Disparate Impact or Disparate Treatment: Either Way Leads to Court

Just when you thought you had this diversity stuff down pat, the U.S. Supreme Court comes along and turns it all upside down. At least that's what seems to have happened in two cases the justices decided before they left for summer vacation.

One case, Gross v. FBL Financial Services, Inc., has been largely overshadowed by the other, a sexier story for the media. Gross requires employees who want to claim age bias to prove that their advanced years are the reason (the "but-for" cause) for an adverse employment decision. Until Gross, plaintiffs had to prove only that it was one of the reasons (a "motivating factor") for the decision not to hire, not to promote, to fire, to lay off, or to otherwise do whatever is adverse to the claimant ("Supreme Court," 2009).

This, of course, makes it much tougher for a plaintiff to prove bias unless some manager is silly enough to say, "Hey, we're laying you off because you're an old coot," or words to that effect. The decision has caused such outrage that Congress is expected to pass legislation to overturn the decision (LoBianco, 2009; Savage, 2009; Simon, 2009; "Supreme Court," 2009). At least one attorney believes it is such a certainty that Congress will act, he is telling his clients to ignore the decision (Simon, 2009). The change could come soon. U.S. Rep. George Miller, D-CA, chairman of the House Education and Labor Committee, announced July 1 that he plans to hold a hearing regarding the Gross case to "prevent the damage this decision will have on workers' civil rights" (Sumner, 2009).

The other case, Ricci v. DeStefano, has overshadowed Gross, not just because of its holding but because the 5-4 decision overruled an opinion by a three-judge appellate panel; one of the panel members just happened to be Sonia Sotomayor. Sotomayor, of course, is President Barack Obama's pick to replace David Souter on the Supreme Court.

While conservatives and liberals are arguing about the impact, if any, the reversal should have on Sotomayor's ability to serve on the Supreme Court, lawyers and legal scholars are blogging, giving interviews and issuing warnings about the impact of the case and what employers need to do to protect themselves (Castellano, 2009; Hyman, 2009; Nolan, 2009; Schwartz, 2009). The problem is that Ricci - or, as it's more commonly known, the firefighter, or reverse discrimination, case - has left employers in a damned-if-you-do, damned-if-you-don't position regarding testing and its impact on racial balance in the workplace (Atkins, 2009; Hyman, 2009).

Employers' dilemma after Ricci: If the results of any test used to determine employees' job promotions or other events wind up excluding minorities, organizations can't simply toss the results or they can be sued by those who did well on the tests. But, not discarding the tests might open them up to lawsuits from those who performed badly (Atkins, 2009).

"The outcome really puts employers in a box," said Andrew J. Pincus, an attorney with Mayer Brown who filed an amicus curiae brief in the case on behalf of the National League of Cities and other groups. "Before, employers had some leeway. Under the new standard, they are really in a box because they will be facing costly litigation no matter what they do" (Atkins, 2009).

Ricci arose after the city of New Haven, CT, tested 118 firefighters - as required by union contract - for promotion. Among the test takers who passed were whites, Hispanics and African Americans. The trouble was, city regulations required the promotions to come from the group with the top three scores - 17 whites and two Hispanics.

The city feared it would be sued by the disqualified African American firefighters under a claim of disparate impact, which is an unintentional bias "resulting from a practice or policy that appears neutral on its face ... but which (1) has a disproportionately adverse affect on a protected group ... (2) is neither job-related nor justified by business necessity ... and (3) can be replaced with an alternative policy that will have a less discriminatory impact" ("High court," 2009).

To avoid the disparate impact suit, New Haven discarded the results of the tests and, in so doing, opened itself up to a lawsuit by the white and Hispanic firefighters, who claimed they were victims of racial discrimination based on disparate treatment. Disparate treatment is an "intentional discrimination on account of race, gender, etc." ("High court," 2009).

Sure enough, the high-scoring white and Hispanic firefighters sued. New Haven tried to defend itself by arguing that because of the racially disproportionate results, it risked a disparate impact lawsuit ("High court," 2009). The Supreme Court was not impressed and rejected that argument, saying that discarding the tests violated Title VII of the Civil Rights Act of 1964 because there was "no strong basis in evidence" indicating that the African American firefighters would have won had they filed suit. The city, said the Court, had plenty of defenses against such a case because the test was "job-related, consistent with business necessity, and there existed no equally valid, less discriminatory alternative that suited the city's needs but was not adopted" (Alifanz, 2009).

The upshot for New Haven: The white and Hispanic guys won, and now the black firefighters say they will sue.

Some commentators say the decision will have little impact on employers in general except those that are using tests, policies, or other standards to determine hiring, promotion, layoffs and the like (Alifanz, 2009). And others predict that Congress may step in and pass a law designed to overturn the ruling (Alifanz, 2009), but, until then, employers are left in the classic Catch-22 situation.

The immediate effect, say some commentators, is to make it less "legally precarious" for employers to rely on the outcome of qualifying tests (Alifanz, 2009; Sumner, 2009). But some attorneys are issuing cautionary advice to their clients, both private and public.

The first lesson for employers who use tests or diversity policies to make employment decisions: Do not toss results only because they may have an adverse impact on racial minorities, and understand that the "fear of litigation alone is not a sufficient defense ... to justify relying on race to the disadvantage of white employees or applicants" (Benjes & Polley, 2009).

As Sarah Benjes and John W. Polley of the Faegre & Benson law firm write: "Rather, under Ricci, the employer must use test results that have a disproportionate impact on a minority group unless there is strong evidence that the test result is not job related and consistent with business necessity or there is strong evidence that the employer could have achieved its objectives by deploying some other selection mechanism that would have had less of a disproportionate impact" (2009).

Given that, the consensus among many attorneys seems to be that employers should make sure before they give the test that the tests have been professionally validated or otherwise analyzed to make sure they are race-neutral (Benjes & Polley, 2009; Castellano, 2009; Shaughnessy & Ellerson, 2009). The same holds true for layoffs and terminations (Schwartz, 2009).

"Many employers have started to conduct a disparate impact analysis before the termination to see if the raw statistics are of concern," writes attorney Daniel Schwartz of the Pullman & Comley LLC law firm in Connecticut. "If they are, employers sometimes reconsider their decisions or re-engineer the layoff criteria to remove such a disparate impact. In other cases, employers simply review the particular data to ensure that the decisions were fair" (2009).

The law firm of Baker, Donelson, Bearman, Caldwell & Berkowitz (2009) has several pointers. One is that it's okay to have processes, criteria or tests that give all groups a fair whack at being hired or promoted. But it's wise, or perhaps imperative, to consider "before administering the test or practice" whether it will unfairly impact a protected class of employees. If it does, the employer needs to make sure there is no other metric available that is less discriminatory. If not, the employer must make sure the test is both job-related and consistent with necessary company business.

If all that is accomplished, then administer the test. If a disparity does pop up, do not invalidate the test or policy because workers have relied on it as being a criterion for the employment decision.

But what happens if you find in advance that a test or policy potentially has an adverse impact and there's no other less discriminatory metric available? Jay Jamrog, i4cp's senior vice president of research, suggests finding a way to help the employees who are less likely to make high scores. That could include mentoring, tutoring, or providing tips on test taking.

So, what does Ricci say about the future of affirmative action and diversity?

In the short run, there will probably be more lawsuits unless, as many expect, Congress acts quickly on this issue (Schwartz, 2009). But it could be that Ricci is a harbinger of a sea change in U.S. civil rights law prompted by a demographic shift that potentially puts non-Hispanic whites in a "minority" position, one that increasingly needs the protections that were once the province of other races or ethnicities (Phillips, 2009).

Documents used in the preparation of this TrendWatcher include the following:

• Alifanz, M. (2009, June 29). Ricci v. DeStefano - Supreme Court holds city violated Title VII by rejecting racially disparate test results. World of Work. Retrieved from worldofworklawblog.com
• Atkins, K. (2009, June 30). Supreme Court discrimination ruling may put employers in lose-lose situation. LawyersUSA. Retrieved from lawyersusaonline.com
• Baker, Donelson, Bearman, Caldwell & Berkowitz PC. (2009, June 30). Out of the frying pan and into the fire: Supreme Court issues favorable ruling for white firefighters in reverse discrimination case. Retrieved from bakerdonelson.com
• Benjes, S., & Polley, J. W. (2009, July 2). Ricci v. DeStefano: U.S. Supreme Court rules for white employees in race discrimination case. Faegre & Benson. Retrieved from faegre.com
• Castellano, P. (2009, July 3). How will the Ricci decision affect employment law? LA Workplace Issues Examiner. Retrieved from examiner.com
• High court upholds Ricci "reverse discrimination" claim. (2009, July 2). Bracewell & Giuliani. Retrieved from bracewellgiuliani.com
• Hyman, J. (2009, June 30). Ricci v. DeStefano: Supreme Court rules on discriminatory Hobson's choice. Ohio Employer's Law Blog. Retrieved from ohioemploymentlaw.com
• LoBianco, T. (2009, June 19). High court adds hurdle to age-bias suits. Washington Times. Retrieved from washingtontimes.com
• Nolan, C. (2009, June 29). Decision could affect private employers. Connecticut Law Tribune. Retrieved from ctlawtribune.com
• Phillips, J. (2009, June 30). Supreme Court rules for white firefighters in discrimination case. Employment Law Post. Retrieved from employmentlawpost.com
• Savage, D. G. (2009, June 18). Supreme Court: Burden of proof in age discrimination cases falls solely on workers. AARP BulletinToday. Retrieved from aarp.org
• Schwartz, D. A. (2009, June 30). Five things employers can learn from the Ricci v. DeStefano case. Connecticut Employment Law Blog. Retrieved from ctemploymentlawblog.com
• Shaughnessy, K. W., & Ellerson, T. L. (2009, June 30). Supreme Court issues ruling in "reverse" discrimination case. Executive Alert. Retrieved from bakerlaw.com
• Simon, E. (2009, June 22). New Supreme Court age discrimination decision will be gone in a flash. Employee Rights Post. Retrieved from employeerightspost.com
• Sumner, J. (2009, July 1). Congress will hold hearings on Gross v. FBL Financial Services decision. Washington DC Employment Law Update. Retrieved from dcemploymentlawupdate.com
• Supreme Court makes it harder for employees to win age-bias lawsuits. (2009, July 5). Business Management Daily. Retrieved from businessmanagementdaily.com