Although I tipped my hand yesterday through some posts (here and here) and an interview with the Connecticut Law Tribune, here are some takeaways for employers from the Ricci v. DeStefano case.

  1. The Decision Applies to Private Employers.   Before Ricci was decided, the case could’ve gone two ways — it could have been based on constitutional (equal protection) grounds, or on statutory (Title VII — the law prohibiting race and gender discrimination) grounds. The Court decided to go with the latter.  Why does that make a difference? Because Title VII applies to both private and public employers; if it had been decided on equal protection grounds, it would likely have applied only to public (governmental) employers.
  2. Testing Will Never Be The Same.  Whether public or private, employers who use tests to assist them in hiring and promotional decisions get some guidance now in the area. Unfortunately, the guidance that the Supreme Court provides isn’t particularly illuminating. Parsing things out, the court suggests that if a test is designed to be race-neutral, the fact that the numbers come out differently than an employer expects is not, in and of itself, enough to throw out the results of the test. There needs to be something more, some "strong evidence in fact". What that is remains to be seen.

    But supposing that an employer does accept the results of the test, can it defend itself from a disparate impact claim? The court says yes.  The court suggests that as long as an employer designs a test that is that is “job related for the position in question and consistent with business necessity” that might get the employer some traction in defending a claim of disparate impact.  Even in that case, however, the Court opens to the door to employees too: The employee can still win a disparate impact claim if the employer refuses to adopt an available alternative practice that has less disparate impact and serves the employer’s legitimate needs.

    As a result, employers who use testing in particular will need to be able to rule out other alternatives that it might have used to make its hiring and promotional decisions. (Note: Title VII does contain specific provisions regarding testing as well so employers should not forget to look to the statutory language as well.) 

  3. Affirmative Action Plans and Diversity Plans Are OK For Now. Maybe.  Some larger companies have programs now that try to ensure that the makeup of their workforce properly represents the makeup of the population.  For example, the employer may track "high potential" employees (particularly minorities) within their corporation to ensure that they receive proper consideration for promotions and opportunities.  Are these programs ok?

    The court suggests that it will allow for some affirmative action plans and notes that employer’s "voluntary compliance efforts" are essential to the success of Title VII:
    "[We do not] 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. … "

    For employers, it suggests that you can review your policies and practices that ensure that minorities have a fair chance to succeed, but reinforces the view that you still cannot make your decisions to hire and promote based on race.  But how much "affirmative efforts" an employer can use, remains an unanswered question from Ricci.

  4. Tread Cautiously In Conducting a Disparate Impact Analysis for Layoffs and Terminations.  One area that disparate impact claims arise is in the context of layoffs and reductions in force. For example, an employee may claim that the black workers were twice as likely to be laid off as white workers.   As a result, many employers have started to conduct a disparate impact analysis before the termination to see if the raw statistics are of concern.  If they are, employers sometimes reconsider their decisions or re-engineer the layoff criteria to remove such a disparate impact. In other cases, employers simply review the particularly data to ensure that the decisions were fair.  

    Ricci leaves open the question of whether that practice is legal under Title VII.  The court does suggest that the city "was not entitled to disregard the tests based solely on the racial disparity in the results".  Does this mean that employer — once it settles on a process for terminations — cannot change that system after it runs the numbers? At one point is the employer "stuck" with the results? That will likely be the subject of litigation at some point. 

  5. Don’t Expect This Law to Remain Static.  One thing is certain — there are likely to be some more changes to this law in the years to come. One way is through Congressional action (as Senator Patrick Leahy has already suggested). Another way is through additional Supreme Court action. Indeed, Justice Scalia has suggested that there are battles yet to come on this issue:

                    [The] resolution of this dispute merely postpones the evil day on which the Court will have to confront the question: Whether, or to what extent, are the disparate-impact provisions of Title VII of the Civil Rights Act of 1964 consistent with the Constitution’s guarantee of equal protection? The question is not an easy one.

As a reminder, I’ll be participating in a free webinar next week on this subject. I anticipate that it’ll focus on the practical implications of the decisions and additional steps that employers can take now to avoid becoming the next test case before the Court.