A theory of liability that prohibits an employer from using a facially neutral employment practice that has an unjustified adverse impact on members of a protected class. A facially neutral employment practice is one that does not appear to be discriminatory on its face; rather it is one that is discriminatory in its application or effect.
Under Title VII of the civil rights act of 1964, plaintiffs may sue employers who discriminate on the basis of race, color, gender, religion, or national origin. Employers who intentionally discriminate are obvious candidates for a lawsuit, but the courts also allow plaintiffs to prove liability if the employer has treated classes of people differently using apparently neutral employment policies. The disparate impact theory of liability will succeed if the plaintiff can prove that these employment policies had the effect of excluding persons who are members of Title VII's protected classes. Once disparate impact is established, the employer must justify the continued use of the procedure or procedures causing the adverse impact as a "business necessity."
Proof of discriminatory motive is not required, because in these types of cases Congress is concerned with the consequences of employment practices, not simply the motivation. If the employer proves that the requirement being challenged is job related, the plaintiff must then show that other selection devices without a similar discriminatory effect would also serve the employer's legitimate interest in efficient workmanship.
The Supreme Court, in Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971), articulated the disparate impact theory and constructed a model of proof that the plaintiff and defendant must use in presenting their cases. In Griggs, the employer required a high school diploma and a passing score on two professionally developed tests. Although the lower courts found no liability because the plaintiff failed to prove that the employer had a discriminatory motive for the requirements, the Supreme Court reversed the decision. The Court stated that Title VII "proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation." In a famous quote, the Court said that the "absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as 'built in headwinds' for minority groups and are unrelated to measuring job capacity."
In the three-step model defined by the Griggs Court, the plaintiff must first prove that a specific employment practice adversely affects employment opportunities of Title VII protected classes. If the plaintiff can establish a disparate impact, the employer must demonstrate that the challenged practice is justified by "business necessity" or that the practice is "manifestly related" to job duties. The courts, between 1971 and 1989, used these two phrases interchangeably. If the employer does not meet the burdens of production and persuasion in proving business necessity, the plaintiff prevails. If the employer does meet these burdens, the third step requires the plaintiff to demonstrate that alternative practices exist that would meet the business needs of the employer yet would not have a discriminatory effect.
The plaintiff has the burden of persuading the fact finder that the employment practice used by the employer adversely affects the employment opportunities of a Title VII protected class. If the plaintiff fails to meet this burden, the court will dismiss the action under Rule 41(b) of the Federal Rules of Civil Procedure.
Demonstrating that the employer's workforce does not reflect the racial, ethnic, or gender percentage of the population of the area does not prove disparate impact. Such an imbalance may be the product of legitimate factors, such as geography, cultural differences, or the lack of unchallenged qualifications for the job. Therefore, it is incumbent upon the plaintiff to show that the imbalance is because of the challenged practice. The most compelling evidence of disparate impact is proof that an employment practice selects members of a protected class in a proportion smaller than their percentage in the pool of actual applicants, or, in promotion and benefit cases, in a proportion smaller than in the actual pool of eligible employees.
If the plaintiff proves that the employer's practice had a disproportionate impact on a protected class, the burden shifts to the defendant to justify its use of the challenged practice. Griggs labeled this burden as business necessity, but suggested that exclusionary practices would be justified if they were manifestly related to job duties.
Business necessity is the only known defense against the accusation that a personnel practice denies protected classes equal opportunity for hire, promotion, training, earnings and any other term or condition of employment. Three conditions must exist before business necessity can be asserted: (1) The standard used as the basis for the employment practice must be apparently neutral; (2) the standard must be uniformly applied by the employer; and (3) the standard must have a disparate impact on a protected class.
The term business necessity is a fluid concept rather than a bright-line rule (a firm legal standard that courts are required to honor without regard to the particular circumstances of the case being heard). In some cases, courts conclude that business necessity is established by showing a reasonable relationship between the practice in question and the employer's business needs. However, the majority of courts hold that an employment practice having a discriminatory impact can be justified on business necessity grounds only if it is "essential" to the safety and efficiency of the employer's operations. These courts contend that the mere fact that the employment practice serves legitimate management functions will not justify discrimination.
The Supreme Court, in Wards Cove Packing v. Atonio, 490 U.S. 642, 109 S.Ct. 2115, 104 L.Ed.2d 733 (1989), revisited the concept of business necessity and realigned the burdens of proof and persuasion. The Wards Cove Packing Company employed low-paid cannery workers in its salmon canning facility in Alaska and higher-paid non-cannery workers at the company offices in Washington and Oregon. Non-white workers filled a high percentage of the cannery worker positions; primarily white workers held the non-cannery worker jobs. The court of appeals found this statistical disparity sufficient to establish a prima facie case of disparate impact.
The Supreme Court reversed and remanded because the statistical proof the plaintiffs offered was not adequate. As to the defendant's burden of proof, the Court stated that the employer "carries the burden of producing evidence of a business justification for his employment practice. The burden of persuasion, however, remains with the disparate-impact plaintiff." This meant that although the employer had to show a legitimate business reason for using a test or certain job requirements, the plaintiff had to prove that he or she was denied a desired employment opportunity based on race, color, religion, gender, or national origin. This pushed the burden closer to that of disparate treatment, where the plaintiff has to show intentional discrimination by the employer. This is often difficult to prove. In addition, the Court held that just because the plaintiff could offer nondiscriminatory alternatives did not prove that the employer had improper motivations for the use of the employment practice.
The Wards Cove decision was severely criticized by civil rights leaders, who believed the Supreme Court had made disparate impact cases almost impossible to win. Congress responded by passing the civil rights act of 1991, which overturned Wards Cove. In effect, Congress reversed the Court's holding that the burden of proof must remain with the employee at all times. Therefore, once the plaintiff has carried the burden of proving that the challenged employment practice causes a disparate impact, the employer must not only articulate a business justification for the practice but must also prove the validity of the asserted justification.
The Supreme Court has put limits on the disparate impact theory. For example, the Court has made it clear that it is not unlawful for an employer to apply different standards of compensation or different terms or conditions of employment to employees, if the employer acts according to a legitimate seniority system. This is true even if the seniority system has a discriminatory effect, as long as the system was not intended to be discriminatory. In addition, it has ruled that disparate impact theory cannot be applied in age discrimination cases under the Age Discrimination in Employment Act of 1967.
"Disparate Impact." West's Encyclopedia of American Law. . Encyclopedia.com. (July 23, 2018). http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/disparate-impact
"Disparate Impact." West's Encyclopedia of American Law. . Retrieved July 23, 2018 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/disparate-impact
Encyclopedia.com gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).
Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.
Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, Encyclopedia.com cannot guarantee each citation it generates. Therefore, it’s best to use Encyclopedia.com citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:
Modern Language Association
The Chicago Manual of Style
American Psychological Association
- Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most Encyclopedia.com content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
- In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.