Is you company employee test legal?

Process for ADAAA Regulations Underway,
Barran Liebman LLP
Electronic AlertElectronic Alert, July 9, 2009

Do you use employment tests for hiring or promotion opportunities?

Under Title VII of the Civil Rights Act, an employer generally may use facially non-discriminatory examinations or other selection devices for hiring or promotional decisions unless the test disproportionately affects employment opportunities such as on the basis of race–in other words, unless it creates a disparate impact. But a new decision from the U.S. Supreme Court signals a different approach. On June 29, 2009, the Court held in Ricci v. DeStefano, that an employer is not free to disregard test results just because it fears a challenge to an employment test on a disparate impact theory.

The City of New Haven used a race-neutral exam to fill positions of lieutenant and captain in its firefighter ranks. The exam was carefully prepared but still resulted in disproportionately higher test scores for white applicants compared to African-American applicants. The fire department decided not to implement the exam results and left the positions unfilled because it feared that promotions based on the exam would expose the City to liability for disparate impact discrimination under Title VII. The successful employees, who would otherwise have been promoted, sued claiming that it was disparate treatment to take their promotions away just because the city wanted to avoid potential litigation.

The Supreme Court held that the City’s decision to disregard the test results and its refusal to promote the successful applicants was itself unlawful race-based discrimination, even though the City argued that it believed in good faith that its actions were necessary to comply with the law. The Court also rejected the firefighters’ argument that such a decision by an employer is justified only where the employer would be, in fact, in violation of Title VII. The Court instead took the middle ground, announcing that an employer must have a “strong basis in evidence” to believe it will be subject to disparate impact liability before it can intentionally discriminate against non-minority employees. In other words, there must be a “strong basis in evidence” that the test had a disparate impact and a statistical evidence of racial disparity in the test results is not enough to meet that test.

What Employers Need to Know

Employment tests can be a good thing, but employers need to take a hard look at their tests, both prior to and after implementation. They should evaluate tests prior to their use to ensure they are consistent with business necessity (that the test actually serves the business purpose it is intended to serve) and consider whether other alternatives exist that would serve the employer’s legitimate needs without creating a disparate impact. Employers cannot rescore the test and ignore results to achieve a more desirable racial distribution. Rather, employers should proceed with employment decisions unless there is a strong basis in evidence that the test is no longer consistent with business necessity or that an alternative exists that would serve the employer’s legitimate needs without the impact.

***** Electronic Alerts are written by Barran Liebman attorneys for their clients and friends. Alerts are not intended as legal advice, but as employment law, labor law, and employee benefits announcements. If this has been forwarded to you, and you would like to begin receiving Electronic Alerts directly, please call Traci Hopfe at 503-276-2115 or email [email protected]. Copyright © 2009 by Barran Liebman LLP

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