High Court Ruling in Employee Testing Complicates Diversity Efforts

Employers have less flexibility in implementing affirmative action and diversity programs as a result of last week’s U.S. Supreme Court decision in a reverse discrimination case brought by firefighters passed over for promotion in New Haven, Connecticut, observers say.

The Supreme Court’s 5-4 decision in Frank Ricci et al. v. John DeStefano et al., in which the court ruled in favor of 17 white and one Hispanic firefighters, also may be overturned by federal legislation, the observers say.

The case centers on whether the New Haven Civil Service Board was justified in refusing to certify the results of two fire department promotion examinations on the grounds that the tests may have had a disparate effect on blacks.

This occurred after it was learned that seven whites, at most two Hispanics and no blacks would be eligible for vacancies as a result of a 2003 captain’s test. Similarly, the result of a lieutenant’s test indicated neither blacks nor Hispanics would be eligible for eight vacancies, but 10 whites would.

The 17 white and one Hispanic candidates filed suit, alleging violation of Title VII of the Civil Rights Act of 1964 and the U.S. Constitution’s equal protection clause, among other charges.

A lower court ruled in New Haven’s favor. In June 2008, a panel of the New York-based 2nd U.S. Court of Appeals that included Sonia Sotomayor, a U.S. Supreme Court nominee, upheld the lower court in a brief ruling. The appeals court subsequently voted 7-6 against hearing the case en banc.

In overruling the lower courts, the U.S. Supreme Court majority last week said Title VII prohibits intentional discrimination, or disparate treatment, as well as disparate impact, which are practices that are “facially neutral” but discriminatory in operation.

The New Haven board decided against accepting the test results because they appeared to violate Title VII’s disparate impact provisions. The question is whether “the purpose to avoid disparate-impact liability excuses what otherwise would be prohibited disparate-treatment discrimination,” the court said in its opinion.

“Before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious discriminatory action,” the high court said in its opinion.

New Haven did not meet this standard, the majority said. There is “no strong evidence of a disparate-impact violation, and the city was not entitled to disregard the test based solely on the racial disparity in the results.”

In a strongly worded dissent, Justice Ruth Bader Ginsburg criticized the majority’s requirement that there must be a “strong basis in evidence” to comply with Title VII’s disparate-impact provision.

“One is left to wonder what case would meet the standard and why the court is so sure this case does not,” Justice Ginsburg wrote.

“This decision certainly impacts the extent to which race, or even other protected characteristics, may be considered in correcting or adjusting personnel policies due to the risk of disparate impact,” said Gerald Maatman, a partner with Seyfarth Shaw in Chicago. “So there’s a new playing field, there’s new guide posts on the playing field” for employers to follow.

The decision applies to private and public employers, say many attorneys, who note it applies to other presumably neutral screening criteria, such as education in addition to testing.

Richard Meneghello, a partner with law firm Fisher & Phillips in Portland, Oregon, said that while the New Haven case involved promotions, “my guess is this case will have its greatest impact in the situations involving layoffs and downsizing and reductions in force.”

There is ambiguity over what constitutes “strong evidence,” observers say. The decision is “not necessarily going to limit the amount of litigation against employers. There’s questions here that need to be answered, and they’ll wind up being answered in other lawsuits,” said Joseph A. Saccomano Jr., a managing partner with Jackson Lewis in White Plains, New York.

Meanwhile, the decision reduces employers’ flexibility, observers say.

It “may make it harder for employers who are struggling with diversity decisions, and have always hoped there was a little more room for judgment calls in situations where you might be faced with so-called reverse discrimination claims,” said Michael W. Fox, a shareholder with law firm Ogletree Deakins Nash Smoak & Stewart in Austin, Texas.

“What it means is that employers need to be especially thoughtful when establishing selection processes and criteria,” said Katharine H. Parker, a partner with law firm Proskauer Rose in New York. “Under the decision, employers have less flexibility to disregard criteria after it’s announced and utilized.”

Observers say the decision may be overturned by federal legislation. Rep. Eleanor Holmes Norton, D-District of Columbia, last week said she plans to introduce such a bill when Congress returns from its recess.

Filed by Judy Greenwald of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.