Disparate Impact

Disparate impact is a legal doctrine which declares that a policy can be considered discriminatory if it “adversely impacts” a group based on that group’s traits, such as its race, color, religion, or sex. This is especially true when there is no legitimate need for such a policy.

If someone finds a policy or practices to be discriminatory, then he is permitted to challenge it, claiming it has an “adverse effect” on those who would be otherwise protected. Typically, disparate impact is considered when a policy that is unintentionally discriminatory becomes discriminatory when put into practice. To explore this concept, consider the following disparate impact definition.

Definition of Disparate Impact

Noun

1. An unintentionally discriminatory policy that adversely impacts an otherwise protected class of people.

Origin

1968    Fair Housing Act of 1968

What is Disparate Impact

Disparate impact concerns policies and procedures – in employment, housing, education, and other issues – which are not necessarily meant to be discriminatory, but which end up ultimately having an “adverse effect” on a particular class of people, based on such traits as their race, color, or religion. For example, disparate impact can be applied to employment requirements concerning height, weight, and education, as well as written tests or even interviews.

In order for an individual to challenge a policy on the grounds of disparate impact, he must be able to prove that the practice has had a significantly adverse effect on a protected group. This proof is usually provided by statistical comparisons which, of course, can be challenged by the business or housing owner, or other organization (referred to as the “defendant”).

The defendant may show that the practice was necessarily related to the job, and that it is consistent with the needs of the business. However, the plaintiff may still win the case if he can prove that the company did not pursue alternate practices that could have satisfied the company’s needs, without having a disparate impact on the group in question.

Difference Between Disparate Impact and Disparate

While disparate impact results in unintentional discrimination, disparate treatment is quite the opposite. An employee who makes a disparate impact claim is alleging that a company’s policy, intended to eliminate discrimination, actually caused him to be discriminated against.

For example, a company’s policy requiring a specific number of minority workers be promoted to management positions, regardless of other factors, might be seen to discriminate against non-minority (usually white male) workers who are more qualified, and have more seniority. While the policy was put in place to do away with discrimination, it ultimately caused a different type of discrimination.

Disparate treatment, on the other hand refers to the intentional treatment of employees with certain protected traits in a discriminatory manner. In other words, disparate treatment is the type of discrimination most people think about. For instance, a black employee may claim disparate treatment if he realizes that, in spite of his skills, experience, and positive employee reviews, he is repeatedly passed over for a promotion to Supervisor, in favor of white employees with fewer qualifications.

In order to be successful in a disparate treatment complaint, the employee must show that he was treated differently because of his protected trait – age, gender, race, religion, sexual preference, and the like. In many cases this proves difficult, as the employer may see things very differently than the employee.

For example:

Bill, a 58-year old cable repair technician, accuses his former employer of firing him because of his age. Bill’s employer defends the claim, saying that Bill was fired because the company had received several customer complaints about Bill’s performance in the three months prior to his discharge.

The employer provides documentation of the complaints to the labor board, making it necessary for Bill to prove that other – younger – employees, working in the same capacity, had also received multiple complaints, but were not fired.

While disparate treatment claims are usually based on individual complaints, disparate impact claims are based on actual policies or procedures that have the unintended result of discrimination.

The 80 Percent Rule

In order to determine whether or not a company’s policy on selection of employees is having an “adverse impact” on a particular minority group, the Uniform Guidelines on Employee Selection Procedures put in place what is referred to as the “80% Rule.” The 80% test was designed by the State of California in 1972, and adopted by the U.S. Equal Employment Opportunity Commission (“EEOC”), Department of Labor, and Department of Justice in Title VII 1978.

The 80% test was based solely on the ratios of job applicants who were actually hired for the job. Taking into account there is likely to be a difference in the number of people of any group applying for the job, the rule looks like this:

For example:

One hundred people have applied for 10 manufacturing jobs at ABC company. Of those, 80 are men, and 20 are women. The company hires 2 women and 8 men. This means that 40% of the male applicants were hired, and only 10% of the female applicants. This rule does not count the total number of men and women (or other group) hired, but the percentage of matching applicants that were hired.

The Rule required employers’ hiring practices to maintain an 80% hiring ratio. In this example of disparate impact in hiring, the ratio is 10:40, which places the difference in minorities hired at 25%. ABC company would need to either step up its practice of hiring more women, or provide legitimate reasons for hiring more men than women.

The courts, however, soon called the arbitrary nature of the 80% rule into question, in the 1980s, and the fact that the court has argued it so often has reduced the potency of the rule from the time that it was first published. The U.S. EEOC has suggested an alternative test; one that requires companies to hire a particular class of people at the same rate that they would be hired if the company hired employees completely at random.

Put another way, if the company’s selection system proved that it was harder for a certain protected group to get a job than it would be for someone random off of the street to get the same job, then that proves that the company’s selection system is flawed.

The Fair Housing Act

Examples of disparate impact are commonly seen in real estate and housing law. The Fair Housing Act in particular was established to combat discrimination in housing. Unfortunately, it is often true that new policies intended to make things better, actually create another, unintentional problem. In order for someone to claim disparate impact under the Fair Housing Act, the following events have to happen:

• Connection – The plaintiff must be able to show a clear connection between a policy or practice, and the accidental discrimination (“disparate impact”) that is alleged to have occurred.
• Necessary Policy – In defense of the claim, the defendant must be able to show that the policy that is necessary to achieve a legitimate goal. If there were multiple means to meet that end, and the defendant chose the one that had an “adverse effect” on a particular group instead, the defendant is subject to consequences of that action.
• Alternative Policy – If the defendant proves the policy is necessary, the plaintiff must show that an alternative, non-discriminatory policy, which would meet the defendant’s needs, was available.

Disparate Impact Example in Promotion Requirements

An example of disparate impact can be found in a lawsuit that was filed in 1970. Here, the Supreme Court heard a case involving Willie Griggs, a man who initially filed a class-action lawsuit on behalf of himself and several of his fellow black employees who were all employed by Duke Power Company.

In to 1950s, the company only allowed black workers to work in the Labor department – the company’s lowest paying jobs. Later, when anti-discrimination laws were enacted, the company instituted an “inside transfer” policy, which required that all employees who wanted to work in higher positions, to achieve a minimum score on two aptitude tests. They were also required to provide proof that they had received a high school diploma.

While this may not have seemed like a discriminatory practice, Griggs challenged it just the same, claiming that the policy discriminated against black employees in particular, as many blacks of the time did not graduate from high school, and that the tests required by the company did not test aptitude for the specific jobs. Griggs complained that the company’s policies violated Title VII of the 1964 Civil Rights Act.

The district court dismissed Griggs’ claim, and the Court of Appeals found that Duke had not committed discrimination with their practices. The U.S. Supreme Court, however, granted Griggs certiorari, which means it agreed to hear the case. The question for the Supreme Court then became whether or not Duke’s policy did, in fact, discriminate against a protected class of people, even if unintentional.

The Court ruled that yes, Duke had, in fact, commit discrimination with its practices. Specifically, the Court held that Duke’s standardized testing requirement worked to prevent a significant number of black employees from either being hired for, or advancing to, the company’s higher-paying jobs.

The Court determined that neither the high school completion requirement, nor the two aptitude test requirement, were intended to gauge an employee’s ability to learn or to perform a specific function within the company. Instead, the Court ruled that Duke’s motivation, which was carried out subtly and illegally, was to safeguard its long-term practice of offering job preferences to its white employees.

Related Legal Terms and Issues

• Certiorari – An order directing a higher court to review the decision of a lower court.
• Protected Class – Groups of people protected from discrimination by law, including: race, color, national origin, religion, age, sex (gender), sexual orientation, physical or mental disability.