In a unanimous decision, the Supreme Court held yesterday that a plaintiff who does not file a timely charge challenging the adoption of a particular employment practice may nevertheless assert a disparate impact claim that challenges the employer’s subsequent application of that practice. Lewis v. City of Chicago, No. 08-974 (May 24, 2010).

The case stemmed from the City’s July 1995 written examination for firefighter applicants. In January 1996, the City announced that it would hire randomly from the top tier of scorers on that test, or rather, those who scored 89 or above out of a possible 100 points. Those individuals were deemed “well qualified,” whereas those applicants who scored below 65 points were notified that they failed the test. Notably, the “in between” applicants who scored between 65 and 88 points were considered “qualified” but were placed on an eligibility list because, based on projected hiring needs, it was not likely they would be hired. In May 1996, the City selected its first class of applicants by drawing randomly from the “well qualified” range of scores. The City repeated this process 10 more times over the next six years, each time hiring from the “well qualified” range.

On March 31, 1997, African-American applicants who scored in the “qualified” range and had not been hired filed a charge with the EEOC, alleging that the City’s practice of selecting only those applicants who scored 89 or better for advancement caused a disparate impact on African-Americans in violation of Title VII of the Civil Rights Act.

The district court rejected the City’s claim that the plaintiff’s claims were untimely, finding that the ongoing reliance on the 1995 test results constituted a continuing violation under Title VII. The Seventh Circuit Court of Appeals reversed, holding that the claims were in fact untimely because the earliest EEOC charge was filed more than 300 days after the only discriminatory act – the decision to sort the scores into “well qualified,” “qualified,” and “not qualified” categories. In its view, the subsequent hiring decisions made over the next six years were immaterial because they were the automatic consequence of the test scores, rather than new, discrete discriminatory acts.

The Supreme Court reversed the decision and held that the City’s use of the cutoff score in selecting candidates constituted an employment practice that caused a disparate impact that was actionable under Title VII. According to the Court, a Title VII plaintiff establishes a prima facie case of disparate impact discrimination by showing that the employer uses a particular employment practice that causes an unlawful disparate impact. While Title VII itself does not define the term “employment practice,” the Court found that the term encompassed the City’s conduct in this case. Although it had adopted the eligibility list earlier and announced an intention to draw from that list, it made use of the practice of excluding those applicants below 89 each time it selected a new class of firefighters. The Court held that the plaintiffs’ allegation that this exclusion had a disparate impact upon African American applicants stated a cognizable claim under Title VII.

The Court recognized the potential practical implications of its decision. It noted that employers could face new disparate impact suits for practices that they have used regularly for years, and that evidence essential to a business-necessity defense might be unavailable or unreliable by the time subsequent lawsuits are brought. However, the court found that adopting the City’s position in this instance would allow an employer to adopt an unlawful employment practice and continue using that practice indefinitely, with impunity, despite ongoing disparate impact, simply because no timely charge was brought challenging the adoption of that practice.

The practical implication for employers is clear: do not assume that just because a particular method of selecting employees has been used for years that it is lawful. Rather, employers should regularly evaluate their employee selection procedures to ensure that they are in compliance with applicable law, and will not become a source of litigation or liability.