The EEOC Litigation Review - 2023 - Report - Page 33
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Litigation Over EEOC Consent Decrees
Settlement of EEOC lawsuits is effectuated through consent decrees. As a matter of
policy, the Commission will not resolve a lawsuit on a confidential basis. Any resolution
must be approved by a court by way of a public record consent decree.
Courts typically retain jurisdiction over consent decrees, and the EEOC polices an
employer’s compliance with obligations contained within the consent decrees. The
Commission is very aggressive in monitoring consent decree obligations, as shown by
its prosecution of a contempt motion in 2022 in EEOC v. Sherwood Food Distributors,
Inc., 2022 U.S. Dist. LEXIS 32921 (N.D. Ohio Feb. 24, 2022), where the court held an
employer in contempt for failing to pay its payroll tax liabilities, as required by an EEOC
consent decree that resolved a systemic discrimination lawsuit. In addition to paying
the outstanding payroll tax, the court ordered the employer to pay an additional
$46,858.55 resulting from the 3.8% tax rate increase during the time of the contempt
dispute, as well as potential settlement administrator fees.
On September 27, 2016, the EEOC filed a lawsuit against Sherwood, alleging that it
engaged in discriminatory hiring practices that adversely impacted female applicants in
violation of Title VII of the Civil Rights Act of 1964. The parties subsequently settled the
litigation and entered into a consent decree, whereby Sherwood agreed to place $3.6
million into a Qualified Settlement Fund (QSF) account administered by a third-party
administrator within 30 days of entry of the consent decree. Id. at *2. These funds were
to provide monetary relief to individuals that the EEOC determined were subjected to
the alleged discrimination. Id. The monetary relief constituted both back pay and other
monetary damages available under Title VII. Id. The EEOC was given the authority to
determine what type of monetary relief would be paid to the eligible claimants.
The EEOC asserted that Sherwood subsequently violated the consent decree by
refusing to pay its payroll tax liability and therefore preventing the distribution of the $3.6
million to the claimants by December 14, 2021. In relevant part, the consent decree
stated that Sherwood was responsible for paying its share of all applicable pay roll taxes
and that the administrator would inform Sherwood, “of the amounts of back pay
distributed to each person from the QSF and all other information necessary for
[Sherwood] to satisfy its payroll tax liabilities.” Id. The administrator notified
Sherwood’s counsel on December 1, 2021, of the amount that it owed in payroll taxes
and provided notice that payment of the payroll taxes must be received on December
10, 2021, for the award checks to be timely distributed. The EEOC’s counsel
communicated with Sherwood’s counsel in an attempt to compel the payment of the
payroll taxes, but Sherwood indicated it would not make the payroll tax payment.
On January 27, 2022, the court held a hearing regarding the EEOC’s motion for civil
contempt. Upon Sherwood’s request for a breakdown of the individual payments to be
made to the claimants, the court continued the hearing until January 31, 2022. Prior to
the start of the hearing on January 31, 2022, the administrator notified Sherwood that its
total payroll taxes owed had increased from $361,890.68 to $408,749.23 due to the
Ohio Department of Jobs and Family Services’ increase in QSF state unemployment tax
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© Duane Morris LLP 2023
The EEOC Litigation Review – 2023
