Question:

My company is currently assessing promotional exams for future use. It is my understanding that the Supreme Court of the United States recently issued a decision about promotional exams. Could you please explain the Court’s decision and its explanation of the interplay between “disparate impact” discrimination and “disparate treatment” discrimination?

Answer:

In Ricci v. DeStefano, the Court was presented with a novel issue. In 2003, the city of New Haven, Connecticut conducted promotional exams in an attempt to fill vacant lieutenant and captain positions in its fire department. The City hired an outside company to create nondiscriminatory exams based on job-related skills and qualities.

However, when the exam results came in, City officials became concerned that the exams had in fact discriminated against minority candidates. The concern arose because African Americans performed poorly on the exams, and as a result, not one African American was eligible for promotional consideration. However, 17 Caucasian and 2 Hispanic firefighters were eligible for promotional consideration based on their exam scores.

Under Title VII of the Civil Rights Act of 1964, intentional acts of employment discrimination based on race, color, religion, sex, or national origin are prohibited. Such discrimination is referred to as “disparate treatment”. In addition, Title VII prohibits policies or practices that are not intended to discriminate but in fact have a disproportionately adverse affect on minorities. That type of discrimination is known as “disparate impact”.

Thus, the City was faced with a tough decision – refuse to certify the exam results and face a “disparate treatment” lawsuit brought by the Caucasians and Hispanics, or certify the exam results and face a “disparate impact” lawsuit brought by the African Americans. Based on the racial distribution of the exam results, the City decided not to certify the results. Therefore, those who did well on the exams were not eligible for promotional consideration.

As expected, the successful Caucasian and Hispanic firefighters filed a lawsuit in federal District Court against the City and various City officials, alleging “disparate treatment” discrimination. The plaintiffs claimed that the City refused to certify the exam results based on their race. In its defense, the City argued that they had a good faith belief that certification of the test results would have violated Title VII’s “disparate impact” provision. The District Court sided with the City, and dismissed the lawsuit. On appeal, the Second Circuit Court of Appeals affirmed the District Court’s decision, and the United States Supreme Court agreed to hear the case.

The Supreme Court reversed the lower court’s decision, ruling that the City violated Title VII’s “disparate treatment” provision by failing to certify the exam results based solely on the racial makeup of the successful examinees. Notably, the Court held that the City’s good faith belief that certification of the test results would have violated Title VII’s “disparate impact” provision was not enough to shield it from liability for “disparate treatment”.

Instead, the Court stated that the City must have had a “strong-basis-in-evidence” of “disparate impact” liability to avoid “disparate treatment” liability. The Court explained that the City’s refusal to certify the exam results would have been lawful based on the significant statistical disparity between races only if there was a “strong-basis-in-evidence” that the exams were not job-related and consistent with business necessity, or that there was an equally valid, less discriminatory testing option that the City refused to adopt. However, the Court determined that the City failed to satisfy the “strong-basis-in-evidence” standard, and therefore, that the refusal to certify the exam results constituted unlawful “disparate treatment” discrimination.

However, four out of nine justices disagreed with the Court’s opinion. That dissent opined that the Court’s “strong-basis-in-evidence” standard was improper, and that the City’s good faith belief that the exams had a “disparate impact” on a race should have sufficed. In addition, the dissent stated that the Court failed to consider many relevant facts that supported the City’s good faith belief that “disparate impact” liability was evident.

As explained above, the Court has created a standard for employers to follow in determining if promotional exam results should be disregarded based on “disparate impact” discrimination. While the Court’s standard is not as clear cut as many would like, employers now know what to assess when confronted with promotional exam results that show a statistical disparity based on race, color, religion, sex, or national origin. In addition, the Court’s opinion provides assistance to employers that are creating promotional exams. Specifically, in an attempt to avoid litigation altogether, employers should ensure that exams are job related and consistent with business necessity. Moreover, employers should be diligent in locating or creating nondiscriminatory exams that will prove to be the least discriminatory option.
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