In last month’s Recruiting Trend’s article, I explained the disparate treatment method of proving discrimination. It relies mainly on exposing lies, inconsistencies, and unequal treatment as a basis for inferring the intent to discriminate. You might therefore think that an employer or recruiter could avoid discrimination liability by having a pure, prejudice-free heart, always speaking the truth, and using objective, consistent methods to identify candidates and pare down the applicant pool. You would be very wrong. In fact, such an employer or recruiter could still be liable for discrimination under the “disparate impact” method of proof.

Federal Express learned this lesson the hard way last April, when it paid $55 million to settle a class-action suit alleging race and national-origin discrimination. Minority employees challenged the “Basic Skills Test” FedEx used for hiring and promotion, claiming it excluded minorities at a higher rate than others. This lawsuit was based on the theory that employment practices violate federal discrimination law if they have a disproportionate impact on minorities and are not properly justified by business needs.

Unfortunately, FedEx and many other companies recently faced with large disparate impact class actions seem to be living out the maxim that those who do not remember history are condemned to repeat it. Over 35 years ago, in 1971, the Supreme Court unanimously decided a very similar case, Griggs v. Duke Power Co. In Griggs, the Court held that evidence of disparate impact could be used to prove discrimination even if there was no evidence of discriminatory intent.

As with the McDonnell-Douglas case I discussed last month, the Griggs case still serves as an excellent introduction to essential legal principles, while telling a compelling civil rights story from another time – a time perhaps not as dissimilar to our own as we might like to believe.

History of overt discrimination
In Griggs, the Duke Power Company had a history of overt discrimination against African Americans (referred to in the court decision as “Negroes”). The North Carolina power plant in question had five operating departments. It employed African Americans in only one, the Labor Department, where the highest paying jobs paid less than the lowest paying jobs in the other departments. In 1955, the company began requiring a high school education for initial assignment to any department except Labor, and for transfer to the Operations, Maintenance, or Laboratory departments.

The company’s response to Title VII

• Adoption of new requirements with a Disparate Impact on Blacks, but no proven connection to job performance

On the effective date of Title VII of the Civil Rights Act of 1964, which prohibited race discrimination in employment, the company complied with the new law by dropping its outright ban on employment of African Americans in departments other than labor. Previously this policy had been perfectly lawful.

But what it gave with one hand, the company took back with the other, adding a new requirement that working in any other department required not only a high school diploma, but also passing scores on two general aptitude tests. Neither test was designed or intended to measure aptitude for a particular job or category of jobs. (Later, passing the tests was allowed to substitute for the diploma requirement).

These requirements had a disproportionate, or disparate, impact by race, as shown by the following facts. In North Carolina, where the plant was located, only 12% of black males had completed high school, compared to 34% of white males. The racially disproportionate impact of the tests was even greater: only 6% of blacks passed, compared with 58% of whites. The result was that these requirements made it almost as hard for blacks to get the better jobs as did the prior overt discrimination.

The requirements were not justifiable as necessary to achieve any legitimate business objective. Neither a high school diploma nor passing the tests was “shown to bear a demonstrable relationship to successful performance of the jobs.” They “were adopted… without meaningful study of their relationship to job-performance ability,” based solely on the Company's common-sense “judgment that they generally would improve the overall quality of the work force.”

Moreover, employees who had neither completed high school nor passed the tests, but had been hired or promoted before adoption of these requirements, performed satisfactorily in departments for which the high school and test criteria were being used. This fact proved that the requirements were not effective predictors of job success.

The Supreme Court’s holding in Griggs
The Supreme Court found the requirements unlawful. It did not disagree with the lower courts’ conclusion that there was no evidence the company acted with discriminatory intent. But, it said, “good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as ‘built-in headwinds’ for minority groups and are unrelated to measuring job capability.”

Other key points in the Supreme Court’s brief and unanimous opinion:

• “The touchstone is business necessity.” The employer has the burden of showing that a job requirement has “a manifest relationship to the employment in question.” If an employment practice which has a disparate impact cannot be shown to be related to job performance, the practice is prohibited.
• This case “demonstrate[s] the inadequacy of broad and general testing devices as well as the infirmity of using diplomas or degrees as fixed measures of capability. History is filled with examples of men and women who rendered highly effective performance without the conventional badges of accomplishment in terms of certificates, diplomas, or degrees.”
• The use of testing or measuring procedures is not forbidden; obviously they may be useful. But they may not be given “controlling force unless they are demonstrably a reasonable measure of job performance.” [T]ests… must measure the person for the job and not the person in the abstract.”
• The law does not require “that the less qualified be preferred over the better qualified simply because of minority origins.” Qualifications must be the controlling factor.

Subsequent court decisions and EEOC regulatory action clarified many related issues. These included the amount of statistical disparity needed to place the burden on the employer to justify an employment practice, and the manner of proving an adequate relationship between a job requirement and job performance.

In the Civil Rights Act of 1991, Congress wrote similar principles into Title VII by amendment. In particular, it clarified that proof of disparate impact must focus on “a particular employment practice,” except that if the elements of an employment decision-making process “are not capable of separation for analysis, the decision-making process may be analyzed as one employment practice.”

Significance of Disparate Impact for recruiting and hiring
Certainly, educational requirements and tests continue to play significant roles in this process – perhaps now more than ever. Their legal dangers may be under-appreciated. Many other employment practices are potentially subject to disparate impact challenge. Next month, I will address some of these issues.