INFORMAL SETTLEMENT OF EEO COMPLAINT - AWARDS OF BACKPAY
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CIA-RDP92-00455R000300080003-2
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Document Creation Date:
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Document Release Date:
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Sequence Number:
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Case Number:
Publication Date:
June 7, 1983
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I- I It
DECISION
THE COMPTROLLER GENERAL
OF THE UNITED STATES
.B-206014, __-C.
Equal Employment Opportunity Commission--
Informal Settlements of Discrimination
Complaints--Monetary Awards
1. In view of authority granted to EEOC
under Title VII of the Civil Rights Act of
1964, as amended, GAO does not render deci-
sions on the merits of, or conduct investiga-
tions into, allegations of discrimination in
employment in other agencies of the Govern-
ment. However, in view of GAO's authority to
determine the legality of expenditures of
appropriated funds, GAO may determine the
legality of awards agreed to by agencies in
informal settlements of discrimination cases
arising under Title VII.
2. Agencies have the general authority to
informally settle a discrimination complaint
and to award backpay with a retroactive
promotion or reinstatement in an informal
settlement without a specific finding of
discrimination under EEOC regulations and
case law. Title VII of the Civil Rights Act
of 1964, as amended, and EEOC regulations
issued thereunder provide authority for
agencies to award backpay to employees in
discrimination cases, independent of the Back
Pay Act, 5 U.S.C. ? 5596. Thus, backpay is.
authorized under Title VII without a finding
of an "unjustified or unwarranted personnel
action" and without a corresponding personnel
action.
3. Informal settlements without a specific-
finding of discrimination are authorized by
Title VII of the Civil Rights Act of 1964, as
amended. In such informal settlements
Federal agencies may authorize backpay
awards, attorney fees, or costs without a
corresponding personnel action. However,
agencies are not authorized to make awards
not related to backpay or make awards that
exceed the maximum amount that would be
?1 UBLISHED- DECISION
2 Comp. Qen..---.-.
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recoverable under Title VII if a finding of
discrimination were made. An award may not
provide for compensatory or punitive damages
as they are not permitted under Title VII.
4. The scope of remedial actions under Title
VII is generally for determination by EEOC.
However, EEOC's present regulations on
informal settlements do not provide suffi-
cient guidance for Federal agencies to carry
out their responsibilities under Title VII of
the Civil Rights Act of 1964, as amended. We,
recommend that EEOC review and revise its
present regulations to provide such guid-
ance. Until that time agencies may admini-
stratively settle Title VII cases in a manner
consistent with the guidelines in this
decision.
We have consolidated four cases,1 and will. consider
them jointly in this decision since they present related
questions on the appropriateness of certain awards proposed
in informal settlements of Federal employee discrimination
complaints processed under Title VII of the Civil Rights Act
of 1964, as amended, 42 U.S.C. ? 2000e-16 (Supp. IV 1980).
The cases discussed below essentially present the questions
of whether an agency has the authority to informally settle
a discrimination case: (1) by awarding backpay without
effectuating a corresponding personnel action such as a
retroactive promotion or reinstatement; (2) by awarding a
monetary sum not based on backpay; or (3) by paying backpay
without deductions or backpay computed without reference to
the backpay regulations, 5 C.F.R. Part 550, Subpart H
(1982).
1The four cases are B-206014--Small Business Admini-
stration; B-203194--Department of the Interior; B-202552--
Department of the Army; and B-202521--Department of the
Navy.
2 -
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FACTUAL BACKGROUND
In B-206014, a former employee of the Small Business
Administration (SBA) who had been removed from his position
filed a complaint of discrimination against the agency, con-
testing his removal. In order to resolve the complaint the
SBA agreed to an informal settlement without rehiring the
employee and without a specific finding of discrimination.
As part of that settlement the SBA agreed to pay the sum of
approximately $30,000. The amount represents the employee's
gross salary for a part of the period of removal, including
all pay and within grade increases due,as well as a lump-sum
payment for accrued annual leave. The certifying officer
forwarded the case to this office requesting a decision as
to whether the settlement award may be paid, and, if so,
what deductions, such as interim earnings, if any, must be
made from this award.
In B-203194, an employee of the Department of the
Interior had been temporarily promoted to a GS-13 position
for a period of 120 days, and then returned to her GS-12
position. However, the employee continued to perform the
duties of the GS-13 position for an additional 5 months.
This additional 5-month period, together with all her
previously recognized temporary promotions to the GS-13
level, allegedly gave the employee over 1 year's experience
at the GS-13 level. The employee filed a discrimination
complaint against the Department of the Interior after she
was determined to be ineligible for a promotion to a GS-14
position because she did not meet the time-in-grade require-
ments. As part of the informal settlement reached without a
specific finding of discrimination, the Department of the
Interior agreed that the employee would receive backpay at
the GS-13 level for a period of 5 months and the employee's
records would be corrected to show she had satisfied the
time-in-grade requirement for a GS-14 level position. In
addition, the employee would receive backpay for the
difference between the salary she received at the GS-12
level and that of the GS-14 level for an additional 4
months. The case was forwarded to this Office on the ques-
tion of whether the proposed award under the settlement
agreement is authorized in view of our decision in
Donald L. Bressler, 58 Comp. Gen. 401 (1979), which relates
to overlong details to higher graded positions.
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FACTUAL BACKGROUND
In B-206014, a former employee of the Small Business
Administration (SBA) who had been removed from his position
filed a complaint of discrimination against the agency, con-
testing his removal. In order to resolve the complaint the
SBA agreed to an informal settlement without rehiring the
employee and without a specific finding of discrimination.
As part of that settlement the SBA agreed to pay the sum of
approximately $30,000. The amount represents the employee's
gross salary for a part of the period of removal, including
all pay and within grade increases due,as well as a lump-sum
payment for accrued annual leave. The certifying officer
forwarded the case to this Office requesting a decision as
to whether the settlement award may be paid, and, if so,
what deductions, such as interim earnings, if any, must be
made from this award.
In B-203194, an employee of the Department of the
Interior had been temporarily promoted to a GS-13 position
for a period of 120 days, and then returned to her GS-12
position. However, the employee continued to perform the
duties of the GS-13 position for an additional 5 months.
This additional 5-month period, together with all her
previously recognized temporary promotions to the GS-13
level, allegedly gave the employee over 1 year's experience
at the GS-13 level. The employee filed a discrimination
complaint against the Department of the Interior after she
was determined to be ineligible for a promotion to a GS-14
position because she did not meet the time-in-grade require-
ments. As part of the informal settlement reached without a
specific finding of discrimination, the Department of the
Interior agreed that the employee would receive backpay at
the GS-13 level for a period of 5 months and the employee's
records would be corrected to show she had satisfied the
time-in-grade requirement for a GS-14 level position. In
addition, the employee would receive backpay for the
difference between the salary she received at the GS-12
level and that of the GS-14 level for an additional 4
months. The case was forwarded to this Office on the ques-
tion of whether the proposed award under the settlement
agreement is authorized in view of our decision in
Donald L. Bressler, 58 Comp. Gen. 401 (1979), which relates
to overlong details to higher graded positions.
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B-206014
In B-202552, an employee filed a discrimination com-
plaint against the Department of the Army based upon his
nonselection for a GS-11 position. As part of an informal
settlement reached without a specific finding of
discrimination, the agency agreed to pay the employee the
sum of $3,000. The settlement agreement specifically
stated, "[t]he aforementioned monetary adjustment is not and
shall not be construed or interpreted as an award of back
pay, attorney's fees, or damages of any other type." The
case was forwarded to this Office for a decision on the
propriety of the award.
In B-202521, a GS-7 employee filed a discrimination
complaint against the Department of the Navy based upon her
nonselection for a GS-9 position. As part of an informal
settlement reached without a finding of discrimination, the
employee was reassigned to a GS-7, target GS-9 position.
Although the employee was not given a retroactive promotion,
the agency agreed to pay the employee backpay at the GS-9
position from the date of her nonselection to the date of
settlement. The case was forwarded to this Office for a
decision on the question of whether an employee may receive
backpay at the GS-9 level where a retroactive promotion to
GS-9 was not a part of the settlement agreement.
All of the above proposed settlements were negotiated
under the authority of Title VII of the Civil Rights Act of
1964, as amended, 42 U.S.C. ? 2000e-16 (Supp. IV 1980), and
corresponding regulations promulgated by the Equal Employ-
ment Opportunity Commission (EEOC). See 29 C.F.R.
SS 1613.217 and 1613.221.
LAW AND REGULATIONS
Title VII of the Civil Rights Act of 1964, as amended,
was made applicable to Federal employees in 1972, and the
governing statutory provision as amended is found in
42 U.S.C. ? 2000e-16 (Supp. IV 1980), which provides:
"(a) * * * All personnel actions affect-
ing employees or applicants for employment
* * * shall be made free from any discrimina-
tion based on race, color, religion, sex, or
national origin.
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"(b) * * * Except as otherwise provided
in this subsection, the Equal Employment
Opportunity Commission shall have authority
to enforce the provisions of subsection (a)
of this section through appropriate remedies,
including reinstatement or hiring of
employees with or without back pay, as will
effectuate the policies of this section, and
shall issue such rules, regulations, orders
and instructions as it deems necessary and
appropriate to carry out its responsibilities
under this section. * * *"
EEOC's regulations promulgated under authority of
Title VII and published in Title 29 of the Code of Federal
Regulations, provide as follows:
"S 1613.217 Adjustment of complaint and
offer of hearing.
"(a) The agency shall provide an opport-
unity for adjustment of the complaint on an
informal basis after the complainant has
reviewed the investigative file. * * *
"If an adjustment of the complaint is
arrived at, the terms of the adjustment shall
be reduced to writing and made part of the
complaint file, with a copy of the terms of
the adjustment provided the complainant. An
informal adjustment of a complaint may
include an award of back pay, attorney's fees
or other appropriate relief. * * *11
"? 1613.221 Decision by head of agency or
designee.
"(a) The head of the agency, or his
designee, shall make the decision of the
agency on a complaint based on information in
the complaint file. A person designated to
make the decision for the head of the agency
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.0 ?
shall be one who is fair, impartial, and
objective.
"(c) the decision of the agency shall,
require any remedial action authorized by law
determined to be necessary or desirable to
resolve the issue of discrimination and to
promote the policy of equal opportunity,
whether or not there is a finding of
discrimination. * * *"
DISCUSSION
In view of the authority granted to EEOC by the
statute, GAO does not render decisions on the merits of, or
conduct investigations into, allegations of discrimination
in employment in other agencies of the Government. See
Clem H. Gifford, B-193834, June 13, 1979. However, in view
of GAO's authority to determine the legality of expenditures
of appropriated funds, we have issued several decisions on
the legality of awards agreed to by agencies in informal
settlements of discrimination cases arising under Title
VII. See, for example, B-199291, June 19, 1981 (agencies
have the authority to award attorney fees to prevailing
complainants at the administrative level, such awards to be
made from the agency's operating expense as a necessary and
proper expense); Gene A. Albarado, 58 Comp. Geri. 5 (1978)
(agency has no authority to allow interest in settlement of
an EEO complaint under Title VII); and 54 Comp. Gen. 622
(1975) (applicable retirement deductions should be made
against gross salary entitlement, even though amount payable
is reduced by interim earnings, in remedial action for
employment discrimination).
To place the present cases in the proper perspective,
it is beyond question that an agency has the general
authority to informally settle a discrimination complaint
and to award backpay with a retroactive promotion or rein-
statement in an informal settlement without a specific find-
ing of discrimination. These issues have been affirmatively
resolved by EEO regulations and are no longer questioned by
this Office. See 29 C.F.R. ? 1613.221(c), and Shaw v.
Library of Congress, 479 F. Supp. 945 (D. D.C. 1979). It is
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clear that Title VII itself provides authority for awarding
backpay to employees in a discrimination case, independent
of the Back Pay Act of 1966, 5 U.S.C. ? 5596, and its
requirements of a finding of an "unjustified or unwarranted
personnel action." The connection between Title VII and t e
Back Pay Act arises only because EEOC has provided in its
regulations on remedial actions that when discrimination is
found, an award of backpay under Title VII is to be computed
in the same manner as under the Back Pay Act regulations.
See 29 C.F.R. ? 1613.271.
In view of EEOC's authority in this area, we requested
its comments on these cases. The EEOC states that section
717 of Title VII of the Civil Rights Act of 1964, as amended
(42 U.S.C. ? 2000e-16), together with its legislative
history, EEOC's regulations, and the current case law,
provide sufficient authority for informal adjustments of
discrimination complaints in the Federal sector to contain
monetary payments which are independent of any personnel
action. In its comments to this Office, EEOC states that
Title VII's legislative history:
" * * * is unequivocal in stressing that
conciliation and voluntary settlement are the
keystones of the eradication of employment
discrimination, both in the public and
private sectors, and that the broadest of
latitude exists in determining the appro-
priate remedy for achieving this end.".
In EEOC's view the legislative history supports the
conclusion that the term "appropriate remedies" is to be
broadly construed. For example, the legislative history of
section 717 of Title VII, states that:
"Thus the provision in section 717(b)
for applying 'appropriate remedies' is
intended to strengthen the enforcement powers
.of the Civil Service Commission by providing
statutory authority and support for ordering
whatever remedies or actions by Federal
agencies are needed to ensure equal employ-
ment opportunity in Federal employment.
Remedies may be applied as a result of
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individual allegations of discrimination, CSC
investigation of equal employment opportunity
programs in Federal agencies or their field
installations, or from review of agency plans
of action and progress reports. Remedies may
be in terms of action required to correct a
situation regarding a single employee or
group of employees or broader management
action to correct systemic discrimination and
to improve equal employment opportunity pro-
gram effectiveness to bring about needed
progress. The Commission is to provide
Federal agencies with necessary guidance and
authority to effectuate necessary remedies in
individual cases, including the award of back
pay, reinstatement or hiring, and immediate
promotion where appropriate." (Emphasis
added.) S. Rep.-No. 92-415, 92nd Cong., 1st
Sess. 15 (1971).
As further support EEOC cites the case of Shaw v.
Library of Congress, 479 F. Supp. 945 (D. D.C. 1979), which
held that Title VII provided the Library of Congress with
authority to award a retroactive promotion and backpay in
settlement of a discrimination case without a specific find-
ing of discrimination. In that case, the District Court of
the District of Columbia stated:
"The authorities are legion that Congress and
the courts intended employers, private and
public (including the Library), to have and
to exercise broad authority to remedy employ-
ment discrimination. * * * Devices to
achieve these objectives are freely available
in court, at the administrative level and as
management techniques of employers." 479 F.
Supp. at 948-49. (Citations omitted.)
Additionally, in its letter to us, EEOC notes that:
"It has long been the practice in the private
sector for companies to enter into settle-
ments which contain cash payments where there
has been neither a finding of discrimination,
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either judicially or administratively, nor an
admission by the employer of any wrongdoing."
Thus, EEOC concludes that the specific remedial action
proposed in one of the pending cases, B-202521--payment to
employee of a sum equal to the backpay at a GS-9 position
from the date of nonselection to date of the settlement
agreement even though the employee is not to receive a
retroactive promotion to the position--is not only proper
but to be encouraged.
The EEOC, while concluding that informal settlements
may contain monetary payments which are independent of any
personnel action, defines the limits of those monetary
payments as follows:
"Section 1613.217 permits informal settlement
agreements to include back pay, attorney's
fees or costs as monetary amounts. Courts
have given the term 'back pay' a very broad
interpretation covering many benefits of
employment, in addition to salary, that form
part of the employee's compensation, includ-
ing overtime, sick pay, and. shift differen-
tials. These cash awards do not constitute
damages of any kind, but are economic resti-
tution necessary to restore employees to the
economic position they would have but for the
alleged discrimination. * * * Thus agencies
can agree to pay back pay, reasonable
attorney's fees and costs. Compensatory or
punitive damages, or back pay amounts in
excess of a complete back pay award, would
not be permissible." (Footnotes omitted.)
Under EEOC's view, agencies are authorized to
informally settle a Title VII complaint without a specific
finding of discrimination, and to make monetary awards for
backpay, attorney's fees or costs, whether or not the
employee is actually promoted or reinstated. The limit of
any monetary award is the amount of backpay, attorney's
fees, or costs that the employee would have been entitled to
if discrimination had been actually found.
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We recognize that public policy favors the amicable
settlement of disputes, and agreements accomplishing this
result will be disregarded only for the strongest of
reasons. Cities Service Oil Co. v. Coleman Oil Co., Inc.,
470 F.2d 925 (1st Cir. 1972); Lichtenstein v. Lichtenstein,
454 F.2d 69 (3rd Cir. 1972). It is clear that this policy
in favor of informal settlement of disputes applies to Title
VII cases, in both the private and public sectors. See
Sears Roebuck and Company v. EEOC, 581 F.2d 941 (D.C. Cir.
1978) and Shaw v. Library of Congress, 479 F. Supp. 945 (D.
D.C. 1979).
In Shaw v. Library of Congress, the court said:
" * * * In light of the historic policy
favoring the amicable settlement of disputes
and the particular settlement policy of Title
VII, no regulation should be interpreted as
intending to limit the bargaining options
available to an agency confronted by a bona
fide discrimination complaint unless the
language of the regulation is specific and
unambiguous. * * *" 479 F. Supp. at 949.
Although the EEOC regulations do not explicitly provide for
settlements of the types proposed here, we cannot say that
the interpretation given Title VII and these regulations by
the EEOC is improper, and we are hereby adopting that inter-
pretation. We believe that, in light of the authorities
cited above, it is the appropriate interpretation.
Thus, we conclude that Federal agencies have the
authority in informally settling discrimination complaints
filed under Title VII of the Civil Rights Act of 1964, as
amended, to make awards of backpay, attorney's fees or
costs, without a corresponding personnel action and without
a finding of discrimination, provided that the amount of the
award agreed upon must be related to backpay and may not
exceed the maximum amount that would be recoverable under
Title VII if a finding of discrimination were made. The
award may not provide for compensatory or punitive damages
as they are not permitted under Title VII. DeGrace v.
Rumsfield, 614 F.2d 796 (1st Cir. 1980).
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Generally, the maximum amount that would be recoverable
under Title VII if a finding of discrimination is made, and
the maximum amount that could be awarded under an informal
settlement, is the gross amount of backpay the employee lost
minus any interim earnings and other deductions listed in
5 C.F.R. ? 550.806(e). For example, in B-206014, the SB
agreed to pay a monetary sum which represented the
employee's gross salary for a part of the period of his
contested removal. If the amount agreed upon is less than
the maximum amount that would be recoverable under Title
VII, if a finding of discrimination had been made, and his
recovery calculated under the Back Pay Act regulations, it
may be paid. The sums agreed upon in B-203194 and B-202552,
which apparently represent backpay for allegedly lost promo-
tional opportunities, may likewise be paid if they represent
an award which does not exceed the maximum amount that would
be recoverable under Title VII if a finding of discrimina-
tion had been made.
However, we have insufficient information concerning
the payment of $3,000 in B-202552. If it is a lump-sum pay-
ment unrelated to backpay or is in the nature of compensa-
tory or punitive damages, the payment would not be proper.
On the other hand, even though it is stated not to be
backpay, if it was arrived at on a basis consistent with
backpay as discussed in this decision, then payment may be
made.
We are concerned that EEOC's present regulations on
remedial actions in informal settlements without a specific
finding of discrimination do not provide sufficient guidance
for Federal agencies to carry out their responsibilities
under Title VII. We recommend that EEOC review and revise
its present regulations to provide such guidance. Until
such time, however, agencies may administratively settle
Title VII cases in a manner consistent with the guidelines
in this decision.
Accordingly, the settlements reached in these four
cases may be implemented in accordance with the foregoing
under the authority of Title VII and the corresponding EEOC
regulations.
~ J. P6_u_~
Comptroller General
of the United States
ti
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