Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating on the basis of race, color, religion, sex, or national origin. Unlawful discrimination under Title VII may take the form of intentional discrimination (called “disparate treatment” discrimination), in which a protected factor such as race motivates an employment decision, but it may also take the form of unintentional discrimination, which occurs when a facially neutral practice that is not intended to discriminate has a disproportionate adverse effect on a protected class. This type of unlawful practice is called “disparate impact” discrimination. These two types of discrimination can sometimes be at odds with one another, as when an employer takes an employment action that knowingly disadvantages the members of one protected group in order to avoid claims that a facially neutral employment practice unintentionally disadvantaged another protected group. The U.S. Supreme Court recently addressed this situation in Ricci v. DeStefano and in a 5-4 decision concluded that an employer engaged in unlawful disparate-treatment discrimination against nonminority employees when it disregarded the results of a promotion-selection test that had a disparate impact on minorities.
The Supreme Court’s Ruling in Ricci v. DeStefano
In Ricci, the City of New Haven, Connecticut relied on an objective examination process to determine the best qualified candidates for promotions to lieutenant and captain positions within the fire department. The City hired an independent consultant to develop and administer the examination process. The consultant extensively analyzed the jobs in question and undertook measures designed to ensure that the results and examinations would not unintentionally favor white candidates. Nevertheless, when the examinations were administered and the results calculated, the top-scoring candidates who would be first in line for promotion consideration were all white for the lieutenant position and almost all white for the captain position. The City was concerned that the tests had unintentionally discriminated against minorities. After an extended evaluation of the situation, the City refused to certify the results of the tests because the certification would adversely impact minority candidates and expose the City to discrimination lawsuits. As a result of the refusal to certify the test results, those individuals, predominantly white, who had achieved high scores on the test would not be eligible for promotion to the vacant lieutenant and captain positions.
After the City’s failure to certify the tests, certain white and Hispanic firefighters who would have likely been promoted based on their test performance sued the City alleging that by discarding the test results for race-related reasons, the City discriminated against the claimants based on their race in violation of Title VII. The City defended its actions by alleging that if it had certified the results, it would have faced liability under Title VII for adopting a promotion practice that had a disparate impact on minority firefighters. Noting the conflict between disparate-impact and disparate-treatment discrimination in this situation, the Supreme Court held that under Title VII, an employer may lawfully undertake race-based action to avoid or remedy a racial disparate impact only when it has a “strong basis in evidence” to believe that it would have been liable under the disparate-impact theory of discrimination. The Court observed that the existence of a statistically significant disparate impact does not automatically result in Title VII liability. An employer can avoid such liability if the practice that causes the disparate impact is job-related and consistent with business necessity and there is no alternative practice that would serve the employer’s purpose with less adverse impact on protected classes.
Applying these standards to the City’s promotion examination, the Court found that although the examination had a strong disparate impact on minorities, the evidence considered by the City after that disparate impact was recognized compellingly showed that the examination was job-related and consistent with business necessity, and there was no evidence of an effective alternative that would have had a lesser adverse impact on minorities. Thus, the Court concluded that although the City may have reasonably feared discrimination lawsuits arising from the use of the examination test scores, the City had no strong basis in evidence to conclude that it ultimately would have been liable for disparate- impact discrimination. Consequently, the Court found that by discarding the examination results for racial reasons, the City had engaged in unlawful disparate-treatment discrimination against the nonminority candidates for promotion.
With its decision in Ricci, the Supreme Court has now made it more difficult for an employer that has utilized a facially neutral selection method to later invalidate or choose not to implement the results of that method based on the fact that the selection method has a disparate impact on women or minorities. When an employer recognizes that a selection method that has already been utilized has a disparate impact, it faces a Hobson’s choice: it may either apply the results of the selection method and face the possibility of disparate-impact lawsuits, or it may disregard the results of the selection method and face the possibility of disparate-treatment lawsuits from employees who otherwise would have benefited from the selection method. As the Supreme Court made clear in Ricci, the employer making the latter choice can defend against disparate-treatment liability by showing that it had strong reasons for believing that it would have been liable for disparate-impact discrimination if it had applied the results of the selection method, but that defense offers little solace to an employer that is likely to incur legal defense costs no matter which choice it makes.
To minimize the risk of falling into this legal conundrum, employers should use their best efforts to determine whether a proposed selection criterion or method is likely to have a disparate impact and to explore the availability of less discriminatory alternatives when the practice under consideration would have a disparate impact. When the use of selection criteria or methods that have a disparate impact are unavoidable, employers should consider having validation studies conducted on those criteria or methods to ensure that they are job-related and consistent with business necessity. By validating a selection method in advance, an employer would have a defense to use against any disparate-impact lawsuits that may arise from its use. Employers’ ultimate objective should be to ensure that hiring and promotion decisions are made on the basis of job qualifications rather than on the basis of any protected category.