The case for diversity in Corporate America just got a little more interesting. The Supreme Court's recent landmark employment-discrimination ruling that white firefighters in New Haven, Conn., were unfairly denied promotions because of their race may change the state of diversity initiatives as we know it.

The Ricci vs. Stefano case ruling (5-4) favored a group of white firefighters who challenged the City of New Haven's decision to reject the results of a promotion exam because no African-Americans and only two Hispanic firefighters were likely to be promoted based on the results. The Fire Department based its decision on the fear that black firefighters would sue for discrimination based on "disparate impact" resulting from the test. But there was considerable evidence the test was carefully designed and administered based on job content to avoid racial bias.

Depending on whom you ask, the consensus is that the decision will likely be more muted in the private sector than at government agencies, because private employers are less likely to use a test as the single – or predominant – criterion for a job or promotion. Several metro Atlanta human capital companies Business to Business contacted, while recognizing the significance of the ruling, declined comment on what its ramifications could mean.

The legal and education experts interviewed for this particle say the ruling could change the way companies across Atlanta (and the nation) view employment practices, making it harder to prove discrimination when there is no evidence it was intentional.

Atlanta attorney Peter Spanos of Burr Forman says Title VII of the Civil Rights Act of 1964 prohibits intentional discrimination on the basis of race ("disparate treatment") and acts that appear to be neutral, but which result in discrimination against minorities ("disparate impact"). Says Spanos, "The majority opinion, written by Justice (Anthony) Kennedy, established a 'strong basis in evidence' standard to reconcile the competing provisions within Title VII prohibiting 'disparate treatment' on the one hand and 'disparate impact' on the other." 

The ruling has two key implications. "First, it stops employers from any attempt to discriminate against one racial group in order to remedy "disparate treatment" discrimination against another racial group, unless there is clear-cut proof that such 'disparate treatment' did or will occur," Spanos says. "Second, it implies that employers must honor the results of employment promotions testing even if the testing results in a gap in performance between races, unless there is clear-cut proof that the test is biased (not just a statistical difference in results)."
 
Spanos believes it's possible the ruling will discourage claims by minorities that they were subjected to unlawful "disparate treatment" merely on the basis of statistical evidence in the absence of more substantial evidence of biased procedures. Based on the case, employers should be aware that:

• Employers can and should to develop tests or selection criteria under which all races have a fair opportunity for promotions or hiring.
• Employers should design the test or selection criteria in order to provide a fair opportunity for all individuals apart from race (or other protected characteristics).

"The message for employers is that they need to carefully craft their selection devices for hiring and promotion on the front end, before the devices are implemented," says Kelly Cahill Timmons, associate dean for Student Affairs and Associate Professor at the Georgia State University College of Law. "Before this decision, an employer might decide to implement a test or other selection device, perhaps because the device appeared inexpensive and efficient, even if it lacked complete confidence in the device. If the test turns out to have a disproportionately harsh impact on racial minorities, [the employer] could just choose to jettison the test and its results."

Timmons believes that after the Ricci v. Stefano case, jettisoning the test's results is no longer an option because it constitutes intentional discrimination against the members of the majority race who did well on the test. "This decision will make it tougher for employers to navigate the middle ground between avoiding 'disparate impact' liability and avoiding disparate treatment liability," she says. "Intentional discrimination by the employer is justified only if it has a strong basis in evidence for believing that a disparate impact claim would be successful."

"Employers who gave little thought to avoiding disparate impact liability in the past are unlikely to be more concerned about the prospect of such liability now," Timmons adds. "Employers who have been trying to ameliorate racial or gender disparities in their workplaces, though, by attempting to adopt selection processes that don't have a 'disparate impact' on a protected group, may now find it more challenging to do so."

Where are we now?

As an employment law, and business and civil litigation, Tasha Inegbenebor of Stites & Harbison Attorneys in Atlanta has seen it all. Over the years, she has represented large employers in gender, race, disability, national origin, age, harassment, hostile work environment, and pregnancy discrimination and retaliation suits, successfully representing multiple employers before the Equal Employment Opportunity Commission (EEOC) in a diverse number of cases.

She says the Ricci v. Stefano ruling creates a more restrictive burden of proof for employers who decide to change course after receiving test or exam results that negatively impact a protected class of employees. The Court ruled the City could have defended its decision by showing a "strong basis in evidence." Had it not thrown out the results, it would have been liable to the minority firefighters under a "disparate impact" theory. On the flip side, Inegbenebor says minority employees alleging they have been disparately impacted by objective exams and tests may have a harder time challenging the employer's decision to abide by the test results despite its negative impact on minority employees.

"At a minimum, employers who use objective tests to make employment decisions must be careful to make sure the tests are job-related and consistent with a business necessity," Inegbenebor says. "According to the Court, employers are still permitted to make an evaluation of potential racial disparity before administering the test and during the design and creation of the exam. However, there is heightened scrutiny once an employer takes steps to avoid or remedy an unintentional disparate impact."

William D. Deveney, a partner in Atlanta law firm Elarbee, Thompson, Sapp & Wilson, doesn't believe the case will make it more difficult for employees to sue under a disparate impact theory. He says it may make it easier for them to sue under a disparate treatment theory in the rare factual situations similar to those presented in the case.

"The specific holding in the case is more likely to have a greater impact on public employers (especially with regard to their police and fire departments) than private employers, although arguably it could have an impact on manufacturing and similar industries where tests may be more common in qualifying persons for apprenticeship programs and/or promotion."

Deveney says if there is a larger lesson to be drawn from the Court's decision, it's that it's always risky when an employer takes race (or another characteristic protected under the anti-discrimination laws) into consideration in making an employment decision.

"Some critics believe that it may have a chilling effect on employers pursuing diversity initiatives. The case is a reminder that, regardless of a decision maker's good intentions, it is rare when an employer may lawfully consider race or another protected characteristic in making an employment decision," he says. "All such situations must be approached, if at all, in the most cautious manner possible."