On Monday, the U.S. Supreme Court issued its highly anticipated decision in Ricci v. DeStefano.  This case involved Title VII discrimination claims brought by White New Haven, Conn. firefighters after the city ignored the results of promotional examinations when those results appeared to have a statistical disparity against African-American applicants.  The city claimed that had it implemented the results and promoted the White firefighters, it could have faced disparate impact claims from the African-American applicants who would claim that the results demonstrated that the test was racially biased.

In a 5-4 decision, the Supreme Court sided with the plaintiffs, finding that the city’s actions in ignoring the test results and declining to promote the White firefighters constituted disparate treatment under Title VII.  In its decision, the Court directly addressed the conflict between disparate treatment claims that result from an employer’s attempt to avoid a disparate impact (statistical) discrimination claim.  In ordinary circumstances, the Court stated that employers may not make race-based decisions with regard to test results absent a “strong basis in evidence” that the corrections are necessary.

This “strong basis” test is new, and requires the employer to demonstrate that it will be liable for disparate impact discrimination if it does not act to disregard the results of an employee evaluation process.  A threshold determination of statistical disparity is not enough.  To justify race-based reconsideration of the evaluation, the employer must demonstrate (1) that the exams used are not job related and consistent with business necessity; and (2) that there were equally valid, non-discriminatory alternative testing criteria available.  Fear of litigation by disappointed minority applicants is not an adequate basis to invalidate test results.

The Ricci decision has significant implications for private employers, even outside of the testing and hiring context.  For example, employers undergoing a reduction in force often develop employee evaluation criteria, and then statistically measure the effect of those criteria to determine if the selections have a disparate impact on a protected category of employees.  If the initial selections have a disparate impact based on gender or race (this decision does not directly apply to age discrimination claims), and the employer than adjusts the individuals selected to avoid the statistical disparities, it may have engaged in prohibited disparate treatment under Ricci.

This decision will likely cause employers to carefully reevaluate the selection criteria and processes used to make important decisions affecting employees.  Employers may conclude that once the criteria are established, the results must be followed regardless of unanticipated disparate impacts that may emerge.