In Ricci v. DeStefano (decided June 29, 2009), the Supreme Court held, by a vote of 5 to 4, that under Title VII of the Civil Rights Act, an employer may not engage in intentional race-based discrimination, by rejecting the results of a written promotion examination passed by a disproportionate number of white applicants, in order to avoid an unintentional disparate impact on minorities “absent a strong basis in evidence” that it would be subject to disparate-impact liability if it had failed to take race-conscious discriminatory action.

In particular, the court determined that an employer”s good faith belief that action is necessary to avoid a disparate impact is not sufficient to justify race-conscious employment decisions. Under the “strong basis in evidence” standard, the mere threat of litigation by minority employees alleging disparate treatment is insufficient to justify a direct discrimination against other groups without a strong indication that the litigation would be successful. In essence, the Supreme Court concluded that intentional employment discrimination is the greater evil.

Assns should review carefully the principles set forth in Ricci in designing and administering examinations for hiring and promoting workers, in case they ever find themselves in the unfortunate situation in which a test designed with great care to be fair unintentionally produces a disparate impact.

The Ricci decision

In Ricci, 19 white and one Hispanic firefighter sued the city of New Haven under Title VII, on the theory that the city was liable for disparate treatment because it threw out the results of a promotion examination under which a disproportionate number of white firefighters were eligible for promotion to the rank of lieutenant or captain. The high court found that “however well intentioned or benevolent it might have seemed, the city made its employment decision because of race. The city rejected the test results solely because the higher scoring candidates were white.” The city justified its actions as necessary to prevent the filing of a disparate impact lawsuit by disappointed minority applicants challenging the outcome of the test, under which no non-white candidates became eligible for promotion.

The Supreme Court framed the issue for decision as whether the purpose to avoid disparate-impact liability excuses what otherwise would be prohibited disparate-treatment discrimination (express race-based decisionmaking). To resolve this issue, the majority read into Title VII the standard it previously had formulated in resolving reverse discrimination cases under the Equal Protection Clause of the Constitution. It held that an employer may not reject examination results absent “a strong basis in evidence” for concluding that the test was deficient “ i.e., that it was racially biased, unrelated to the job, or that there was some other equally valid, nondiscriminatory test the city could have administered in its place.

In adopting this standard, the high court rejected the city”s argument that an employer”s good faith belief that its actions were necessary to comply with Title VII”s prohibition of disparate-impact was sufficient to justify its use of an explicit racial criterion in promotion decisions. The court held that fear of litigation alone is not sufficient to justify race-based action. It specifically noted that a mere threshold showing of a significant statistical disparity does not provide a "strong basis in evidence" that the employer would have been liable if it had certified the test results.

Applying this standard to the facts, the majority found that the evidence did not show that the examination was deficient or that discarding its results was necessary to avoid disparate-impact liability. It concluded that the city would have won any potential disparate impact lawsuit and thus could not rely on the threat of such litigation to justify its failure to promote the white applicants who passed the test. Thus, the high court found that the city had engaged in unlawful discrimination against the white applicants who had the highest scores on a facially fair test.

The four dissenters argued at length that the majority had ignored multiple flaws in the tests the city used and had thereby improperly downplayed the difficulty the city would have faced in defending against a disparate impact claim based on the disproportionate effect of the test on minorities.

Implications of Ricci for employers

With the adoption of the “strong evidence” test and its application in Ricci, employers now face a lower risk of liability for use of appropriate examinations in hiring and promotion decisions, even if fewer minority applicants than expected become eligible for selection under a properly designed test. Plaintiffs in a disparate impact case must present clear-cut evidence that a particular test has an unfair and illegal impact on minorities. The mere fact that “raw racial statistics” show unequal passage rates is not sufficient to meet this standard.

Developers of written examinations should be particularly interested in the opinion's discussion of whether the exams at issue were job-related and consistent with business necessity. In upholding the tests, the Supreme Court relied heavily on process considerations concerning the detailed steps the city had taken to develop and administer the tests after extensive analyses of the positions involved. The source material from which the questions were drawn was deemed appropriate, and the city had entertained challenges to the validity of particular questions. Further, the city's outside consultants had detailed information available to establish the validity of the questions, if challenged.

Despite the guidance in Ricci, employers will still find it difficult to determine when fears of a potential disparate impact lawsuit are sufficiently justified to warrant alteration of their actions” or when doing so would render them vulnerable to reverse discrimination claims. The dissenters required 34 pages to articulate their disagreement with the majority”s factual findings. This demonstrates that there are no easy answers to the perplexing question of when race-based considerations may be utilized in the effort to eliminate racial discrimination in employment.

Commentary originally published by Association TRENDS, #170, July 3, 2009.