Supreme Court Says “Strong Basis” Needed In Disparate Impact Cases

The U.S. Supreme Court today gave employers some guidance today on the use of assessment tests, saying the results of these tests can not be ignored simply because they have an adverse impact on a protected group.

Ruling 5-4 in the case of Ricci v. DeStefano, the court’s majority said just because a disproportionate share of whites pass a test does not make the test discriminatory. Writing for the majority, Justice Anthony Kennedy said invalidating test results because of the statistical racial outcome, “… is impermissible under Title VII unless the employer can demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate-impact statute.”

Now, before an employer looking at the racial makeup of those who passed and failed a promotional exam and, almost certainly, other types of employment exams, can decide to throw out the results because it fears a discrimination lawsuit, it must have “a strong basis in evidence” to believe the test is discriminatory under Title VII of the Civil Rights Act of 1964 and its amendments.

Employment lawyers reacted with caution, saying the 92-page decision, including a dissent by Justice Ruth Bader Ginsburg, will take time to digest. Their initial impression, however, is that the court appears to have tempered if not invalidated the 80 percent rule of the Equal Employment Opportunity Commission. That rule states that the selection of a group at less than 80 percent of the group with the highest rate will be considered by the EEOC as evidence of discrimination.

However, the Supreme Court ruled statistics are not enough to show disparate impact. The decision says, “… a prima facie case of disparate-impact liability — essentially, a threshold showing of a significant statistical disparity …  and nothing more — is far from a strong basis in evidence that the City (of New Haven, Conn.) would have been liable under Title VII (for discrimination) had it certified the results.”

Merrily Archer, an employment lawyer in the Denver office of Fisher & Phillips who was previously with the U.S. Equal Employment Opportunity Commission, says the decision appears to be “completely at odds with the EEOC guidelines.”

Merrily Archer

“What does it mean to say an employer needs a strong basis in evidence?” she says. “My concern is an employer in the trenches. How is an employer going to apply this?”

“I disagree with the decision,” Archer adds.

A second attorney, who asked not to be identified because he had not completely read the opinion, suggested that the “court has muddied things up. The 80 percent rule was pretty straightforward for an employer: If you didn’t hit that percent, you had a problem.”

Today’s decision came in a case from New Haven, Conn. brought by a group of  white and Hispanic firefighters who scored high enough on a promotional exam to have been appointed to one of several captain and lieutenant openings in the department. No blacks were in the promotional group, although they made up about 30 percent of the department’s workforce in 2003 when the test was given.

Although New Haven spent tens of thousands of dollars hiring consultants to develop the promotional exam and validating it, the city’s Civil Service Board refused to accept the results, essentially denying promotions to the successful test takers. It heard testimony over five days that the test was deficient and that a less-discriminatory test existed. In the end, the city’s decision was based largely on the statistical results, which showed the promotional exam had a disparate impact on blacks.

Kennedy’s decision invites employers to engage stakeholders in the planning, design, compilation, and validation of these exams, but doesn’t require any particular process to be followed in the development and selection of a test. Once the test is given, though, the mere statistical results are not enough to invalidate it. Writes Kennedy:

“Nor do we question an employer’s affirmative efforts to ensure that all groups have a fair opportunity to apply for promotions and to participate in the process by which promotions will be made. But once that process has been established and employers have made clear their selection criteria, they may not then invalidate the test results, thus upsetting an employee’s legitimate expectation not to be judged on the basis of race. Doing so, absent a strong basis in evidence of an impermissible disparate impact, amounts to the sort of racial preference that Congress has disclaimed, §2000e-2(j), and is antithetical to the notion of a workplace where individuals are guaranteed equal opportunity regardless of race.”

The court’s decision is a victory for the firefighters who sued and a slap to Supreme Court nominee Sonia Sotomayor. She was one of three appeals court judges who issued a one-paragraph ruling upholding the city’s decision. The brevity of the decision as well as the notoriety of the case has become an issue in  her confirmation by the U.S. Senate.

Lead plaintiff, Frank Ricci, became a sympathetic figure after telling the Civil Service Board that he had dyslexia and had paid a neighbor to read onto tape the study materials.

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