The United States Supreme Court, in a 5-to-4 decision, held that the City of New Haven, Connecticut (the City), violated Title VII of the Civil Rights Act of 1964 when it discarded examinations it had prepared for its firefighters seeking promotions to the positions of lieutenant or captain.

The City sought to fill vacancies for the positions of lieutenant and captain in its fire department and hired a professional testing firm to develop and administer the examinations. The company, Industrial/Organizational Solutions, Inc. (IOS), specializes in developing promotional examinations for fire and police departments. IOS took detailed steps to ensure that the examinations were race-neutral. Nevertheless, the white candidates’ test results surpassed those of the minority candidates. The City became concerned by the results and opened the matter to public debate. The City was deadlocked on the issue and ultimately tossed out the test scores because of the racial disparity of the results. Moreover, it feared that the minority candidates would file a discrimination lawsuit if the City promoted candidates to the positions of lieutenant or captain on the basis of the test results.

The Court’s analysis turned on whether the employer had a lawful basis to take its race-based action. The Court found that the City could not discard the tests because Title VII requires that the employer “have a strong basis in evidence” to believe that it will be subject to disparate impact liability. In reviewing the record, the Court determined that the City had no strong basis in evidence to believe that it would be subject to disparate impact liability because there was no evidence showing that “the tests were flawed.” The majority found that racial statistics alone cannot justify taking action based on race. In addition, the tests were designed in a race-neutral manner and there was no indication that “other, equally valid and less discriminatory tests were available to the City.”

Although Ricci involves a public employer, the Court’s decision applies equally to public and private employers. The decision presents a dilemma for employers. Because the Court does not define what constitutes “a strong basis in evidence,” there is no clear standard for an employer to follow when faced with a potential lawsuit on disparate impact. If an employer’s test results have the effect of precluding minorities from being hired or promoted, the employer cannot simply discard the tests. Before the employer can abandon the test results, it must be able to prove either that the test was defective because it was not job-related and consistent with business necessity or that the employer has “an equally valid, less-discriminatory testing alternative.”

Employers must therefore proceed with caution. They should document their efforts to develop neutral testing criteria and be prepared to have their decision-making processes fully scrutinized in court.