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High court lowers bar on discrimination suits

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WASHINGTON—The U.S. Supreme Court's unanimous decision permitting a discrimination case by black Chicago firefighter applicants to proceed could lead to more claims and larger awards against employers, many observers say.

The court's decision last week in Arthur L. Lewis Jr. et al. vs. City of Chicago also makes it more difficult for employers to win summary judgment to dismiss such cases, observers say.

While the decision may have a greater effect on public employers, it applies to private employers as well, attorneys say.

The court's ruling focused on the statute of limitations to file claims in disparate impact discrimination cases (see story, page 20). Disparate impact is an employment policy or practice that, while neutral on its face, adversely affects a particular protected group.

Some observers say the unanimous decision may reflect in part the court's recognition of Congress' move to overturn its 2007 ruling in Lilly Ledbetter vs. Goodyear Tire & Rubber Co. by passing the Lilly Ledbetter Fair Pay Act of 2009. In that ruling, the court upheld a time limit to file an unlawful employment practices claim under Title VII of the Civil Rights Act of 1964.

Congress has demonstrated its willingness to “enact laws any time they don't like the Supreme Court's decisions” and the court recognized this, said Martha J. Zackin, of counsel with law firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C. in Boston.

Laura P. Jordan, a Portland, Ore.-based associate with law firm Fisher & Phillips L.L.P., said to the extent that employers use tests to hire or promote, the court's ruling means “they can't rest assured that their prior use of those will bar an employee or applicant from later being able to claim” discrimination.

Its impact could be quite significant because “it allows challenges in cases outside the 300-day period where employers may have assumed they were home free,” said Todd D. Steenson, a partner with Holland & Knight L.L.P. in Chicago.

“The plaintiffs bar is going to be looking much more closely now at these kinds of tests, at these kinds of standards for job eligibility,” said Phillip M. Berkowitz, a partner with law firm Nixon Peabody L.L.P. in New York.

Debra S. Friedman, a member of law firm Cozen O'Connor P.C. in Philadelphia, said disparate impact claims more commonly involve groups of affected individuals compared with disparate treatment cases, in which deliberate discrimination is alleged, “and could end up being large class actions.”

The decision clarifies “that a disparate impact claim can accrue with each use or application of a practice,” said Katharine H. Parker, a partner with Proskauer Rose L.L.P. in New York.

Furthermore, “each time an employer uses an employment practice that has an unlawful disparate impact...it's going to increase the potential exposure in multiples,” Ms. Friedman said.

Gregory V. Mersol, a partner with Baker & Hostetler L.L.P. in Cleveland, said the ruling means “more and more of these claims are going to survive an easy dismissal on statute of limitations grounds, and you're going to have to defend these cases on the merit.”

The decision will affect public more than private employers because they rely more on tests, observers say. However, “every private employer that has in place pre-employment selection criteria, or any kind of objective job measurements that caused them to take adverse actions against employees, is going to be potentially affected by this,” Mr. Berkowitz said.

Philip K. Miles II, an associate with State College, Pa.-based McQuaide Blasko Attorneys at Law, said the ruling “should serve as a reminder to employers that they need to look at their practices, even if they've been using them for years, to make sure they're not having a disparate impact now.”

Mr. Berkowitz said, “To the extent employers have created objective job skill measurements... employers have to go back and review them and make sure they are not going to have some sort of disparate impact on new applicants or employees. They can't rely on the argument, "We created these criteria 10 years ago.'”

They also “need to be extremely careful when implementing new policies or practices and be on the lookout for any disparate impact,” said Ron Chapman Jr., a shareholder with law firm Ogletree, Deakins, Nash, Smoak & Stewart P.C. in Dallas.

Should there be a disparate impact, employers must then decide if there is a business necessity for the policy, which employers can use as a defense against disparate impact charges, Mr. Chapman said.

Make sure any test “is tailored to the job and does not have a disparate impact on minorities,” Mr. Mersol said.

“The big issue is really going to be validation, making sure you can prove this test really predicts job performance and that you need this kind of measuring stick to determine whether people can perform the job,” Mr. Steenson said.