Ricci decision highlights importance of validating tests

One of the important lessons from the Supreme Court's June 29, 2009 decision in Ricci v DeStefano, is that employers need to make sure, before administering a test, that the test is valid under the Uniform Guidelines on Employee Selection Procedures (41 CFR §60-3) for the specific job in question. Moreover, federal contractors should note that, post-Ricci, the OFCCP has demonstrated it will continue to evaluate whether employment tests have a disparate impact against any racial, ethnic or gender group. 

In Ricci, the Supreme Court found that the City of New Haven, Connecticut violated Title VII's prohibition against discriminatory treatment when it tossed the results of firefighters' promotion exams on the premise that certifying the exam results would lead to disparate impact litigation from minorities who were not promoted. In so ruling, the Court adopted a new standard — “strong-basis-in-evidence” — for resolving any potential conflict between Title VII’s disparate treatment and disparate impact provisions. The High Court held that under Title VII, before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate impact liability if it fails to take the race-conscious, discriminatory action.

However, the High Court ruling did not change the standards under Title VII and, thus, the Uniform Guidelines, regarding liability for employment tests that result in a disparate impact. Under the Uniform Guidelines, it is permissible for an employment test to have a disparate impact if the test is valid – i.e., job-related and consistent with business necessity, unless a plaintiff can show the employer had a better option, equally valid alternatives with lesser adverse impact, which is rare. A highly unusual aspect of the Ricci case was that the employer (rather than an employee alleging disparate impact) argued that its test was not valid and that it had equally valid alternatives with lesser adverse impact.

In addition to Title VII, the Uniform Guidelines apply to disparate impact liability under Executive Order 11246. During a forum at the Industry Liaison Group National Conference in Atlanta on July 30, OFCCP Midwest Regional Director Sandra Zeigler specifically stated that, post-Ricci, the OFCCP will continue to evaluate federal contractors’ use of tests pursuant to the requirements of the Uniform Guidelines. Recent OFCCP enforcement actions buttress Zeigler’s statement. On July 28, the agency announced that Kraft Foods Global, Inc. paid $227,500 to settle allegations of hiring discrimination against 193 minority jobseekers for the position of plant laborer at a Kraft facility. On August 18, the OFCCP announced that Gerber Products Co. agreed to pay $900,000 to settle findings of hiring discrimination against 1,912 rejected minority and female applicants for entry-level positions. In both cases, OFCCP investigators found that the employers used pre-employment tests with a disparate impact where there was insufficient evidence of validity for the positions at issue.  

Thus, employers are left with a legal landscape where they risk a Title VII action or OFCCP enforcement action by using invalid tests that result in a disparate impact, but, under Ricci, they cannot legally throw out the results of such tests without “a strong basis in evidence.” If the City of New Haven’s assertions are to be believed, then it begs the question why the city did not take care to validate the test prior to its implementation. In addition to potential disparate impact liability from using tests that are not valid, the OFCCP’s testing expert, Richard J. Fischer, Ph.D., has pointed out that if a test is not job-related, it simply doesn't make business sense to use it. The bottom line is that employers should not be so concerned with the unusual circumstances presented in the Ricci case that they forget to focus on whether they are implementing valid employment tests in the first place.