive in preparing a position statement with documents and affidavits during the EEOC investigation process, your chances are good that the EEOC will find in your favor. A decision from the EEOC that there was insufficient evidence of discrimination makes it even more unlikely a plaintiff’s lawyer will be interested in taking the case. Once the EEOC issues its determination and notice of right to sue, the employee only has 90 days to file a lawsuit, or the claim is gone forever.
  5. Time is on your side. EEOC investigations take a long time. Although the employee has the right to request a right to sue letter after 180 days have passed, most don’t and some claims languish for two years or more at the agency. If you’ve done your job with the position statement, you already have all the documents and sworn witness statements you need. The employee, on the other hand, will be relying on former coworkers to testify and remember events from several years ago, by the time a lawsuit would ever be filed. And meanwhile, the employee has likely moved on with their life, and their commitment to pursing the matter tends to lessen over time.

So, when should you mediate? There are exceptions to every rule, and there are exceptions to the general strategy of avoiding pre-suit mediation of an EEOC charge. Here are some examples of when it does make sense to go to mediation:

  1. When it can only get worse. Sometimes there just isn’t any way to avoid liability. You’ve conducted an investigation, and discovered to your dismay that the employee in question was indeed sexually harassed by her supervisor, that she followed your HR policy regarding complaints, and that for whatever reason nothing was done to correct the situation. The more you look into it, the worse it gets, as you discover that after complaining to HR she was retaliated against by her supervisor. Her file documents that she had exceptional performance ratings prior to the complaint, and lousy ones afterwards, ultimately leading to her termination. Your best option is to go to the EEOC mediation, and resolve the case earlier rather than later. At this juncture, you can explore other options, including firing the harasser and reinstating the employee. Alternatively, you can offer severance, a positive reference and some outplacement services in exchange for a release – if the employee was recently fired, she is likely to be more optimistic about her future job prospects now than she might be six months or 12 months down the road when she’s become frustrated by a challenging job market, and her unemployment benefits are running out. She’s likely to be much more reasonable now about a settlement number than she would be after months have gone by and she’s applied for 150 jobs and still not been hired. And with facts like these, if you don’t settle, she’ll have no trouble obtaining counsel to file a lawsuit, and you could end up paying a substantial money judgment plus both your attorney’s fees and her attorney’s fees.
  2. When the situation can be salvaged. You may have a policy or practice that is in violation of law and can easily be corrected. If, for example, a disabled current employee is requesting a reasonable accommodation, this is something that might be able to be worked out in mediation and does not involve you writing a settlement check. In a perfect world, an issue like that would have been resolved internally, but it doesn’t always work that way, particularly since the recent amendments to the ADA went into effect. Many managers do not understand what is and is not a disability under the new regulations, and taking a fresh, objective look at the situation across the mediation table could mean the difference between clearing up a misunderstanding, and defending a costly lawsuit.