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.
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.
Recently, Public Justice filed an amicus brief on behalf of the National Fair Housing Alliance, the Center for Responsible Lending, and local fair housing groups explaining the disparate impact of blanket criminal background bans in housing. The brief explained the detrimental effects on communities and families of banning people with criminal backgrounds from rental housing and described how those effects disproportionately impact communities of color.
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.