Supreme Court Holds Use Of Previously Adopted Unlawful Employment Practice States A Claim Of Disparate Impact

Supreme Court Holds Use Of Previously Adopted Unlawful Employment Practice States A Claim Of Disparate Impact

On May 24, 2010, the Supreme Court issued its decision in Lewis v. City of Chicago, No. 08-974, addressing the issue of whether a plaintiff who does not file a timely charge challenging the adoption of an allegedly discriminatory practice may assert a claim for disparate impact under Title VII in a timely-filed charge challenging the employer’s application of the practice. The events underlying the lawsuit began with the City of Chicago administering a written examination in July 1995 to over 26,000 applicants seeking employment. In January 1996, after scoring the examinations, the City issued a press release announcing that it would begin randomly filling positions with those it deemed “well-qualified” (those with a score of 89 points or above out of a possible 100 points). The City further stated that it then would fill positions with “qualified” individuals (those with scores between 65 and 88). Those who scored below 65 were deemed “not-qualified” and were sent a letter notifying them that they had failed the test. The City began filling positions pursuant to this classification in May 1996, and repeated the process nine more times over the next six years. Initially, the City drew randomly from the pool of “well-qualified” applicants; however, in the last round, it exhausted the pool so it began filling remaining slots with “qualified” candidates.

On March 31, 1997, Crawford Smith, an African American applicant who scored within the “qualified” range and had not been hired, filed a charge of discrimination with the EEOC. Five others followed suit, and on July 28, 1998, the EEOC issued right to sue letters to all of the individuals. The individuals then filed suit against the City alleging that its practice of selecting individuals with a score of 89 or above caused a disparate impact on African Americans in violation of Title VII. Ultimately, the District Court certified a class of more than 6,000 African Americans who scored in the “qualified” range on the examination, but were not hired.

The City sought summary judgment on the ground that charges had not been filed with the EEOC within 300 days after the claims accrued; however, the District Court denied the motion, finding that the City’s continued reliance on the examination results constituted an “on-going violation” of Title VII. The Seventh Circuit reversed, holding that the suit was untimely because the earliest charge was filed with the EEOC more than 300 days after the “only discriminatory act” – that is, the act of sorting the scores into the categories of “well-qualified,” “qualified,” and “not-qualified” candidates. The court further reasoned that the subsequent hiring decisions were immaterial because “[t]he hiring only of applicants classified ‘well-qualified’ was the automatic consequence of the test scores rather than the product of a fresh act of discrimination.”

The Supreme Court reversed, finding that although the decision to adopt a cutoff score could have given rise to a free-standing disparate impact claim, the failure to file a charge based on that act did not lead to a conclusion that no new claims could arise each time the decision was implemented. As a result, the Court held that if the petitioners could prove that the City “’use[d]’ the ‘practice’ that ‘cause[d] a disparate impact,’ they could prevail.” The Court reasoned that a Title VII plaintiff must only show a “present violation” within the limitations period, and in a disparate impact case, that would require showing that the implementation of the test had a discriminatory impact on a protected class.

This decision may have a significant impact on companies covered by Title VII. As noted by the Court, its ruling may cause employers to face new disparate impact suits for practices they have been using for years. Additionally, by the time suit is filed, evidence essential to a business-necessity defense may be unavailable or, in the case of witnesses’ memories, unreliable. Although the Court acknowledged these potential issues, it stated that its charge was to “give effect to the law Congress enacted” and if the effect was unintended by Congress, it is a problem for Congress, not federal courts, to fix. In light of this decision, companies should be sure to document anything that may constitute evidence of business necessity and the legitimate, nondiscriminatory reasons behind their decisions when establishing policies.