After a day to read and digest the holding in Ricci, I have the following observations:
First, it is a fairly important case getting far more coverage from the press than normal due to the politics associated with Judge Sotomayor. But setting that aside, the case has some ramifications beyond the realm of employee testing. Ultimately, the Court’s analysis is between discrimination (or disparate treatment) and disparate impact. Disparate impact is a situation in which a facially neutral policy or practice actually has a discriminatory effect on a protected class of individuals.
Ricci, involved a city using a testing tool to assist in selecting firefighters to promote to higher ranks. Note that while the facts of this case involve the public sector, Title VII applies to the private sector as well — thus the holding in Ricci applies to both private and public sectors. The city went to great lengths to ensure the test was not racially bias. Nevertheless, white candidates generally performed better on the test than minorities. In order to avoid lawsuits from the minorities under the theory of disparate impact, the test results were scrapped. Based on the decision to throw out the test results, the white firefighters who performed well on the test brought a case for discrimination based upon their race.
In seeking guidance concerning employee testing, 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. The Court said there needs to be something more, some “strong evidence in fact” that the test is bias. As long as an employer designs a test that is that is “job related for the position in question and consistent with business necessity” the employer has an argument in defending a claim of disparate impact. However, 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.
An interesting effect of this decision may actually apply to other areas of the employment law world where disparate impact is often analyzed. A common practice is for employers to review their layoff decisions with counsel to determine whether the criteria for selecting individuals to be laid off may expose the employer to liability under a disparate impact theory. Given the impact of the recession on businesses, and the necessary reductions in force that have occurred. It seems likely the Ricci case will probably be used to under these types of cases as well.