Subtitle: 
Balancing disparate treatment and disparate impact liability under Title VII.
Important Tip Before you stop using a test or other business-related practice that has a disparate impact on a protected group, you must consider whether the disparate impact presents a strong likelihood of liability.

You may have read in the newspaper about a discrimination lawsuit filed by firefighters against the city of New Haven, Connecticut and some of its public officials.  The plaintiff firefighters alleged they were unfairly denied promotions because of their race, after the city discarded results of a test passed by a disproportionately higher number of whites than minorities.  In a 5-4 decision, the Supreme Court sided with the firefighters, holding that the defendants violated Title VII of the Civil Rights Act of 1964.  

Businesses with policies, practices, or employment-related tests that have a disparate impact on protected groups need to be familiar with this decision, which holds that an employer may not intentionally discriminate against a protected group for the purpose of remedying a disparate impact practice unless the employer has a “strong basis in evidence” to believe that it will be subject to disparate impact liability if it fails to take the racially discriminatory action.

Background

To be considered for promotion to lieutenant and captain positions in the New Haven fire department, applicants were required to pass a test designed to measure candidates’ leadership, firefighting knowledge, and management abilities, among other things.  The test consisted of a written portion containing 100 multiple choice questions, was written below a 10th grade reading level, and applicants were provided with a list of the source materials and given three months to study before taking the test.  The test also contained an oral component, which counted for 40% of the overall score.  New Haven law required that, based on the test results, a ranked list of applicants be prepared, and that each lieutenant and captain vacancy be filled by a candidate from the top three candidates on the list.  

Candidates took the test in late 2003, and a disproportionately high number of white candidates passed the test compared to other racial groups, with the result that only two minorities (out of 118 test takers) qualified for consideration to be promoted.  Concerned about the test’s disparate impact on minorities, the city chose to abandon the test results, thereby denying those who performed best on the exam an opportunity for promotion.  

Title VII of the Civil Rights Act of 1964 prohibits both intentional discrimination (known as “disparate treatment”) as well as practices that have the unintended effect of disproportionately affecting certain groups (known as “disparate impact”).  The city argued that it was necessary to discard the test to avoid liability for unlawful discriminatory impact (facially neutral practices that, even if unintentional, have a disparate impact on certain groups) on minority applicants in violation of Title VII.  The plaintiff firefighters, on the other hand, argued that by discarding the test, the city engaged in unlawful discriminatory treatment (contrary to disparate impact, discriminatory treatment is intentional discrimination) in violation of Title VII.  

The Supreme Court’s Holding

The key holding of the Supreme Court’s decision is that before an employer may intentionally discriminate for the purpose of avoiding or remedying a disparate impact (in this case, by discarding the test), the employer must have a “strong basis in evidence” to believe that it will be subject to disparate impact liability if it fails to take the racially discriminatory action.  The focus here is on liability.  Disparate impact alone is not enough (countless practices may have a disparate impact for a variety of lawful reasons).  Nor is fear of being sued for a policy’s disparate impact sufficient.  Instead, the employer must have a strong evidentiary basis to believe that the disparate impact is unlawful.  

How do you determine whether disparate-impact discrimination is unlawful?  The Court discussed two ways this can be shown:  (1) whether the policy or practice (in this case the discarded test) is job-related and consistent with a business necessity (to be lawful, the answer must be “yes”) and (2) whether the employer could have adopted an equally valid, but less discriminatory, alternative to the challenged practice (to be valid, the answer must be “no”).

The Court had no difficulty with the first prong of this test, finding ample evidence in the record that the tests were job-related and consistent with business necessity, noting the painstaking efforts taken by the test designers to ensure that it effectively measured firefighting aptitude.  The Court also held that the defendants failed to identify a less discriminatory alternative, noting that defendants’ only proposals involved impermissible racial discrimination.  In sum, the Court held that the city lacked no evidence, much less a “strong basis in evidence,” that the tests would subject it to disparate impact liability.

What does this mean for your small business?  If you have policies or practices that disproportionately impact certain groups, consider the purpose of the practice and whether there are reasonable alternatives that would reduce that disparity.  In some cases, there may be less discriminatory alternatives.  In other cases, as in the New Haven case, there aren’t.  Be cautious about reversing practices merely to iron out disparities between protected groups.  As the Supreme Court made clear today, employers must have a strong basis in evidence to believe that failure to do so will result in disparate impact liability.
 

Additional Information
Important Tip: 
Before you stop using a test or other business-related practice that has a disparate impact on a protected group, you must consider whether the disparate impact presents a strong likelihood of liability.
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