The EEOC Expands the Universe of Disparate Impact Prohibitions
In 2009, the Supreme Court decided the much-publicized “firefighters case” of Ricci v. DeStefano, in which the Court considered the interplay and disharmonies of the disparate impact (i.e. intentional discrimination) and disparate treatment (i.e. neutral practices with an inadvertently discriminatory impact) discrimination theories. Ricci fascinated employment lawyers and HR practitioners alike for calling into question an employer’s attempt to relieve the disparate impact of a promotional exam by tossing out the results to the detriment of those who fared well. The decision provided anything but certainty for employers evaluating the legality of their hiring and promotional tools. Rather, Ricci highlighted employers’ justifiable difficulty in navigating the disparate impact minefield.
Ricci notwithstanding, the Equal Employment Opportunity Commission recently demonstrated that it intends to press forward with its disparate impact agenda. In February, the EEOC issued an opinion letter addressing the disparate impact of education requirements in hiring, concluding that a strict education requirement – in this case, a master’s degree requirement for a Director position – could be unlawful, assuming the requirement has a statistically significant impact on minorities or other protected groups. The EEOC acknowledged that employers may be able to defend education requirements by showing that they are sufficiently job-related and consistent with business necessity. However, this defense will not absolve liability where there exists an equally effective evaluation tool with a lesser disparate impact. The EEOC offers no guidance in this regard.
Similarly, in a March opinion letter, the EEOC questioned the legality of the use of credit checks in the hiring process, given its disparate impact on minorities. Notably, the Commission cited its belief that credit checks are not an accurate measure of job performance. By indicating that the EEOC does not perceive credit information to be sufficiently predictive of performance, it implicitly takes the position that this evaluation tool is not job-related and consistent with business necessity and, therefore, is unlawful (assuming its disparate impact).
While the EEOC’s expansive application of the disparate impact theory is not necessarily new (indeed, the Commission has previously raised concerns about other common evaluation tools, such as arrest and conviction records, cognitive tests and physical-strength tests), the recent EEOC opinion letters serve as an important reminder that the agency continues to push the boundaries of disparate impact in hiring, even in the shadow of Ricci.
With this in mind, employers should take the opportunity to review the job-relatedness and effectiveness of their evaluation tools. In particular, employers should analyze the correlation between the tools and successful employees. And they must reconsider using any tool that they discover is not materially predictive of performance.
