On Monday, June 29, 2009, by a vote of 5-4, the Supreme Court found that when the city of New Haven threw out the results of a firefighters' promotion exam because white candidates passed the exam in disproportionate numbers compared to minority candidates, the city engaged in unjustified race-based decision making in violation of Title VII of the Civil Rights Act.

"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," Justice Anthony Kennedy wrote in his opinion for the Court. Despite the Supreme Court's decision, the dilemma faced by the city of New Haven is a complex and difficult issue with which nearly all employers continue to struggle.

A brief review of the facts is important to understand this controversial case. The city of New Haven, Connecticut, with the help of a test development company, IOS, created a firefighter promotion examination. IOS paid special attention to concerns raised that in past firefighter promotion exams in New Haven, minorities had not fared well. To address these concerns, IOS utilized minority interviewers and spent a great deal of time interviewing firefighters and developing testing criteria that were job related and consistent with business necessity. The exam was 60 percent written and 40 percent oral. As stated, whites scored disproportionately better than minorities who took the exam.

An uproar ensued. The city held hearings on what to do with the test results. At the hearings, the city took testimony from IOS and other experts on testing. None of the experts stated on the record that the testing was flawed, not job related, or not consistent with business necessity. None of the experts could state with certainty that other suggested forms of evaluation for promotion were better than the test used.

Everyone agreed that the prima facie case for disparate impact against the minority candidates was met - but no one agreed on what to do with the results of the exam. When the city threw out the results, the white firefighters sued claiming disparate treatment. The city defended its actions by pointing to the threat of a disparate-impact lawsuit from the minority firefighters.

The Ricci decision holds that under Title VII, before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious discriminatory action. The Court noted that the city's actions would violate Title VII's disparate-treatment prohibition absent some valid defense.

In the Court's view, the real question then became, whether the purpose to avoid disparate-impact liability excused what otherwise would be prohibited disparate-treatment discrimination. The Court found that there was no evidence that the exam was not job related. The Court also noted the great expense and time that had gone into creating the exam with special attention given to the needs and concerns of the minority candidates. Finally, the Court noted that there was no clear evidence in the record that there existed any other better alternative to the exam used by the City of New Haven.

What, then, is an employer to do when faced with this type of dilemma? First, fear of litigation alone obviously does not justify race-based decisions. Second, the new, strong basis in evidence standard requires that employers carefully evaluate the employment practice or policy (as the City did with its exam) and then be prepared to defend it against disparate impact challenges by showing that despite the statistical disparity problems, the exam was job related, and based on business necessity, and there was no clear better alternative that would avoid the statistical disparity.

Validated, written, job-related testing likely remains one of the best options for employers. Another option, one suggested by Justice Ginsburg in a dissenting opinion, is to consider using a skills-based testing approach. Whichever method is used, it is critical that the test be job related and that it be able to withstand close scrutiny.