In one of its most significant employment discrimination decisions in years, the U.S. Supreme Court held this week that if an employer discovers that a test it has given to employees would screen out a statistically significant number of women or minorities, the employer cannot scrap the test based on a fear that it will be sued for discrimination by those who did not pass the test, unless it can show a “strong basis in evidence” that it would actually lose such a suit. Throwing out the test results without such a showing, the Court held, would unlawfully discriminate against those who did well on the test based on their race or sex. Ricci v. DeStefano, Nos. 07-1428 and 08-328 (June 29, 2009).

Facts

The City of New Haven, Connecticut (the “City”), used a written test to help decide which firefighters would be eligible for certain promotions. The results showed that the test had a statistically significant adverse effect on African-Americans. Not only was the passing rate for black firefighters only about half of what it was for whites, but also none of the employees with top scores – the only ones eligible for promotion under City rules – was black. Concerned that using the test would lead black employees to file, and probably win, a suit alleging that the test had a discriminatory “disparate impact” based on race, the City decided not to use the test. In what likely appeared to the City as a case of “damned if you do, damned if you don’t,” it was then sued by 18 firefighters (17 whites and one Hispanic) who had passed the test, alleging that the City had discriminated against them, based on race, by refusing to use the test and thus denying them a chance at promotions.

The Court’s Decision

Title VII of the Civil Rights Act of 1964 (“Title VII”) prohibits two types of discrimination based on race, color, national origin, sex, and religion. First, the law prohibits intentionally treating one employee better than another because of such factors – so-called “disparate treatment” discrimination. Second, the law prohibits unintentional discrimination that results when an employer uses a test, selection device, or practice that is neutral on its face, but that has a disproportionate adverse impact on members of a protected group, or “disparate impact” discrimination.

Ricci dealt with a clash between those two types of discrimination. Although the City refused to use its test because it was afraid that it would lose a “disparate impact” case brought by black employees who had not passed the test, the Court held that fear did not justify the City in deciding not to use the test, because that amounted to intentional “disparate treatment” discrimination against the non-black firefighters who had done well on the test. In particular, the Court said that once a test has been given, even a significant statistical difference between how well two groups did on the test is not enough to justify scuttling it, because doing so amounts to “race-conscious” discrimination against those who did well on the test. To justify discarding such a test, the employer must instead show that there is a “strong basis in evidence” that if those who did poorly on the test challenge its use as “disparate impact” discrimination, the employer will lose that case, either because its test was not “job related and consistent with business necessity,” or because it refused to adopt less discriminatory ways to choose among employees who would have met its needs. In effect, the Court said that the only way an employer can walk away from a test it has already given, based on concern about possible liability for disparate impact discrimination, is to show that the test was unrelated to the job for which it was used or that the employer had ignored ways of selecting employees that would have met the employer’s needs with a less discriminatory effect.

What This Case Means for Employers

The Court’s decision puts employers between a rock and a hard place in deciding what to do if, after they give a test or use a selection device, they discover that the test or device has a disproportionate adverse effect on members of a protected group. If the employer uses the test, it may be sued by members of that group for “disparate impact” discrimination, but if it decides not to use the test, it may be sued by those who did well on the test for “disparate treatment” discrimination.

After Ricci, employers making that choice must now be much more concerned about a discrimination suit from those who will lose out if the test is discarded. An employer can defend such a claim only by showing that its own test was largely irrelevant to the job for which it was being used or not closely aligned with the employer’s business needs, or that the employer rejected less discriminatory ways of meeting those needs. But having chosen and used a test, presumably based on a belief that it would accurately predict success in a job, very few employers will be able to meet that burden.

For that reason, it is now risky to change a selection process after the fact, and employers who give a test must be prepared to follow through with it. Before giving any test or implementing any other method of selection among applicants or employees, therefore, employers should carefully evaluate the likelihood that the test or method may have a disproportionate adverse effect on certain groups; whether other alternative tests or methods are available that may have a less discriminatory impact; and – most importantly – how accurate the test or method will be in correctly selecting those employees who are best able to perform the required duties and responsibilities of the relevant job or jobs. By taking those steps before using any test or other selection device, employers will be best prepared to defend any resulting discrimination claim.