Disparate Impact Versus Disparate Treatment – What Employers Need to Know

Do you test job applicants prior to making a job offer? Do you test employees as a requirement for receiving promotions? If you’ve recently had to do layoffs, did you conduct a disparate impact analysis? These and many more questions are likely to surface given the recent United States Supreme Court decision that concluded that the City of New Haven Connecticut engaged in impermissible reverse discrimination when it discarded test results and refused to promote white firefighters who qualified for promotions based on their test scores because other minority applicants did not perform as well (Ricci v. DeStefano).

The Court’s decision raises many questions concerning the steps that employers may take when avoidance of discrimination against one group could likely mean discrimination against another group.

In order to better understand the employer implications, a brief legal lesson may be helpful. Title VII of the Civil Rights Act of 1964 (as amended in 1991), specifically prohibits conduct that intentionally discriminates on the basis of race, color, religion, sex or national original (a.k.a., disparate treatment). Title VII further prohibits policies or practices that are not intended to be discriminatory, but which have a disproportionate adverse effect on minorities (a.k.a., disparate impact).

A fundamental aspect of the case for employers to be wary of is to understand the difference between “disparate treatment” versus “disparate impact.” Simply put:

Disparate treatment occurs when …. Disparate impact occurs when …
an employee claims that the employer treated him/her differently than other employees who were in a similar situation. employment practices (e.g., hiring, firing, promotion, pay or other employment decisions) have a statistically greater impact on one group than on another.

What Can Employers Learn From This Case

While the Ricci v. DeStefano case focused on promotions, a wider net should be cast with regard to all employment policies and practices that have a potential impact on minorities. For employers, what this case suggests is that you should:

  • Review your policies and practices to ensure they are relevant and fair for all employees
  • Ensure that hiring, promotion, pay, termination and other employment processes/systems rely only on job-related information and are defensible if scrutinized; and
  • Consider adopting available alternative methods or practices that has less disparate impact on minorities while still serving your legitimate business needs.

More changes to this law are likely to evolve in the future so employers should take the time now to carefully review their current policies and practices before any problems can arise.

Author: Stan Shimizu

Stan helps organizations streamline existing processes, create consistent policies and implement programs and procedures that save them time and money over the long-term. He draws from years of experience, holding HR leadership roles in Corporate Recruitment, HR management, HR Infrastructure Development and HR Policy and Communications. Stan has had the opportunity to develop both the breadth and depth of his HR and leadership talents by working over the years with companies like Nordstrom, Nike, Amazon.com and Washington Mutual. His goal is to help clients strike the right balance between what is necessary with what is most practical given their unique business situations. Accustomed to rolling up his sleeves, he is comfortable handling the tactical details without losing sight of the big picture. Stan received a Bachelor of Arts in International Business Administration, with a concentration in Communications, from the University of Puget Sound.

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