I.                     Affirmative Action Plans and Diversity Programs

 Some minority groups have had a difficult and painful history in the United States such that the government had to come up with some way to level the playing field for those who were previously excluded from opportunities because of their race.  The term “affirmative action” was first introduced by President John F. Kennedy in 1961 in an Executive Order as a way of redressing discrimination.  With the passage of equal employment opportunities laws, some companies began adopting affirmative action plans.  Later, companies began diversity programs to promote a diverse workplace with sometimes similar and overlapping goals as affirmative action plans.

Affirmative action plans were not thought of as a permanent fix to the race problem.  It was a hope that affirmative action plans would help transition the United States in promoting, celebrating, and advancing diversity initiatives without the crutch of affirmative action.  Thus, many private and public entities have used race as a factor in employment decisions and policies to promote racial diversity in the workplace. 

II.                    Ricci, et al v. DeStefano, et al 

 In its decision in Ricci, et al v. DeStefano, et al, the Supreme Court took away the employer’s authority to make employment decisions based on race in favor of a minority employee because of the fear of disparate impact liability unless the employer can prove that there is objective and “substantial basis in evidence” of potential disparate impact liability. 

                 Brief Facts

 The City implemented a test for its firefighters to determine who were the best candidates for promotions to or advance within the officer ranks.  The City took its job serious in the test development and hired a company to develop and administer the exam, specifically Industrial/Organizational Solutions, Inc. (“IOS”).  However, despite the rigorous research and development of the test, the results of the test showed that generally the white candidates had “outperformed” minority candidates.  Disturbed by the test results and the seemingly striking racial disparity, the City began the process of determining whether the test results should be thrown out.  The City also sought the advice of its counsel who advised the City of Title VII’s disparate impact analysis. 

The City did the following to determine what it should do, including:

1. The City had  a meeting with IOS where IOS defended the exam’s validity.
2.  The City’s counsel sent a letter to the City’s Civil Service Board (“CSB”) outlining its duties regarding the examination results, including raising the disparate impact analysis.
3. The CSB had a few public meetings in which experts and witnesses were allowed to testify, including some of the firefighters who took the test (even though they did not know the results of the test).
4. During the CSB meetings, IOS described the procedure of the exam test development and administration. 

Based upon witness and expert testimony, and other factors, the CSB voted not to certify the results.  As a result, 17 white firefighters and 1 Hispanic firefighter brought this lawsuit for disparate treatment under Title VII and violation of the Equal Protection clause of the United States Constitution.   

                Legal Definitions

Under Title VII of the Civil Rights Act of 1964, an employer may be held liable for race discrimination if it engages in disparate treatment or its practices cause disparate impact to protected class members. 

Disparate-treatment occurs in situations “where an employer” treats its employee or applicant “less favorably than others” because of the employee or applicant’s “protected” class.    

The Supreme Court set forth “disparate impact” as follows:

Under the disparate-impact statute, a plaintiff establishes a prima face violation by showing that an employer uses “a particular employment practice that causes a disparate impact on the basis of race, color, religion, sex or national origin.”  42 U.S.C. §2000e-2(k)(1)(A)(i).  An employer may defend against liability by demonstrating that the practice is ‘job related for the position in question and consistent with business necessity.”  Ibid.  Even if the employer meets that burden, however, a plaintiff may still succeed by showing that the employer refuses to adopt an available alternative employment practice that has less disparate impact and serves the employer’s legitimate needs.  §§2000e-2(k)(1)(A)(ii) and (C).

                 The Court’s Decision 

The Court conceded the City was in a tough position as it balanced arguments for and against certifying the test results with the fear of lawsuits no matter which path the City chose.  Yet, the Court found that “its hearings produced no strong evidence of a disparate-impact violation, and the City was not entitled to disregard the tests based solely on the racial disparity in the results.” 

In wanting America’s workplace free of discrimination, the Supreme Court established an evidentiary objective standard of “strong basis in evidence”.  A fear of litigation cannot just incite an employer to discard test results.  The Court stated that before canceling a test to have a better racial balance, there has to be a strong basis in evidence that “the test was deficient and that discarding the results is necessary to avoid violating the disparate-impact provision.” 

The Court also found that, 

 Restricting an employer’s ability to discard test results (and thereby discriminate against qualified candidates on the basis of their race) also is in keeping with Title VII’s express protection of bona fide promotional examinations.  See §2000e-2(h) (“[N]or shall it be an unlawful employment practice for an employer to give and to act upon the results of any professionally developed ability test provided that such test, its administration or action upon the results is not designed, intended or used to discriminate because of race”); cf. AT&T Corp. v. Hulteen, 556 U.S. __, __ (2009) (slip op., at 8).

                 What Can an Employer Do or Not Do?

While it is true the Ricci decision is based on common sense—you cannot discriminate because of race.  Race-conscious policies and practices, and affirmative action of the recent past have prompted companies to be proactive in building diversity in its workforce to remedy the discrimination of the past.  Ricci leaves human resource staff scratching their heads trying to figure out if decisions cannot be made in favor of historically disadvantaged minorities generally, and the extent and breadth the Ricci decision will have on other employment-related decisions and policies.   

The Court did not provide guidelines to instruct employers on how it should figure out what qualifies as “strong basis in evidence.”  The Court correctly thought the racial statistics were not enough to show disparate impact.  However, the evidence was apparently insufficient even after the City made its decision of not certifying the tests based upon extensive hearings, witness and expert testimony, arguments against certifying the tests, questions about the test’s validity; and the possibility of an alternative to the test.  The impact of the Ricci decision on affirmative action remains to be seen.  Some argue that the civil rights violations of America’s past are still recent.  If you have questions as to whether your company’s employment decisions, test, policies and procedures place your company in the same position as the City of New Haven, please seek the advice of an employment lawyer to carefully guide your company through the process in determining whether there is “substantial basis of evidence.”

Recent Supreme Court Decision

Alleging similar facts to the above, four former employees of AT & T Corp. sued their employer claiming they were discriminated against in violation of the PDA because AT & T calculated the retirement benefits owed them, using a pre-PDA rule to accord limited service credit to maternity leave they took at the time.  AT & T’s decision caused these women to receive less retirement benefits than they would have received if the post-PDA service credit rule applied retroactively to them.  Their case made it before the Supreme Court of the United States of America.  The Supreme Court held on May 18, 2009 in AT&T Corp. v. Hulteen, et al, No. 07-543 (May 18, 2009) that an employer maybe  able to continue using pre-PDA pension benefit rules, which were effective and lawful at the time, to maternity leave taken during that time.  However, the Supreme Court made this holding in context of its finding that the subject pre-PDA pension benefits rule was part of a bona fide seniority system under section 703 (h) of Title VII of the Civil Rights Act, protecting it from challenge.  In addition, the Court found that the PDA applies prospectively, not retroactively.  Moreover, the Court further found that the employer, AT & T Corp., had made its service credit rule PDA- compliant upon the Act’s enactment.

How do I know if our company’s retirement pension plan is lawful? 

Your company’s retirement pension plan should be reviewed with the help of experienced employment counsel.  If your company has a seniority system with a service credit rule similar to the aforementioned, your company would have to determine, among other factors:

1. Does the company have a “bona fide seniority system”, under section 703 (h) of Title VII, in place?
2. Was the subject service credit rule lawful at that time?
3. Was the service credit rule created to intentionally discriminate?
4. After the PDA became effective, did the company immediately change its service credit rule and relevant policies in response such that current service credit rule regarding maternity leave is nondiscriminatory?

 What else should be considered?

It should be noted that there is disagreement by concerned groups about Hulteen’s impact on women’s rights in the workplace.  The Hulteen decision may have the consequence of allowing women who took maternity leave prior to the PDA becoming effective, still being subject to the seemingly discriminatory impact of a service credit rule that credited their maternity leave differently from other leave (such as disability).  In relevant part, the dissenting Judges, Justice Ruth Bader Ginsburg and Justice Stephen G. Breyer, stated that they would have held that “AT&T committed a current violation of Title VII, when post-PDA, it did not totally discontinue reliance upon a pension calculation premised on the notion that pregnancy-based classifications display no gender bias… I am persuaded by the Act’s text and legislative history, however, that Congress intended no continuing reduction of women’s compensation, pension benefits included, attributable to their placement on pregnancy leave.”

While the Supreme Court found the use of this particular service credit rule to be lawful under the circumstances outlined in its decision, a company may want to stop using antiquated pre-PDA service credit rules that, while lawful at the time, would be deemed discriminatory now.  While it may seem cost-effective to continue to honor pre-PDA service credit rules that were applicable at the time of the subject maternity leave(s) in current benefits calculations, companies run a real risk of not being able to attract and retain qualified talented women in its workforce. 

http://eeoc.gov/facts/h1n1.html and http://eeoc.gov/facts/h1n1_flu.html

On April 24, 2009, the Small Business Administration’s Office of Advocacy submitted comments to the Equal Employment Opportunity Commission (EEOC) about its proposed rule implementing Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA).  The Office of Advocacy acts as a representative of small entities to Congress and federal agencies.  To read the Office of Advocacy’s comments to the EEOC, please click on this link   http://www.sba.gov/advo/laws/comments/eeoc09_0424.html.

www.eeoc.gov/policy/docs/caregiver-best-practices.html.

Check out this link on a story of a company found liable for damages as a result of wrongfully classifying workers as independent contractors.  http://www.labusinessjournal.com/article.asp?aID=18536208.3617262.1770171.3395461.71778102.238&aID2=136158