The question is whether a particular complaint form, the intake questionnaire, constitutes a formal discrimination charge that can serve as the basis for a lawsuit under the Age Discrimination Employment Act (ADEA).
Under the ADEA, employees must wait 60 days after filing a formal EEOC complaint to bring a lawsuit against their employers. The rule is designed to give the employer sufficient time to investigate the charges and perhaps reach an out-of-court settlement with the employee.
Almost half of EEOC complaints are filed by small business employees, according to the National Federation of Independent Business, which filed a brief with the Supreme Court in support of Federal Express.
In 2006 the EEOC received more than 75,000 discrimination charges, only 5% of which had reasonable cause to go to court, according to Karen Harned, executive director of the NFIB's legal foundation.
Harned argued that U.S. employers would face a surge in discrimination lawsuits if the justices decide that intake questionnaires qualify as discrimination charges.
"There has to be a filtering process or small business owners will be inundated with litigation," she said.
In December 2001, a Federal Express (Charts, Fortune 500) courier named Patricia Kennedy filed an EEOC intake questionnaire claiming that FedEx was in the habit of improperly firing older employees who did not meet the company's hourly delivery quotas.
The EEOC did not follow up on Kennedy's complaint. In April 2002, Kennedy and several other older employees, including Paul Holowecki, filed a class action suit against Federal Express. In May 2002, Kennedy belatedly submitted a formal discrimination complaint, known as a Form 5, to the EEOC.
A district court threw the case out on the grounds that plaintiffs were legally required to submit the Form 5 before filing suit against their employers. But the U.S. Court of Appeals for the Second Circuit reversed that decision, ruling that an intake questionnaire could indeed be considered a formal charge.
At yesterday's hearing, the justices concentrated on the issue of how the EEOC handles discrimination complaints. Chief Justice John Roberts argued that employees should not be held responsible for the EEOC's complex and often contradictory regulations.
"I don't understand the leap from government incompetence to the plaintiff losing," the chief justice told Federal Express advocate Connie Lensing.
The plaintiffs' advocate, David Rose, argued that the validity of a discrimination charge should not be a function of the form on which it was filed.
But Justice Antonin Scalia responded that employees were responsible for reading the forms that they filled out. "You can't run a system for people who are illiterate," Scalia said. But he also criticized the EEOC's procedures for handling discrimination complaints. "The problem is the EEOC," Scalia said. "What kind of agency is this?"
It may be months before the Supreme Court rules on Holowecki, but the outcome could force the EEOC to change its procedures for all discrimination complaints, including those that arise under the Americans with Disabilities Act and under Title VII, which covers discrimination on the basis of race, color, religion, sex and national origin.
"The decision in Holowecki will likely resolve the many inconsistencies among federal circuit courts of appeal on the issue of whether an EEOC intake questionnaire may constitute a charge of discrimination under the ADEA," said Paul Secunda of the University of Mississippi School of Law, in his American Bar Association preview of the case.
"Depending on the breadth of the holding, the case may also answer this same question for related federal employment discrimination laws."