On May 24, 2010, the United States Supreme Court issued its ruling in Lewis v. City of Chicago, No. 08-974, holding that a disparate impact employment discrimination charge filed with the Equal Employment Opportunity Commission ("EEOC") within 300 days of a discriminatory practice's application, rather than its adoption, will be deemed timely. The Court's unanimous opinion, authored by Justice Scalia, reversed and remanded the Seventh Circuit's holding that a plaintiff must file a charge within 300 days of when the alleged discriminatory practice is adopted.

The case centered around a test that the City of Chicago ("City") gave to firefighter candidates in 1995. Lewis v. City of Chicago, 2005 WL 693618, at *1 (N.D. Ill. March 22, 2005). The City administered the written test to 26,000 candidates as the first step in its hiring procedures. The test results were finalized and communicated to candidates in January 1996. Based on the results of the test, the City classified applicants into three groups: "well qualified," "qualified," and "not qualified." Id. at *1-2. In May 1996, the City began hiring based on the test results and, until 2001, only allowed the hiring of applicants from the "well qualified" group. This practice had a disparate impact on African-American applicants as 12.6 percent of whites as compared to 2.2 percent of African-Americans scored as "well qualified." Id. at *2.

In 1998, the African-American Fire Fighters League and a class of African-Americans who applied for entry-level firefighter positions and scored in the "qualified" category on the test sued the City alleging that the City's decision to hire only from the "well-qualified" group had an adverse impact on African-Americans. Id. at *1. The plaintiffs had filed charges with the EEOC in March 1997, more than 400 days after the announcement of the test results but within 300 days of when the City began to hire applicants. The district court, which had previously denied the City's motion for summary judgment on timeliness grounds, ruled in favor of the plaintiffs on the grounds that the City had not proved that its decision to hire only from the group of applicants who were "well qualified" was consistent with a business necessity, and even if it had, there were less discriminatory means available. Id. at *14.

The City appealed the district court's decision to the Seventh Circuit Court of Appeals. The Seventh Circuit, in an opinion written by Judge Posner, reversed the lower court's decision on statute of limitations grounds. In its appeal, the City argued that the suit was untimely because the plaintiffs did not file their charges within 300 days after they were notified of their test results, which, according to the City, is when plaintiffs' claims accrued. Lewis v. City of Chicago, 528 F.3d 488, 490 (7th Cir. 2008). The plaintiffs, on the other hand, asserted that their charges were timely because they were filed within 300 days of when the City began to hire applicants from the "well qualified" list, which, they argued, is when their claims accrued. The Seventh Circuit held that, as in disparate treatment cases, the charging period begins when the discriminatory decision is made, rather than when it is executed, and thus the discrimination was complete when the tests were scored and the applicants were placed in qualification categories. The act of hiring from the pool of "well qualified" candidates was "the automatic consequence of the test scores rather than the product of a fresh act of discrimination." Id. at 491.

The Supreme Court reversed the Seventh Circuit, holding that "a plaintiff who does not file a timely charge challenging the adoption of a practice … may assert a disparate-impact claim in a timely charge challenging the employer's later application of that practice." Lewis v. City of Chicago, No. 08-974, slip op. at 1 (2010) (emphasis in original). Aside from the first hiring selections made in May 1996, neither party disputed that the conduct that the plaintiffs challenged (hiring only those applicants from the "well qualified" group) occurred within the 300-day charging period. Thus, the Court noted that the focus was not whether the charges were timely but whether the use of the employment practice of hiring only from the "well qualified" list could be the basis for a claim at all. Id. at 4-5. The Court focused on the language of 42 U.S.C. § 2000e-2(k) and determined that a plaintiff establishes a prima facie disparate impact cause of action by demonstrating that the employer "‘uses a particular employment practice that causes a disparate impact.'" Id. at 6 (emphasis in original). The Court found that the City's exclusion of "qualified" applicants met this standard because it used its practice in each round of hiring. Id.

This decision potentially affects employers in several ways. The practical effect of the decision is that employers may now be subject to disparate impact lawsuits years after initially unchallenged policies are implemented as they continue to apply those policies. In light of this potential, employers should carefully analyze any policies that they have adopted, or plan to adopt, to determine not only whether the policies had a disparate impact when they were created but also each time they are applied.