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In this appeal, Union Pacific Railroad challenged the EEOC’s authority to continue its investigation after issuing a Right to Sue letter and after the district court had granted summary judgment in favor of the employer. While an issue of first impression in this circuit, similar challenges have created a split in authority between the Fifth Circuit in EEOC v. Hearst, 103 F.3d 462  (5th  Cir.  1997) (EEOC authority ends when it issues a right to sue letter), and more recently the Ninth Circuit in EEOC v. Federal Express Corporation, 558 F.3d 842 (9th Cir. 2009) (EEOC investigatory authority continues after issuance of right to sue letter).

The Hearst court believed there to be an integrated, multistep enforcement procedure divided into four distinct stages: filing and notice of charge, investigation, conference and conciliation, and, finally, enforcement. The court further believed that these steps must always proceed as separate stages, rather than overlapping each other.

The Federal Express court rejected the Fifth Circuit’s concept of distinct, multistep stages of enforcement by the EEOC finding that the beginning of one stage does not necessarily terminate the preceding stage.

The 7th Circuit joined in that holding, concluding that the text of Title VII, and more recent Supreme Court and Seventh Circuit opinions, do not support such a restrictive  interpretation of the  EEOC’s enforcement authority. The 7th Circuit’s decision in favor of the EEOC’s investigatory authority was driven by its own prior recognition of the EEOC’s broad role in promoting the public interest by preventing employment discrimination under Title VII. The court also noted with favor the United States Supreme Court’s similar recognition.

The court cited to EEOC v. Waffle House where the United States Supreme Court stated that Title VII clearly makes the EEOC the master of its case and confers on the agency the authority to evaluate the strength of the public interest at stake, where the charging party had contractually agreed to arbitrate the charge. The 7th Circuit referenced its own Watkins v. Motor Lines, Inc. and EEOC v. Sidley Austin decisions in joining the 9th Circuit’s view that the EEOC’s investigation is not derivative of the legal rights of the charging party.

The 7th Circuit noted that the dismissal of the underlying case in the employer’s favor was not an issue before the 5th or 9th Circuits. However, the court believed the result was the same – the   entry of judgment in the charging individual’s civil action has no more bearing on the EEOC’s authority to continue its investigation than does its issuance of a right-to-sue letter to that individual.

Until this issue is resolved, employers need to be aware that resolution of a claim with the employee will not necessarily end the investigation.  The employer should remain in litigation mode and litigation holds should continue until the EEOC has agreed to conclude its investigation.