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Disparate Impact

Disparate Impact: A Powerful Tool for Anti-Discrimination Efforts

Discrimination comes in many forms. In popular culture, we often see or learn about intentional discrimination: someone believes a member of a certain (often marginalized) group deserves less than equal treatment and intentionally acts accordingly. But in the real world, intentional discrimination can be difficult or impossible to prove because many victims of discrimination don’t have evidence that someone intended to treat them differently.

In legal terms, discrimination can be divided into two main categories: disparate treatment and disparate impact. Both disparate treatment and disparate impact acknowledge that someone has been harmed due to a protected status, like race, sex, or disability, but they recognize different causes leading to the same effect. 

For example, imagine a store owner in New Mexico has an unwritten but well-understood policy of not hiring Native American retail workers. It could be that the store owner is motivated by internal racist beliefs, or it could be that they are motivated by a perceived racist preference among their customers. Either way, this is disparate treatment.

Public Justice is closely monitoring the latest legal developments around disparate impact to determine where we might be able to make a positive impact on this important area of law. We are also actively investigating potential cases involving facially neutral policies that adversely affect people based on their race, sex or gender identity, age, disability, and other protected traits. If you would like to discuss a potential case with us or would like help in a case you’re already litigating in this area, please contact us at access2justice@publicjustice.net.

Alternatively, the store owner might have a policy that to be hired into an entry-level retail position, applicants must have a bachelor’s degree. In New Mexico, 41 percent of non-Hispanic white adults meet this requirement, but only 11 percent of Native American adults do (according to the U.S. Census Bureau, 2016-2020 American Community Survey 5-Year Estimates). 

As a result, the policy would likely lead to far fewer Native American employees. This is disparate impact. And when a policy like this is not legitimately related to the needs of the store owner’s business, it is unlawful.

While all anti-discrimination laws allow claims for disparate treatment, it is not always clear which laws provide for disparate impact claims. Courts differ on whether an individual or company should be held responsible when a seemingly neutral action or policy produces discriminatory results. It usually depends on the type of discrimination and the underlying law. So far, the U.S. Supreme Court has recognized disparate impact as a valid legal theory in three main areas.

Race Discrimination in Employment

First, in 1971, in a case called Griggs v. Duke Power Company, the Supreme Court recognized disparate impact in the context of employment discrimination prohibited by Title VII of the 1964 Civil Rights Act. While Griggs was a case about disparate-impact discrimination based on race, Title VII prohibits discrimination against employees on several grounds: race, color, religion, sex, and national origin.

In Griggs, a power plant in North Carolina excluded Black employees from certain departments. When the Civil Rights Act made this illegal in 1965, the company changed its policy and required a high school diploma to transfer into the previously white-only departments.

Recognizing the history of segregated education, the Court noted that 34 percent of white men had finished high school, but only 12 percent of Black men had done so. As a result, the Court held that the policy violated Title VII because it disparately impacted Black employees. Congress later amended the law to incorporate a disparate impact analysis into the text of the statute itself.

Age Discrimination in Employment

In a 2005 case called Smith v. City of Jackson, the Supreme Court recognized that the Age Discrimination in Employment Act (ADEA) also allows disparate impact claims, though on a narrower basis than Title VII. The ADEA bars discrimination against people over 40. In Smith, older police officers challenged pay raises to less experienced officers that were higher than the raises the older officers received.

Due to differences in the text of Title VII and the ADEA, the court held that it is easier for an employer to establish a defense against disparate impact claims under the ADEA. Because of this, the judge ultimately ruled against the older officers in Smith.

Fair Housing

Most recently, in 2015, the Court allowed for disparate impact claims to be brought under the Fair Housing Act (Texas Department of Housing and Community Affairs v. Inclusive Communities Project). In that case, a local non-profit used a disparate impact argument to challenge government practices that concentrated low-income housing projects in predominantly non-white communities, deepening a pattern of housing segregation.

In general, plaintiffs who prove the availability of a disparate impact argument do not automatically win their lawsuit. The other party can point to factors that may justify their policy or action, like the employer did in Smith. In Title VII employment claims, this is called a “business necessity” defense. In age discrimination claims, it is a “reasonable factor other than age.” In fair housing suits, it means showing a “valid interest” served by the discriminatory policy.

Despite these possible defenses, disparate impact remains a powerful tool for anti-discrimination advocates. Perhaps for this reason, it remains a hotly contested issue across many areas of law.

What Public Justice is Doing

Public Justice’s Access to Justice team is working to protect this avenue of relief where it has been recognized—and argue for its expansion into new areas of law.

Last year, Public Justice joined other disability rights organizations in filing an amicus brief in a pending Supreme Court case concerning discrimination on the basis of disability under Section 504 of the Rehabilitation Act and discrimination in access to health insurance under the Affordable Care Act. In that case, individuals living with HIV challenged the disparate impact of a policy by CVS Pharmacy to provide special medications only by mail.

The Ninth Circuit Court of Appeals ruled for the individuals and CVS appealed to the Supreme Court. Before proceeding to argument, however, CVS dropped its appeal and agreed to partner with disability rights organizations to resolve the issue.

Other anti-discrimination laws implicitly recognize disparate impact (sometimes through the language of “discrimination by effect”), even if they have not yet been blessed by the Supreme Court.

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