Will Texas Fair Housing Act Case Limit Use of Disparate Impact Analysis in Employment Discrimination Cases?


fheo175I was surprised to realize I haven’t written about disparate impact analysis on this blog before. “Disparate impact” is the legal theory of discrimination that says that covered entities can be liable for statistically disproportionate results of their policies and practices that have an adverse impact on protected classes, even in the absence of any proof that these entities intended to discriminate. If there is a statistical disparity that adversely impacts some group protected by law, then the burden falls on the entity to prove that there is a legitimate business interest for the policy or practice.

1. Disparate Impact under Title VII

Disparate impact has been a valid theory under Title VII since the Supreme Court’s decision in Griggs v. Duke Power Co., 401 U.S. 424 (1971), in which the Court ruled that an employer must justify any neutral policy that disproportionately affects minorities or women adversely. The Court said that Title VII was intended to rectify the consequences of employment practices, not simply discriminatory motives.

The holding of Griggs was limited somewhat in Ward’s Cove Packing v. Antonio, 490 U.S. 642 (1989), where the Supreme Court ruled that plaintiffs must identify a specific practice or policy that adversely affects the protected group, that the employer need only produce some evidence of a business justification for the practice, and that the burden of proof always remains with the employee.

So for over forty years now, employers have dealt with disparate impact cases and have needed to justify any policies that have adverse impacts on women, minorities, older workers, or others protected under the various employment discrimination statutes.

2. Texas Dept. Of Housing v. The Inclusive Communities Project: A Case Under the Fair Housing Act

When I learned that the Supreme Court had taken a case involving the Fair Housing Act, I wondered whether it might have an impact on employment discrimination cases. Both Title VII and the Fair Housing Act permit cases to be brought under theories of either intentional discrimination and disparate impact.

More Perspectives on Health Care ReformThe new case, Texas Dept. of Housing v. The Inclusive Communities Project, is the first Fair Housing Act case to reach the Supreme Court under a disparate impact theory. The Fair Housing Act requires that discrimination be “because of” race, rather than the “adversely affect” language of Title VII, which the Supreme Court has held allows disparate impact statistical analysis. The Court heard oral arguments in the case on January 21, 2015.

The basic issue in the case is whether the 1968 Fair Housing Act only prohibit intentional housing bias, or whether it also prohibit policies that have a negative impact on people in protected classes.  Intentional discrimination is far harder to prove than disparate impact, because motives are not always clear.

In the past, the Obama Administration seems to fear the Supreme Court’s likely handling of disparate impact under the Fair Housing Act. The government has settled two other recent cases.

For a good history of the case, see Lyle Denniston, Argument preview: That housing bias issue is back, SCOTUSblog (Jan. 20, 2015).

Of course, without a decision in the case, it’s hard to know what to think yet. But the oral arguments were interesting.

The Court’s four liberal justices seemed ready to adopt “disparate impact” without any restrictions. Justice Breyer said during oral argument that disparate impact liability under the Fair Housing Act “has been the law of the United States uniformly throughout the United States for 35 years.”

Justice Scalia—typically conservative—wondered whether Congress implicitly adopted the disparate impact theory under the Fair Housing Act when the law was amended in 1988. But he also asked plaintiffs why a statistical disparity should be enough for liability under the Act, if the statutory language requires that housing must be unavailable for a reason related to race. After all, statistical disparities might not be based on race; they merely show a correlation, not causation. And in an earlier employment discrimination case, Ricci v. DeStefano, 557 U.S. 557 (2009), Justice Scalia has seemed dubious about the constitutionality of the disparate impact theory.

For more on Justice Scalia’s comments, see Amy Howe, Justice Scalia keeps both sides guessing in Fair Housing Act case: In Plain English, SCOTUSblog (Jan. 22, 2015).

And as always, Marcia Coyle’s analysis on PBS NewsHour, January 21, 2015, was succinct and clear.

3. What Impact Will the Texas Case Have on Disparate Impact in Employment Cases?

Upon reflection, I think the odds are long that the Texas case will make much difference in employment discrimination cases. First of all, the statutory language is sufficiently different that the Court could well stick with the Griggs v. Duke Power ruling in employment cases. Griggs is a direct precedent in support of disparate impact analysis in employment cases, albeit narrowed by Ward’s Cove Packing.

The second reason for a limited impact is that the Court tends to issues narrow rulings rather than broad, particularly when it is likely to be split philosophically. Even if the Court decides against the appropriateness of disparate impact analysis under the Fair Housing Act, the decision is likely to be a 5-4 ruling (based on the comments of the liberal justices) and is likely to be limited to the Fair Housing Act on its terms.

Third, any employment discrimination cases will have to wend their way through circuit court splits and could take years to reach the Supreme Court. Still, Justice Scalia’s prior invitation is likely to encourage defense counsel in employment cases to start down that path.

What do you think the role of disparate impact analysis should be in employment discrimination cases?

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