“Disparate Impact” – Part 1

How racism has been redefined by some to include the application of neutral rules that have inevitable disproportionate effects on some people grouped by race.

Most people think, quite reasonably, that for someone to be found to have racially discriminated against someone, they have to have, well, discriminated against them based on race.  That is, most people reasonably think it must be proven in court that someone was treated differently based on their race.  But even though the federal civil rights laws were originally designed to work that way, over the decades federal agencies have interpreted those original laws to also prohibit some situations in which there was no discrimination based on race, but, for one reason or another, it turned out that certain categories of people grouped by race had different outcomes under the situation in question, outcomes that imposed a “disparate impact” on that group in that the outcomes didn’t befall that group in strict statistical alignment with the percentage of that group among the relevant population.

I wrote about this back in 2010 in a law review article that appeared in the Harvard Law School Journal on Legislation, in which I go into more detail on the previous point, and so I’ll quote from that article a bit here.  The history here is important, because it forms part of the basis for policies today that are promoted as creating “equity,” a concept that also falsely equates any demographic disparities among groups based on race with racism.

Now for some legal history.

Title VII of the Civil Rights Act of 1964 is the primary federal law designed to prohibit racial discrimination in employment.  It was designed to protect individuals from intentional employment discrimination on the basis of race, color, religion, sex, or national origin.  It’s located in Title 42 of the United States Code, Section 2000e-2(a), and it states:

It shall be an unlawful employment practice for an employer–(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or (2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.

As historians Stephan and Abigail Thernstrom have described its genesis, “Title VII was initially conceived to protect individuals against intentional discrimination—what was called ‘disparate treatment.’ In other words, plain old-fashioned bias.”  The U.S. Senate floor managers of Title VII, Senators Clifford Case (R-NJ) and Joseph Clark (D-PA), made clear that Title VII only prohibited intentional discrimination and did not require statistical parity based on race, religion, or national origin. In their exhaustive memorandum distributed prior to Senate debate on the bill, the senators wrote, “[t]here is no requirement in Title VII that an employer maintain a racial balance in his work force.”

This interpretation was reiterated by Senator Hubert Humphrey (D-MN), who said, “[i]f [a] Senator can find in Title VII . . . any language which provides that an employer will have to hire on the basis of percentage or quota related to color, race, religion, or national origin, I will start eating the pages one after another, because it is not in there.”

Title VII also created the Equal Employment Opportunity Commission (EEOC) to draft regulations governing the administration of its provisions. And over time, however, Title VII’s prohibition of disparate treatment also came to cover employers’ actions that resulted in a disparate impact on covered groups, even if those actions were the result of facially neutral policies which were applied without any intent to discriminate. Alfred W. Blumrosen, the Equal Employment Opportunity Commission’s first Chief of Compliance, employed “[c]reative administration” to draft regulations under which Title VII would be interpreted “liberally.”  Blumrosen explicitly stated in his book that “[t]he objective was to maximize the effect of the statute [Title VII] on employment discrimination without going back to the Congress for more substantive legislation.”  And Blumrosen later admitted that such regulations did not “flow from any clear congressional grant of authority.”

Under such federal regulations, Title VII would come to be interpreted to ban not just intentional discrimination but also practices that disproportionately affected the numerical representation of a covered group within an employment sector, even if such a practice was neutral by its terms and motivated by no ill will.  As the Thernstroms have explained, Title VII came to protect covered groups “not simply against formal barriers or malicious intent;” rather, it came to enforce “racially proportionate results” as well.

The Supreme Court ultimately approved claims based on disparate impact in the case of Griggs v. Duke Power Co.  In that case, the Court struck down, as a violation of Title VII, a company’s requirement of a high school degree or a sufficient score on a standardized test as a condition for employment or promotion where such test, while not designed with a discriminatory intent but not required as a “business necessity,” yielded disparate employment results based on race. Delivering the opinion of the Court, Chief Justice Burger wrote that in his view, in enacting Title VII, “Congress directed the thrust of the Act to the consequences of employment practices, not simply the motivation.”  As a result, “[t]he Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude [blacks] cannot be shown to be related to job performance, the practice is prohibited.”

As Thernstroms have written, as a result of this interpretation, “[e]mployers had to be prepared to prove the indispensability of any method they used to sift job applicants if more blacks than whites were adversely affected.”  Courts, following EEOC guidelines, have strictly construed the phrase “business necessity,” holding that “the practice must be essential, the purpose compelling.”  As the Court later refined the business necessity test in Albemarle Paper Co. v. Moody, it also became clear that even if an employer could prove a direct link between the test employed and performance in the particular job that was the subject of the test, the employer could still lose a disparate impact suit if the claimant could show that an alternate test with a less pronounced racial disparity could be employed.  In his concurrence in Albemarle, Justice Blackmun expressed reservations about how these precedents could encourage employers to institute quota systems to avoid disparate impact lawsuits. He wrote, “I fear that a too-rigid application of the EEOC guidelines will leave the employer little choice, save an impossibly expensive and complex validation study, but to engage in a subjective quota system of employment selection.”

The Court addressed Justice Blackmun’s fears several years later in Wards Cove Packing Co. v. Atonio. In that decision, the Court relaxed the business necessity standard so that courts would henceforward engage in merely “a reasoned review of the employer’s justification for his use of the challenged practice [such that] there is no requirement that the challenged practice be ‘essential’ or ‘indispensable’ to the employer’s business for it to pass muster.”  Congress, however, responded two years later by overturning Wards Cove in the Civil Rights Act of 1991, requiring an employer “to demonstrate that the challenged practice is job related for the position in question and consistent with business necessity.”  The legislative history of that provision states that “[t]he terms ‘business necessity’ and ‘job related’ are intended to reflect the concepts enunciated by the Supreme Court in Griggs v. Duke Power Co. …  and in the other Supreme Court decisions prior to Wards Cove Packing Co., Inc. v. Atonio.”  Congress thereby restored the meaning of “business necessity” under Title VII to what it had been prior to Wards Cove.

Other federal statutes originally intended to prohibit only disparate treatment based on race has also become subject to interpretive regulations that also prohibit “discriminatory impact.”  Title VI of the Civil Rights Act of 1964, for example, provides that “[n]o person in the United States shall, on the ground of race, color, or national origin … be subjected to discrimination under any program or activity receiving Federal financial assistance.” The purpose of this provision was summarized by President John F. Kennedy, who said “[s]imple justice requires that public funds ... not be spent in any fashion which encourages, entrenches, subsidizes or results in racial [color, or national origin] discrimination.”  Title VI applies to federal contractors and other entities receiving federal financial assistance the same anti-discrimination standards that Title VII applies to employers. In Alexander v. Choate, the Supreme Court clarified that while the Title VI statute itself prohibited only intentional discrimination, “actions having an unjustifiable disparate impact on minorities could be redressed through agency regulations designed to implement the purposes of Title VI.”  In that case, the Court assumed for purposes of deciding the case that the agency’s disparate impact regulations were valid.  However, one question left unanswered by the Court was whether, if Title VI only prohibits intentional discrimination, an agency can implement regulations prohibiting disparate impact without going beyond what it is authorized to do under Title VI.

There have been efforts in Congress to explicitly codify “disparate impact” claims in the text of all federal civil rights statutes.  They haven’t been enacted so far, but it’s important to note that if “disparate impact” claims could ever be brought even more broadly, it would threaten many beneficial federal programs.  For example, in 1996, Congress passed comprehensive welfare reform in the form of the Personal Responsibility and Work Reconciliation Act (“PRWRA”). PRWRA replaced a prior federal entitlement program for poor families with a block grant program called Temporary Assistance for Needy Families (“TANF”). Under the reforms, eligible families can only receive TANF aid for five years, and certain TANF recipients are required to participate in work activities. PRWRA gives states the flexibility to: (1) set their own eligibility criteria; (2) limit grants based on family size; (3) determine the grounds for exemptions from work activities; and (4) determine how and under what circumstances to sanction recipients who fail to comply with work and other requirements.

If Congress were to statutorily codify the right of private litigants to bring disparate impact claims under Title VI, individuals and groups could file Title VI complaints to alter the administration of welfare reform. Such complaints could allege disparate impact based on race or national origin. Such a case was compiled by the U.S. Commission on Civil Rights in a document entitled “A New Paradigm for Welfare Reform: The Need for Civil Rights Enforcement,” in which the Commission stated:

Passage of [PRWRA] in 1996 was intended to drastically transform public assistance in the United States. With it, a new emphasis was established to move public assistance recipients from welfare to work … The Commission has evaluated the 1996 law … [P]eople of color are disproportionately affected by public assistance policies … Evidence suggests that people of color and language minorities are often disparately affected by welfare rules and restrictions.  For example, states with higher percentages of Hispanic and black recipients at the time of welfare reform were more likely to adopt shorter time limits, family caps on benefits, and stronger sanctions than states with lower percentages of minority recipients. Whites are less likely than other former recipients to leave welfare for administrative reasons, such as not following program rules, administrative mistakes, or reaching time limits on benefits … Nationally, whites leave the rolls at faster rates than minorities, and thus make a faster transition to work … The decline in welfare rolls has been 25 percent for whites, 17 percent for African Americans, and 9 percent for Hispanics … The provisions adopted disproportionately affect people of color … and those with limited English proficiency.

Following the 1996 welfare reforms, other research showed that blacks and other minorities came to comprise a greater percentage of the welfare rolls than previously and were less likely to leave welfare than whites. Other researchers similarly found that, prior to the 1996 reforms, blacks and Hispanics tended to remain on welfare for longer periods of time, and therefore would be more significantly affected by the time limits imposed by welfare reform, as data suggested to them that forty-one percent of black recipients and fifty-one percent of Hispanic recipients, while only twenty-seven percent of white recipients, would be forced off the rolls by time limits.

As one commentator has described it:

Title VI’s breadth and its potential power derive from its application to a wide range of funding programs … Because of its application to a broad array of regulatory contexts, Title VI disparate impact theory risks appearing like disparate impact theory uncabined, provoking judicial concerns about whether it would require the judiciary to broadly restructure social institutions …

Fortunately, the Supreme Court, in the case of Washington v. Davis, 426 U.S. 229 (1976), refused to strike down as unconstitutional, based on a disparate impact analysis, a police department written personnel test, on the grounds that it excluded a disproportionately high number of blacks.  In that case, the Court made clear that it would not judge the constitutionality of an action solely by its outcome, as such would “raise serious questions about, and perhaps invalidate, a whole range of tax, welfare, public service, regulatory and licensing statutes.” The Court clearly rejected the notion that “a law, neutral on its face and serving ends otherwise within the power of government to pursue, is invalid under the Equal Protection Clause simply because it may affect a greater proportion of one race than of another.”  And it added that “our cases have not embraced the proposition that a law or other official act, without regard to whether it reflects a racially discriminatory purpose, is unconstitutional solely because it has a racially disproportionate impact.”  Just a few years later, the Court stressed the need for judges to be tolerant of legislative generalizations that might unintentionally impact covered groups differently, stating in Personnel Administrator of Massachusetts v. Feeney, 442 U.S. 256 (1979) that:

The equal protection guarantee of the Fourteenth Amendment does not take from the States all power of classification. Most laws classify, and may affect certain groups unevenly, even though the law itself treats them no differently from all other members of the class described by the law. When the basic classification is rationally based, uneven effects upon particular groups within a class are ordinarily of no constitutional concern. The calculus of effects, the manner in which a particular law reverberates in a society, is a legislative and not a judicial responsibility.

But the holdings of those cases only apply to constitutional challenges based on disparate impact theory, not to claims authorized by statutes or regulations.  And the legal theory of disparate impact played a significant role in the 2007-2008 financial crisis that was caused when a large number of people found themselves unable to pay the home loans they had committed to pay.  And claims of disparate impact also played a significant role in creating the situation today in which kids are expected to go to college to get a good job, even when, as we’ve seen in previous essays, going to college doesn’t pass a cost-benefit analysis for many people.  Those issues will be explored in the next two essays.

Links to all essays in this series: Part 1; Part 2; Part 3; Part 4; Part 5; Part 6; Part 7; Part 8; Part 9