Employment Alert: Supreme Court Places Employers in The Middle of The Racial Divide

Date: Jul 16, 2009

As a result of the Supreme Court's late term decision in Ricci, et al. v. DeStefano, et al., 557 U.S. ___, Nos. 07-1428, 08-328 (June 29, 2009), employers may face years of litigation and uncertainty in connection with hiring and promotion decisions.

In an effort to ensure a fair process for selecting candidates for promotion to the rank of captain and lieutenant, the City of New Haven's fire department consulted with experts and developed tests that were supposed to reflect an individual's capacity to perform actual job requirements. Seventy-seven candidates took the lieutenant examination – 43 whites, 19 blacks, and 15 Hispanics. Fifty-eight percent (58%) (6) of the white candidates passed the exam, compared with only 31.5% (6) of the black candidates and 20% (3) of the Hispanic candidates. Under the City's selection rules, the ten candidates with the highest passing scores were eligible for immediate promotion – and all 10 were white. The results of the captain's exam were similar. Of the 41 candidates who took the exam (25 whites, 8 blacks and 8 Hispanics), 64% (16) of the whites, 37.5% (3) blacks, and 37.5% (3) Hispanics achieved passing scores. The nine candidates with the highest passing scores (7 whites and 2 Hispanics) were eligible for immediate selection.

The City of New Haven's Civil Service Board faced a difficult choice: keep the results and face discrimination lawsuits by black candidates based on statistically significant disparities in performance based on race, or throw out the results and risk being sued by the candidates who would have been promoted. After holding several hearings and consulting with experts, the Board voted to discard the examination results.

The 17 whites and 1 Hispanic who would have been promoted sued the City under the Equal Protection Clause of the Fourteenth Amendment and Title VII of the Civil Rights Act of 1964, as amended. The City answered that it had acted in good faith in seeking to avoid liability for discrimination against blacks under a disparate impact analysis. The City prevailed before both the trial and appellate courts based on this defense according to existing precedents.

By a 5-4 vote, the Supreme Court overturned the decisions of the lower courts and held that the City had violated Title VII by making an "express, race-based" decision to discard the test results because "‘too many whites and not enough minorities would be promoted were the [results] to be certified.'" The Court Majority announced a new standard for judging an employer's good faith defense to a claim of disparate treatment under Title VII. Henceforth, employers could only be relieved of liability for overt acts of disparate treatment if they could demonstrate "a strong basis in evidence" for liability towards another protected group under the disparate impact theory. A statistically significant disparity in the pass rates of white and black applicants would not suffice to meet this standard. Instead, an employer would be required to prove that the selection procedure at issue was not job related and consistent with business necessity, or that it had refused to adopt an equally valid, less discriminatory alternative. The City of New Haven could not meet this standard because the examinations at issue had been developed by experts in order to comply with the business necessity standard.

The dissenting justices predicted that employers "who discard[] a dubious selection process can anticipate costly disparate-treatment litigation in which their chances for success – even for surviving a summary-judgment motion – are highly problematic" given the Court's newly established standard.

Recommendations for Employers

Given this change in the law, there are several steps employers, together with counsel, can take to minimize their risk of Title VII liability.

· Employers should consider, prior to administering a selection procedure, how to design it so as to provide a fair opportunity for all individuals, regardless of race. Consultations with experts in the particular job area, subject matter experts, independent consultants and attorneys specializing in Title VII law will likely be helpful in this regard. Before administering any test, employers should ensure that their tests or other criteria for promotion and hiring are job related and consistent with business necessity, and the least discriminatory alternative for making selection decisions.

· Prior to deciding to discard the results of a testing procedure, an employer should ensure that it has a "strong basis in evidence" to believe that use of the selection process results will subject it to discriminatory-impact liability under Title VII. Notably, fear of litigation alone will not justify disregarding the results of a testing procedure that has produced a prima facie showing of discriminatory-impact. Generally speaking, unless an employer can show that the testing instrument is not job-related and consistent with business necessity, the employer will not be able to satisfy this test.

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