Supreme Court Makes a Fine Line a Little Finer for Employers
7/2/2009
Employers are often faced with difficult decisions. The Supreme Court perhaps just made some of those difficult decisions a bit more challenging. The Court’s June 29, 2009 decision in Ricci et al. v. DeStefano et al. regarding the use of a promotional exam by a municipal fire department has garnered broad media coverage because it touches upon controversial issues involving race and reverses an opinion joined by current Supreme Court nominee Sonia Sotomayor. For employers, however, the impact of the Ricci decision will likely extend far beyond Sotomayor's Senate confirmation hearings because it directly affects how employers can legally structure hiring, promotion and workforce reduction decisions affecting groups of employees or applicants.
The Ricci decision addresses, and perhaps exacerbates, a significant “Catch 22” for employers. The root of the issue in Ricci is found in Title VII of the Civil Rights Act, which prohibits two different types of discrimination: “disparate treatment” (intentional) discrimination and “disparate impact” discrimination, where a facially neutral policy or practice has an adverse impact on a protected group. In the Ricci case, the employer's promotional exam had a statistically adverse impact on black candidates that could expose it to a “disparate impact” lawsuit under Title VII if the exam results were upheld. Conversely, throwing out the results arguably would amount to the “disparate treatment” of successful white and Hispanic candidates. The employer effectively chose what it concluded to be the “lesser of two evils” and threw out the exam results. The Supreme Court ruled that the employer chose incorrectly and violated federal law by discarding the test results based solely on a statistical disparity in the success rates of different racial groups and the employer’s fear of a “disparate impact” lawsuit.
What the Ricci Decision Means for Employers
The analysis and standard adopted by the Supreme Court in the Ricci case, discussed in more detail below, provide employers with very little guidance when using standardized tests or criteria for making employment decisions. Because not all employers use exams for promotions, the impact of this case may at first glance appear to be narrow. Many employers, however, use standardized criteria for not only promotions, but also decisions on hiring and reductions in force. Once those standardized criteria for such group employment decisions have been carefully established, employers run a substantial risk by abandoning those criteria and changing the rules based on a resulting statistical breakdown showing racial or gender disparities, absent strong evidence that the criteria were actually flawed.
This decision potentially places employers between the proverbial rock and a hard place. To create a buffer between sometimes competing concerns, employers may want to consider a few reminders and suggestions:
It’s still a numbers game to some extent. An employer should know whether disparities exist in the first place. This decision does not mean that disparate impact, or even disparate treatment, claims by groups and individuals adversely affected by selection criteria are no longer a concern. It remains important to find out how group employment decisions break down statistically by key protected categories such as race, gender and age (although there is no similar “Catch 22” for age discrimination – favoring older employees does not violate federal law). If there is a statistically adverse impact on a certain group, an advisable next step is to take another hard look at the selection criteria and the business necessity behind them.
Don’t throw the baby out with the bathwater. The Supreme Court has made it clear that numbers alone are not enough to justify abandoning an entire decisionmaking process in order to alter the results. Employers will be required to dig deeper. In most circumstances, with all but the most objective criteria, looking behind the numbers and individually evaluating specific decisions can provide a more defensible, fact-based approach and limit the possibility of a more significant class action or multi-plaintiff lawsuit.
Leave yourself some wiggle room. In adopting selection criteria, employers should not only focus on the business needs driving the decision, which make them more defensible when challenged under either a disparate impact or disparate treatment theory, but also avoid boxing themselves into those criteria for future decisions. The Supreme Court focused substantially on preserving the “legitimate expectations” of those who sought the promotions at issue. As a result, employers should consider adopting policies and practices that allow for sufficient flexibility to change selection criteria going forward in order to address emerging legal risks and changing business needs.
Anything you say (especially by e-mail) can and will be used against you. This case is yet another reminder to save the most strategic and frank discussions on employment decisions for direct (and preferably privileged) conversations. In this case, the Supreme Court relied heavily on statements by city officials involved in the decision process to reach the result against it, and a concurring opinion by one Justice placed great emphasis on two emails that some members of the Court found to be troubling. Development of criteria for group employment decisions and the impact of actual or potential disparities along protected category lines can be discussed and addressed most critically and candidly within the context of the attorney-client privilege.
More Detail on the Ricci Decision
In 2003, the New Haven, Conn. fire department administered standardized exams for firefighters to qualify for promotion to lieutenant and captain positions. The City hired a third party to develop and administer the exam, which was created after a detailed analysis to ensure that the test did not favor one racial group over another. In total, 118 firefighters—68 whites, 27 blacks, and 23 Hispanics—took one of the two exams, hoping to earn one of 19 immediately available promotions. When the exams were graded, however, the top scorers eligible for promotion were 17 white and 2 Hispanic employees. No black firefighters scored high enough to qualify. A public debate ensued in New Haven as to whether the promotions should be awarded to those who had scored highest on the exam or the test scores should be thrown out because of the racial disparity in the results. The City found itself in a difficult situation: either promote the top scorers and face a threatened "disparate impact" lawsuit by black examinees, or throw out the test results and face a "disparate treatment" lawsuit by the successful white and Hispanic examinees. The City decided to throw out the exam, arguing that it should not be liable for race discrimination under a "disparate treatment" theory when it took measures to avoid liability under a "disparate impact" theory.
The Supreme Court disagreed with the City and concluded that it had unlawfully discriminated against the white and Hispanic examinees when it threw out the exam scores. The Court found that the City’s decision not to promote the successful examinees was clearly based on race and illegal unless the City had a lawful justification. Concluding that the City had no lawful justification, the Court ruled that a statistical disparity in success rates among racial groups and the threat of a disparate impact lawsuit from unsuccessful examinees was not enough, standing alone, to justify the City's decision. According to the Court, results such as those of the employment test at issue can only be disregarded if there is a “strong basis in evidence” to conclude that the tests were deficient and that “disregarding the results is necessary to avoid violating the disparate impact provision.”
For more information on the impact of the Ricci decision, please contact any member of Waller Lansden’s Labor and Employment practice at 800-487-6380.
RSS feed: RSS is a web feed format used to publish frequently-updated content. Use this feed in an RSS reader or browser (Safari 2, Firefox 2, or Internet Explorer 7 and higher)
ICS file: Use this feature to download an ICS file to use to import the calendar's event(s) into another program, such as Outlook, iCal, or Google Calendar.
ICS Feed: This is a live feed in the iCalendar format. To use this feed, you will need a program capable of subscrbing to a life iCalendar feed. Some examples include Apple iCal, Microsoft Outlook 2007 or higher, or Windows Calendar in Vista.
