In Lewis v. City of Chicago, No. 08-974, the U.S. Supreme Court unanimously ruled that a class of plaintiffs could timely sue for disparate impact discrimination under Title VII as long as one of those plaintiffs filed a charge of discrimination within 300 days of the employer using an allegedly discriminatory employment practice—regardless of when the employer first adopted that employment practice. The Supreme Court’s decision significantly impacts employers by extending the time period for plaintiffs to file disparate impact charges of discrimination with the Equal Employment Opportunity Commission (EEOC).
In July 1995, 26,000 applicants took the Chicago Fire Department’s written service exam. After scoring the exam, the City of Chicago divided the candidates into three categories: (a) “well-qualified”—those scoring 89 or above (out of 100); (b) “qualified”—applicants scoring between 65 and 88; and (c) “not qualified”—those scoring below 65. Six thousand African-American applicants scored in the “qualified” category.
In January 1996, the city announced it would begin drawing randomly from the “well-qualified” candidate pool for its first phase of selecting candidate firefighters. The second phase required candidates to take physical ability tests and to clear background checks, medical examinations and drug tests. Candidates who passed the second phase would be hired as candidate firefighters.
The city also notified “qualified” candidates that, although they had passed the exam, it was unlikely they would be called for further processing in light of the city’s anticipated hiring needs and the number of “well-qualified” candidates available for selection. However, their names would remain on the Department of Personnel’s eligibility list for as long as the city used the list.
On March 31, 1997, one of the “qualified” African-American candidates filed the first EEOC charge, alleging that the city discriminated against African-American applicants by randomly selecting only “well-qualified” candidates from the list. The charging party filed the charge more than 300 days after the city announced the hiring practice in question but within 300 days of the second round of selection decisions. On July 28, 1998, the EEOC issued its notice of right to sue.
Subsequently, a group of plaintiffs filed a lawsuit alleging that the city’s employment practice of selecting only “well-qualified” applicants for advancement disparately impacted African-Americans in violation of Title VII. In a summary judgment motion, the city argued that the plaintiffs’ claims were untimely because they failed to file a charge of discrimination within 300 days of the city’s initial decision to sort the candidates and select only “well-qualified” candidates for promotion. In denying the motion, the district court held that the city’s “ongoing reliance” on the test results constituted a “continuing violation” of Title VII.
The Seventh Circuit Court of Appeals reversed, holding that the city’s only discriminatory act was sorting the applicants into the three categories to begin with. Consequently, “[t]he hiring only of applicants classified as ‘well-qualified’ was the automatic consequence of the test scores rather than the product of a fresh act of discrimination.” Because no plaintiff filed a charge of discrimination within 300 days of the city’s initial decision to sort the candidates, the Seventh Circuit concluded the litigation was untimely. The plaintiffs then appealed to the U.S. Supreme Court.
Supreme Court’s Analysis
The Supreme Court reversed and found that the plaintiffs’ lawsuit was not time-barred. The court explained that Title VII’s prohibition against disparate impact discrimination requires a plaintiff to show that the employer “uses a particular employment practice that causes a disparate impact. ” The court found that the conduct these plaintiffs complained of—excluding “qualified” applicants from advancement until the list of “well-qualified” applicants was exhausted—was an employment practice. The city “used” that employment practice each time it filled a new class of firefighters. Consequently, since the city’s use of the cutoff scores in selecting candidates occurred within the charge filing period, the plaintiffs’ disparate impact claim was timely.
Based on this reasoning, an employer adopting an employment practice allegedly having a disparate impact on a protected group remains exposed to disparate impact claims whenever it applies that employment practice in each subsequent employment decision.
Effect of the Decision
The Supreme Court’s decision significantly impacts employers by extending the time period for plaintiffs to file disparate impact charges of discrimination with the EEOC. Because of this decision, plaintiffs may be encouraged to file more disparate impact charges (and litigation) challenging the employment practices that underlie management decisions.
In instances where a plaintiff establishes a prima facie case of disparate impact, employers will have to rely even more heavily on record keeping, management and human resources’ recollections of decisional processes and procedures and document retention policies in order to preserve job relatedness and business necessity defenses. The same will have to be relied upon to refute plaintiff’s evidence, if any, that the employer could have used an available alternative process that would have a less disparate impact while also meeting the employer’s legitimate needs. Maintaining this information—potentially for decades and for larger numbers of employees, including comparators—results in exorbitant document retention and defense costs.
In the face of the Lewis decision, there are several steps that employers can take to help protect themselves against disparate impact claims:
• Scrutinize EEOC charges carefully. Maintain timeliness objections to disparate treatment claims, where applicable, even if the disparate impact claims are now timely.
• Require plaintiffs early on to identify the specific employment practice they believe leads to the alleged discriminatory impact. Doing so could potentially limit the scope of document and/or discovery requests and curtail defense costs and expenses.
• Review, in an attorney-client privileged manner where possible, all employment practices, particularly selection procedures and subparts of those procedures, to determine whether such employment practices may cause a disparate impact. If so, make necessary modifications to limit or to eliminate the disparate impact.
• Strengthen documentation of employment practices, including selection procedures and subparts of those procedures, to ensure that each subpart is job related and consistent with business necessity.
• Consider shortening the time period for applying certain selection criteria impacting “groups” of employees in order to minimize the length of the potential exposure period for disparate impact claims. If “eligibility lists” are used, for example, consider limiting their duration to time periods of fewer than 12 months or another shortened time frame that makes sense within the context of your business.
• Ensure that selection criteria only distinguishes between candidates who are qualified and not qualified. Once the group of qualified candidates is identified, then consider a process that allows all qualified candidates to be considered for an opportunity. If that is not administratively feasible, ensure that the remainder of the selection process minimizes (within legally compliant statistical ranges) or eliminates altogether any disparate impact on a particular, protected group.
• Consider modifying document retention policies, where appropriate, to protect documents that could support the employer’s potential defenses for each employment practice that a plaintiff might challenge in a selection process. These documents often include relevant policies and procedures regarding selection criteria, score cards, interview notes, test results, resumes, communications between decision-makers, personnel files, collective bargaining agreements, job descriptions, job postings, e-mails, text messages, production and service reports, sales reports, performance evaluations, reports on projected business and hiring needs, customer or client feedback, etc.
• Keep meticulous records of employment practices (procedures, criteria, etc.) and decision-makers involved in selection decisions. Dates of the selection decisions, notifications to employees about the same and rationales for particular selections are even more critical now. Detailed, contemporaneously prepared documents are the cornerstone of a good defense.