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Latest News... Ricci v. DeStefano -- Tension between disparate impact and disparate treatment theories

The Supreme Court in Ricci v. DeStefano, 129 S. Ct. 2658 (June 29, 2009) addressed the tension between theories of intentional discrimination and “disparate impact” in the context of employee testing, ultimately setting out the following standard for employers to follow: "Title VII does not prohibit an employer from considering, before administering a test or practice, how to design that test or practice in order to provide a fair opportunity for all individuals, regardless of their race. And when, during the test-design stage, an employer invites comments to ensure the test is fair, that process can provide a common ground for open discussions toward that end. We hold only 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."

Turning to the facts, the City of New Haven administered a promotion exam for its firefighters. The carefully designed test was specifically intended to eliminate the risk of bias in the promotion process. As it turned out, however, there were wide disparities in test performance among racial groups. All sides threatened to sue – African Americans intended to sue under the disparate impact theory if the results were followed and the white firefighters promised to sue for intentional discrimination (“disparate treatment”) if the city essentially changed the promotion criteria after realizing they would not bring about the desired racial result. Ultimately, the City did throw out the test results and the white firefighters sued. Although the firefighters lost before the District Court and the Second Circuit Court of Appeals (opinion by Sotomayor), the Supreme Court reversed in the aggrieved employees’ favor.

Unfortunately for employers, the case offers little guidance on what exactly would constitute “a strong basis in evidence” for employers to believe they would be subject to disparate impact liability. Impact liability would arise if the examinations were not job related and consistent with business necessity, or if there exists an equally valid, less-discriminatory alternative to the exams. However, these vague standards give little comfort to employers, especially when the costs of defending a case can easily exceed the damages at issue in the litigation.

Other Points, Questions and Implications Arising from the Decision: 

  • Will there ever (again) be a case where public and/or private employers are lawfully permitted (or compelled) to “engage in intentional discrimination” under the guise of attempting to comply with an anti-discrimination statute?
  • The court expressly leaves open the question of whether it is even possible to reconcile impact theory as it has been understood and applied with the equal protection clause of the United States Constitution. Supreme Court litigation on this point will certainly take place at some point in the future and the results will likely depend on however the balance of a divided Court breaks at that time.
  • The case calls into question the legitimacy of affirmative action and any other programs using racial statistics as a measure of fairness. 
  • Voluntary diversity programs could be increasingly suspect, particularly those aimed at promoting minorities into management positions.
  • Important questions remain when it comes to employer strategies for reductions in force – is it permissible to adjust the selection standards once a preliminary evaluation forecasts a peculiar racial result or are they stuck with the result? (And will the same concerns translate to other protected categories?)

Aside from issues left open for future litigation, there are at least a few guideposts employers can find in the decision:

  • Tests are allowed;
  • Fair tests are a preferred method of achieving Title VII compliance; and
  • Employers should carefully evaluate the legitimacy of their test before implementing the exam.

Friday, June 26, 2009

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