Does your company use employment tests to screen candidates? If so, you should be aware that a new United States Supreme Court decision provides important guidance for employers. Ricci v. DeStefano, Nos. 07-1428 and 08-328 (June 29, 2009). First, employers should make sure their tests or other screening tools actually evaluate job related skills for the position in question consistent with business needs. Second, employers should be hesitant to discard out of fear of litigation valid test results that have a disproportionately adverse impact based on race, age, gender, or other protected class status.

In this much-anticipated decision, the Supreme Court held that the City of New Haven, Connecticut intentionally and impermissibly discriminated on the basis of race when failing to adopt test results used to promote city firefighters. Each candidate was scored and ranked on a written and oral examination. The City rejected the test results after determining that white and Hispanic candidates had scored disproportionately higher than black firefighters, who the City feared would file a successful claim of unintentional discrimination if the test results were honored.

Instead, after the test results were discarded, several white and Hispanic candidates who likely would have been promoted if certification had occurred, filed a race discrimination lawsuit under Title VII of the Civil Rights Act of 1964 and the Equal Protection Clause of the Fourteenth Amendment. A divided 5-4 Supreme Court sought to develop a standard under Title VII to guide employers caught between potential claims of intentional (disparate treatment) and unintentional (disparate impact) discrimination. The Supreme Court did not decide the underlying Constitutional claim.

As a threshold matter, the Supreme Court determined that the City had intentionally used race as the basis for failing to adopt the firefighter test results. The Court then held that this reliance on race would be permissible only if the City had a “strong basis in evidence” to believe it would be subject to liability for unintentional discrimination if it failed to take the race-conscious action. The Supreme Court concluded that the City could not meet this standard because the record evidence demonstrated that the underlying test was racially neutral and properly tested for job-related skills. Further, the Court also held that no strong basis of evidence was presented that an equally valid, less-discriminatory testing alternative existed that the City declined to adopt. Writing for the Court, Justice Kennedy stated: “Fear of litigation alone cannot justify an employer’s reliance on race to the detriment of individuals who passed the examinations and qualified for promotions.” Accordingly, the Supreme Court reversed the Court of Appeals and granted summary judgment in favor of the petitioning firefighters.

Contrary to the Court majority, the dissenting Justices did not find any inherent conflict between Title VII’s disparate treatment and disparate impact provisions. Instead, the dissent written by Justice Ginsburg disagreed with the majority’s interpretation of the record evidence and concluded that the City “had ample cause to believe its selection process was flawed and not justified by business necessity.”

This decision emphasizes the following steps employers should take to avoid legal liability when using tests or similar screening tools:

  • Make sure the tests or similar tools are validated to test for job-related skills.
  • Update job descriptions to accurately reflect the pertinent position functions.
  • Consider whether the at-issue test or tool is the best assessment of such skills.
  • Train managers to properly implement the test or screen.
  • Monitor the test or screen results to determine any disproportionate impact.