Discrimination on the Basis of Color, Quirky Question # 134
My company is planning a reduction in our workforce, which largely consists of African-Americans. I understand that when a company conducts a mass layoff, it should make sure the layoff does not disproportionately affect older workers, women or men, or employees of a particular race, or else the company risks being accused of discrimination. But doesn’t the law also protect employees from discrimination based on color? If so, do we also need to worry about letting go a disproportionate number of “dark-skinned” or “light-skinned” employees? How would we even go about measuring this? I know our African-American workforce consists of a broad spectrum of skin tones.
Joel’s Analysis:
[Readers: Quirky Question # 134 was posed to my colleague Joel O’Malley. Joel’s analysis is set forth below. If you have any comments, do not hesitate to contact Joel at 612.492.6727 or at omalley.joel@dorsey.com. Additional information about Joel is available at http://www.dorsey.com/omalley_joel/. If you have any questions or comments, please send me a note at ginsburg.roy@dorsey.com. Regards, Roy]
You raise a good question about whether a “disparate impact” claim can successfully allege discrimination based on color. While intriguing in theory, I think for practical reasons such a claim could not succeed, so I do not believe that you need to agonize over your employees’ varying skin tones when planning your reduction in force. To reach my conclusion, it is best to begin with a brief summary of anti-discrimination law.
As you note in your question, anti-discrimination law prohibits discrimination against individuals in certain protected classes, based on characteristics such as age, sex, race, national origin, or color. Employees generally can assert discrimination claims under two legal theories: disparate treatment and disparate impact. Disparate treatment claims alleging race, sex, age, or national origin discrimination typically involve an employee in the protected class claiming her employer intentionally treated her less favorably than persons outside of the employee’s protected class. For example, a female employee might sue claiming her employer denied her a promotion, instead advancing a less-deserving male coworker. In such a scenario, the distinction between the allegedly disfavored plaintiff and the favored coworker is based on a clear and evident difference—the employees’ sex.
Disparate impact claims do not allege intentional discrimination, but rather encompass the type of scenario you describe here – a facially-neutral policy (e.g., a reduction in workforce based on financial or business reasons) that disproportionately affects individuals in a protected class. For example, a female employee might sue after a mass layoff claiming that the group of terminated employees included too many females, while too few female employees were spared termination.
Cases involving alleged color discrimination are relatively rare, and typically are brought under a disparate treatment theory. In color-based cases, the aggrieved employee can be – and often is – the same race, sex, age, and national origin as the allegedly favored coworkers and the allegedly discriminatory supervisor. That employee, however, claims she is, in the employer’s eyes, “too dark” or “too light” in color. The cases, while different than those involving other protected classes, are straightforward. To determine the merits of such cases, the court must, among other things, compare the relative skin tones of an individual plaintiff and a limited number of her coworkers.
As an example, in one older case, a light-skinned Pakistani employee sued his Pakistani employer, claiming darker-skinned Pakistani employees were favored. Ali v. Nat’l Bank of Pakistan, 508 F. Supp. 611 (S.D.N.Y. 1981). Another, more recent case involved a light-skinned Native-American employee claiming that her employer favored darker-skinned Native-American employees. Nettle v. Cent. Okla. Am. Indian Health Council, Inc., 2009 U.S. App. LEXIS 14470 (10th Cir. July 1, 2009) (unpublished). In yet another case, an employer defended itself against an employee claiming that light-skinned employees were favored, by arguing that it had in fact replaced the dark-skinned plaintiff with a darker-skinned worker. Brack v. Shoney’s, Inc., 249 F. Supp. 2d 938 (W.D. Tenn. 2003). The congressional discussions leading to the enactment of the anti-discrimination laws specifically noted the laws’ applicability to cases like these, expressly noting the law would apply when, for example, an employer refused to hire an African-American because her skin pigmentation was “too dark,” even if the employer was also an African-American. See Cong. Rec., Feb. 8, 1964, at H-2552-2555.
Unlike these intentional discrimination cases, there do not appear to be any published court decisions involving claims that an employer’s facially-neutral practice or policy had a disparate impact on persons of a particular color. In theory, such a claim could exist, like the previous example of a female worker suing her employer following a mass layoff. In your situation, a dark-skinned African-American employee could argue your company’s layoffs, while ostensibly based on neutral criteria, resulted in the termination of too many darker-skinned employees, while too few darker-skinned employees remained employed.
Perhaps the chasm between theory and reality with these color-based disparate impact cases stems from the practicality of enforcing a claim. First, there is the problem of classifying skin-tone. Even scientists have a difficult enough time categorizing the wide variety of skin pigmentation in the human race – first using the complicated 36-tone Von Luschan chromatic scale, then more recently using the six-tiered Fitzpatrick scale (primarily for grading sunburn risk). We cannot expect an employer to do much better. While it is relatively simple to determine whether an employee is male or female, of one race or another (though the idea of race does have its complexities), or to determine in the disparate treatment context whether a single plaintiff is darker or lighter than a few allegedly favored coworkers, categorizing large numbers of employees based on skin tone is not a “black or white” question.
Second, even if scientists (and employers) could perfect the practice of color-grading, doing so at the workplace or in the courts seems rather distasteful. In fact, despite Congress’s apparent approval of color-based discrimination claims, several courts, even in disparate treatment cases, have cautioned the judiciary to be wary of “the unsavory business of measuring skin color and determining whether the skin pigmentation of the parties is sufficiently different to form the basis of a lawsuit.” See Sere v. Bd. of Trs. of the Univ. of Ill., 628 F. Supp. 1543 (N.D. Ill. 1986); see also Franceschi v. Hyatt Corp., 782 F. Supp. 712 (D.P.R. 1992) (noting that courts have “shied away from grappling with cases that deal with subtle degrees of intra-racial discrimination”); Walker v. I.R.S., 713 F. Supp. 403 (N.D. Ga. 1989) (observing the “genuine and substantial” difficulties in comparing skin pigmentation).
An additional problem with color-based disparate impact claims is the lack of a legal demarcation instructing an employer how to test the lawfulness of a facially-neutral practice. For sex, the employer can easily determine whether men or women are disproportionately impacted. Likewise, determining race or national origin represented in the workforce may be accomplished without much difficulty. Even age – which, like color, exists in the workplace in a broad range – contains a bright-line cutoff under federal law, with individuals age 40 and older afforded protected from discrimination. In contrast, skin color does not have any clear cutoff.
Without such a cutoff, we cannot expect employers to ensure employees throughout the skin-tone spectrum are equally affected or disaffected by an employment practice. Courts in age-based disparate impact cases have declined to accept employees’ requests for a protection against such “subgroup” discrimination. For example, in EEOC v. McDonnell Douglas Corp., 191 F.3d 948 (8th Cir. 1999), employees claimed that a workforce reduction, while not disproportionately affecting employees age 40 and older, disproportionately affected employees age 55 and older. The Eighth Circuit Court of Appeals rejected this argument. The court explained that “if disparate-impact claims on behalf of [age] subgroups were cognizable . . . , the consequence would be to require an employer engaging in a [reduction in force] to attempt what might well be impossible: to achieve statistical parity among the virtually infinite number of age subgroups in its workforce.” Id. at 951. Given courts’ reluctance to allow a disparate impact claim based on an age subgroup, courts would likely also recognize the analogous difficulties with a color-based theory. Certainly the Eighth Circuit’s reasoning applies to color-based disparate impact lawsuits: it may well be impossible for an employer implementing a neutral practice or policy to achieve parity among various categories of skin tone (be they six or thirty-six distinct subgroups) in its workforce.
For all of these reasons, I am skeptical as to whether a legitimate color-based disparate impact case could ever be properly pled in court. In sum, then, continue to test for whether your company’s layoff has a disproportionate impact on employees with respect to age (forty and older), gender, race, and national origin. But there is little reason, and inherent practical difficulty, in also testing for color-based disparate impact.
Another Religious Accommodation Issue, Quirky Question # 122
I read the religious discrimination question posed to your colleague in Seattle. We have a slightly different issue. All of our employees are required to wear identification tags when they are in our buildings. The IDs have their pictures on them. One of our employees recently advised us that it violated his religious beliefs to have his photo taken or to include his photo on the ID tag he wears. He has asked us to accommodate his religious beliefs by foregoing our requirement of photo IDs. We believe that the photo IDs serve a number of important purposes at our company. Must we accommodate his request to provide him special treatment on this issue.
Roy’s Analysis:
You pose an interesting question regarding whether you are obligated to accommodate one of your employee’s religious beliefs by allowing him to disregard your policy requiring to display his photo on your company ID tag. As a prefatory comment, I’d start with a refrain you’ve heard from me in previous Blog analyses – much of employment law involves a balancing act between two (or more) competing societal interests. If an employer and employee cannot amicably resolve how these conflicting interests should be reconciled, courts will assume the responsibility for sorting out which societal interest should predominate. At times, general principles can be articulated that will have widespread application. At other times, however, the governing principles will be entirely dependent on the specific facts of a case.
Let me illustrate the above observation with an example. In general, as you may have seen from my other Blog pieces addressing accommodating genuine religious beliefs, courts often focus on whether the requested accommodation would cause the employer an undue hardship. But that general principle can be dramatically affected by the specific facts of a particular case.
You did not describe the nature of your business. If, for example, your company manufactured hockey sticks, and there were not significant theft or security issues that mandated your company’s use of photo IDs, the accommodation sought by your employee might seem reasonable. If, however, your company was a private security contractor with responsibility for guarding spent nuclear fuel rods, the requirement that every employee wear an identification card, with his or her picture, may be absolutely essential. Accommodating an employee’s religious beliefs in this job environment would involve a dramatically different calculus than it would for a hockey stick manufacturer.
A recent case from the Eastern District of Pennsylvania, Cherry v. Sunoco, Inc., No. 07-cv-2235 (August 17, 2009), involved some of these issues. The plaintiff, John Cherry, worked as a refinery operator at Defendant Sunoco’s Philadelphia refinery. When he was hired in early 2001, he informed his employer of his religious beliefs, which were grounded on the Church of the True and Living God, a sect of Hebrew Israelites, that apparently prohibits its members from posing for pictures or photographs or from carrying such pictures or photographs on one’s person. At the time of Cherry’s hiring, Sunoco was willing and able to accommodate his religious beliefs, and issued him an employee ID without a photograph.
Even after the events of September 11, 2001, the defendant employer still was able to accommodate plaintiff’s religious beliefs and did not compel him to pose for or carry a photo ID. Sunoco did require plaintiff to report to security when he came into work, and, at times, plaintiff’s supervisor would have to verify his identity if the security guard on duty did not recognize him.
In the post-9/11 world, however, Congress began implementing various statutes to enhance our nation’s security. Among the statutory provisions enacted by Congress was the Maritime Transportation Safety Act (MTSA), with the US Coast Guard adopting regulations to “implement portions of the maritime security regime.” Sunoco, and specifically its Philadelphia Refinery where plaintiff worked (a port facility), was required to comply with the Coast Guard regulations by mid-2004. Defendant developed a Facility Safety Plan that required all employees at the Philadelphia refinery to carry a photo ID. At that point, plaintiff’s religious beliefs, which the defendant employer had accommodated for several years, became problematic.
Sunoco insisted that plaintiff pose for and begin wearing a photo ID. Plaintiff refused, re-explaining his religious beliefs, and proposing several alternative solutions (e.g., fingerprinting; iris scan; escort to job location). After checking with the Coast Guard as to whether any of these accommodations would suffice, and being informed that the photo ID requirement could not be waived, the defendant first suspended and later terminated plaintiff’s employment.
Upon his discharge, plaintiff sued under Title VII and the Pennsylvania Human Rights Act for religious discrimination. As discussed in other Blog analyses, to establish a prima facie case, a plaintiff claiming religious discrimination must demonstrate that he: a) held a sincere religious belief that conflicted with a job requirement; b) notified his employer of the conflict; and c) was disciplined for failing to comply with the conflicting requirement. The district court found that Cherry had established a prima facie case. Once a prima facie case is established, the employer may demonstrate that it made good faith efforts to accommodate the employee’s religious beliefs or that doing so would cause it an undue hardship. Because Sunoco acknowledged that it made no effort to accommodate the plaintiff’s religious beliefs once the MTSA and the Coast Guard regulations went into effect, the central issue in the Cherry case became whether Sunoco could accommodate plaintiff’s religious beliefs without experiencing an undue hardship.
As the trial court pointed out, “Under hardship is requiring the employer ‘to bear more than a de minimis cost’ in order to accommodate the employee’s religious practice. Economic, as well as non-economic costs can impose an undue hardship on employers. The Supreme Court has strongly suggested that ‘the undue hardship test is not a difficult threshold to pass.’”
Relying on analogous precedent, the district court concluded that it would constitute an undue hardship for an employer to require it to violate a valid criminal statute, thereby exposing its administrators to criminal prosecution and the possible consequences associated with prosecution. Because the MTSA and the Coast Guard regulations mandated that all of the port facilities’ employees carry and display a photo ID and because there were potential criminal consequences for violating that requirement, the court concluded that it would cause the employer an undue hardship to accept any of the accommodations proposed by the plaintiff-employee.
The Cherry decision is instructive, though it may not be dispositive of the parallel situation your company is confronting. To summarize, there are several critical issues you should examine when you are being asked to accommodate an employee’s religious beliefs. First, are the religious beliefs sincere? Second, do the employee’s religious beliefs conflict with some work requirement? Third, has the employee notified your company of the conflict? Fourth, can you accommodate the employee’s religious beliefs? Fifth, would accommodating those beliefs cause your company an undue hardship (recognizing that establishing an undue hardship should not be limited to an economic calculus, and may not be a difficult burden to satisfy)? The Cherry decision also demonstrates the importance of considering whether the work requirements or rules to which the employee has objected for religious reasons are based upon any external variables (e.g., federal statutes, state statutes, criminal law proscriptions, common law principles, significant public policies, etc.). It may be that the most compelling justification for rejecting the employee’s request for an accommodation is grounded upon a source external to the employer rules and requirements.
Again, however, it may be perfectly appropriate to accommodate your employee’s request for a religious accommodation, including the specific request relating to your employee’s desire to avoid having his or her picture taken or wearing a photo ID. As is evident in the Cherry case, despite a large workforce (over 1500 employees at the Philadelphia facility), Sunoco was able to accommodate its employee’s request to avoid using a photo ID for the several years preceding the passage of the MTSA and the Coast Guard regulations that altered the ID equation for port facilities. It could be that your company has equally compelling justifications for requiring employees to display a photo ID and it could be that allowing your employee to disregard this requirement would cause your company an undue hardship. But, before you leap to that conclusion, consider the mix of issues carefully. You may discover that this request can be accommodated relatively easily with virtually no hardship, undue or otherwise, to your company.
Associational Gender Discrimination, Quirky Question # 118
One of our male employees (call him Mr. X) recently complained that a supervisor at our company was sexually harassing Mr. X’s girlfriend, also one of our employees. We advised him that we would investigate. Apparently, however, our investigation was not moving sufficiently fast for him. When Mr. X encountered the supervisor in routine work settings, he was confrontational and unpleasant. We advised him he needed to tone it down and let our HR Department do its work, but that just seemed to anger him more. The supervisor who had been accused of harassment informed us that he was getting very nervous about Mr. X’s antagonistic conduct. Based on this escalating situation, we terminated Mr. X’s employment.
He now has filed a charge for “associated discrimination” and retaliation. Say what? Can a significant other of our employees claim discrimination because of the way our company allegedly treats their girlfriend?
Roy’s Analysis:
Your question implicates a number of interesting issues. First, are courts recognizing “associational discrimination” claims? Second, have they done so in the context of gender discrimination claims? Third, even if an associational discrimination claim were not recognized, would your employee have any other recourse? Finally, should your company accept otherwise problematic behavior from the employee simply because he has raised discrimination issues with management? Let’s examine each of these issues sequentially.
As I have discussed in other Blog Postings, courts have recognized associational discrimination claims. (For other analyses of this subject, use the “View by Topic” bar and scroll down to Associational Discrimination and Inter-racial Marriage.) Typically, these claims have arisen in the contexts of family relationships (spouses, parents/children, or other familial relationships). They also have generally been limited to contexts involving inter-racial associations, e.g., inter-racial marriage, or close friendships between members of different races.
The fact pattern you described, where one employee believes that his discharge was caused by his objections to the alleged sexual harassment of his girlfriend, also one of your employees, is unusual. Recently, however, the United States District Court for the Eastern District of Pennsylvania, examined a similar factual pattern in the case of Stezzi v. Aramark Sports, LLC, No. 07-5121 (July 30, 2009). In Stezzi, the plaintiff brought claims under both Title VII and the Pennsylvania Human Rights Act, contending that his discharge was caused by his association with his girlfriend/co-worker who allegedly was a victim of sexual harassment. The plaintiff complained to management about the way in which his girlfriend had been treated. Thereafter, he claimed that he too was treated unfairly by the same person who had been harassing his girlfriend.
Stezzi brought claims for associational discrimination and retaliation. These claims were presented to the District Court on summary judgment. As to the associational discrimination claim, the federal court noted that although courts have recognized Title VII claims for associational discrimination, “such claims are typically predicated upon discrimination against a plaintiff because of race.” The court further pointed out that “there is currently no precedential support to extend a Title VII claim to [gender-based claims].” The court observed that the Third Circuit also had rejected an associational discrimination claim based on gender.
While the Stezzi court was unwilling to extend associational discrimination claims to the context of gender based discrimination, the court did not grant the defendant company’s summary judgment motion on the plaintiff’s retaliation claim. This analysis bears upon the third issue referenced above – would your employee have any claims besides his associational discrimination claim? As you noted in your fact description, your male employee reported the alleged sexual harassment of his girlfriend. As you stated, he apparently concluded that the “investigation was not moving sufficiently fast for him.”
(Digressing on that point for a moment, you do need to move expeditiously once you have received a complaint of sexual harassment. Courts have little tolerance for companies that fail to investigate claims of harassment or that fail to take appropriate remedial action when warranted. You do not describe in your question how much time your company took with its investigation, whether you determined that your female employee had, in fact, been harassed, or whether disciplinary action was warranted. But, I emphasize the obvious to state that you do need to be sensitive to the issues surrounding a harassment complaint and the speed with which you initiate and complete your investigation.)
Returning to the issue of retaliation, it is possible that your male employee, while unlikely to persuade a court to recognize an associational discrimination claim based upon his gender, may well have a retaliation claim that could survive a motion for summary judgment. He formally complained about the way a manager was treating one of your female employees and the company terminated his employment soon thereafter.
This leads to the fourth issue presented by your fact pattern – what conduct did your employee engage in that led to his discharge? You suggested that your employee was “confrontational” and “unpleasant” and that when you advised him that he needed to modify his behavior, that only “angered him more.” As you described, the supervisor who allegedly engaged in the initial harassment informed your company that he was becoming nervous about this employee’s behavior. This fact pattern implicates two important issues.
First, simply because there is temporal proximity between a complaint about discrimination and a subsequent discharge does not mean there is a causal relationship between these two events. Your company does not have to accept otherwise unacceptable behavior merely because the employee engaging in the unacceptable conduct has made a claim of discrimination. You will have to demonstrate to the factfinder (whether judge or jury) that your disciplinary actions were based on intervening events, but if you document the problems you are encountering, and counsel the employee regarding the ramifications of continued misconduct, you should not be reticent to discipline your employee (including discharge if necessary), if the problematic behaviors continue. In your fact pattern, it appears that this was your conclusion. Now, you will need to explain that decision persuasively to others.
Second, your observation that the alleged harasser was becoming “nervous” about the reactions and behavior of the employee who complained suggests also raises a red flag. Unfortunately, in contexts like this, there is always an under-current risk of workplace violence. You do not want to ignore this possibility, even if the likelihood is slim. Ensure that you explore the relevant issues so you can realistically evaluate this risk. The bottom line is that absent a judge who is willing to expand the associational discrimination analyses into a new area, you likely need not worry about a claim for gender-based associational discrimination. But, once a formal report of discrimination, including sexual harassment, has been made, the complainant may be able to assert claims of retaliation if he later suffers adverse job consequences. Move cautiously once a formal (or informal) complaint has been made, but don’t be reluctant to take appropriate disciplianary action if intervening events warrant it.
Who’s a Supervisor?, Quirky Question # 102
We’ve tried hard to institute and enforce an effective sexual harassment policy. Nevertheless, we still occasionally receive sexual harassment complaints from some of our employees. Recently, an employee sued us for sexual harassment. She claimed that she reported the harassment to a relatively low level supervisor and that he failed to take any action in response to her complaint. She said the harassment intensified after her report.
We did not even know she complained. The “supervisor” (who does not have any hiring or firing authority) never said anything to anyone, let alone someone in our HR Department. If anyone who truly is in management had been apprised of this problem, we would have investigated and, if appropriate, addressed the issue. Our employee’s attorney claims that the knowledge of our low level supervisor is imputed to the company. Can this be right?
Roy’s Analysis:
The question of who constitutes a supervisor or a manager is an issue the courts have grappled with for many years, without much consensus. The divergence of judicial opinions relating to this issue likely reflects the competing interests at stake. On the one hand, courts want companies to take their obligations to their employees seriously, implementing reasonable measures to eliminate sexual harassment or to comply with other employment obligations, whether based on statute or common law. On the other hand, courts do not want to create an unfair legal standard by imposing liability on employers under federal or state employment statutes or common law theories by holding that knowledge possessed by a very low level supervisor is imputed to the corporation. The direction a particular court leans when balancing these competing interests often determines how low or how high in the management hierarchy a “supervisor’s” knowledge will imputed to the corporation.
As implied above, this issue can arise in a variety of contexts. For example, as in the Quirky Question # 102, the issue of who is a supervisor may be critical when evaluating liability in the sexual harassment context or in addressing other types of discrimination claims. If an individual who engages in the harassing behavior is a high level manager or executive, whose conduct is imputed to the corporation, the company will likely be held liable for this individual’s behavior. Similarly, if an individual to whom a report of harassing conduct is made is a manager or executive and that individual fails to take appropriate action in response (e.g., reporting the claim to HR, or if so empowered, initiating an investigation), the manager’s failure to act can establish liability for the company. But, should the same standard apply when the individual who engages in the harassing conduct or to whom the initial complaint is made is a low level supervisor, without hiring/firing authority or the ability to discipline other employees? In this factual context, should the company be held liable for this individual’s actions or failure to act?
The question of whose knowledge may be attributed to the company arises in contexts besides sexual harassment or other discriminatory conduct. For example, imagine that an applicant had a domestic assault charge brought against him and that this unfortunate circumstance was known to a friend, who held a low level supervisory role at the company where the employee was applying. If the company hired this individual and he later assaulted a co-worker, could the injured employee persuasively argue in a negligent hiring case that the low level supervisor’s knowledge of the domestic should be imputed to the company?
In the recent case of Huston v. The Proctor & Gamble Paper Products Corporation, No. 07-2799 (3d Cir. June 8, 2009), the appellate court affirmed the summary judgment dismissal of the plaintiff’s sexual harassment and retaliation lawsuit. The fundamental issue in the Hutson case was whether the knowledge of two low level supervisory employees, who allegedly were aware of certain harassing conduct directed at Hutson and others, should be imputed to the corporation.
The Hutson facts were relatively simple. Hutson worked in the control room of a P&G plant, monitoring large paper manufacturing machines. Other technicians worked in the control room with her. Hutson claimed that several of her male co-workers engaged in inappropriate conduct constituting sexual harassment, including exposing themselves. As soon as she reported the alleged conduct to a senior level manager and a Human Resources manager, P&G promptly instituted an investigation. Although Hutson’s principal allegations were not corroborated (indeed, they were vehemently denied), P&G still imposed discipline on a number of the technicians working in the control room for other problematic behaviors.
After later being terminated for falsifying data regarding the machines she was charged with monitoring (conduct admitted by Hutson), she claimed that she was a victim of sexual harassment and retaliation. Because two of the other workers in the control room had certain supervisory responsibilities, including reporting on other technicians who submitted falsified data, Hutson contended that the knowledge possessed by these two individuals (prior to Hutson’s formal complaint) should be imputed to the corporate defendant.
Neither the District Court nor the appellate court bought her argument. The Third Circuit took the opportunity to clarify the law of the circuit regarding the question of when and under what circumstances a supervisor’s knowledge should be imputed to the company. The appellate court noted that management level employees have constructive notice of a hostile work environment when “an employee provides management level personnel with enough information to raise a probability of sexual harassment in the mind of a reasonable employer.” (Citations omitted.) The question then was whether the two low level supervisors in the P&G control room, who held the positions of Process Coach and Machine Leader respectively, were management-level employees whose knowledge could be imputed to the defendant.
In resolving this issue, the appellate court looked to agency principles, observing that Congress had specifically directed the courts to consider agency principles when adjudicating Title VII claims. The court then looked to the Restatement (Third) of Agency, which states that an agent’s knowledge is imputed to the corporation if “knowledge of the facts is material to the agent’s duties . . ..” The court summarized the position articulated in the Restatement – “there are two parameters limiting when knowledge of facts known by an agent is imputed to the principal: the agent’s duties to the principal; and the materiality – or significance – of the facts in question to those duties.” (Emphasis in original.) If the supervisor’s duties to the company did not encompass responsibilities for personnel and/or human resources issues, or if the facts demonstrated that the complaint were outside the scope of the supervisor’s duties, the supervisor’s knowledge should not be imputed to the company.
Applying this analytical framework to the sexual harassment claims brought by Hutson, the court stated, “We thus conclude that employee’s knowledge of allegations of co-workers’ sexual harassment may typically be imputed to the employer in two circumstances: first, where the employee is sufficiently senior in the employer’s governing hierarchy, or otherwise [is] in a position of administrative responsibility over employees under him, such as a departmental or plant manager, so that such knowledge is important to the employee’s general managerial duties.” * * * “Second, an employer’s knowledge of sexual harassment will be imputed to the employer where the employee is specifically employed to deal with sexual harassment.” The court pointed to HR representatives, Employee Relations representatives and other personnel department employees as falling into this category.
The Third Circuit stressed that for someone to be legitimately characterized as management whose actions bind the company or whose knowledge may be imputed to the company, the employee must be an employee in the governing body of the entity, “as opposed to merely a supervisory employee in the labor force.” The court further clarified that “mere supervisory authority over the performance of work assignments by other co-workers is not, by itself, sufficient to qualify an employee for management level status.”
Based on this analysis, the Third Circuit affirmed the summary judgment dismissal of Hutson’s claims. The appellate court found that the two supervisors who worked with her in the P&G control room did not have sufficiently broad managerial responsibilities to have their knowledge imputed to the corporation. They had no hiring or firing authority and their disciplinary role was extremely limited. Further, since they were not charged with responsibility for personnel issues, Title VII compliance, eradication of sexual harassment, etc., their knowledge could not be imputed to P&G on this basis. Interestingly, the court also found that Hutson’s later report of the harassment to two other management-level employees, one with general duties and one with HR responsibilities, undermined her contention that P&G should be held liable for the prior knowledge allegedly possessed by her co-workers in the control room.
The Hutson case provides instructive guidance to the question you posed. It would appear that the “supervisor” to whom your employee complained of harassment is not sufficiently high in your corporate hierarchy to have his knowledge imputed to the corporation. Moreover, based on the facts you briefly recounted, it would not appear that this supervisor was charged with HR responsibility, including the elimination of sexual harassment from your workplace. Given those facts, which need some further development, I would be reasonably comfortable that your company will not be found to have been put on notice by the complaint made. This conclusion would be bolstered further if your company had a clearly designated Department or individual, who was charged with the responsibility for addressing sexual harassment complaints, information well publicized within your company.
There are at least two other practical implications illustrated by the Hutson case. First, the Third Circuit’s analysis and the decisions from other courts suggest that companies would be prudent to define carefully the appropriate individuals to whom claims of harassment or other types of discrimination should be reported. The more broadly that group is defined, the more problematic. By problematic, I simply mean that to the extent a company expansively defines the group of individuals to whom harassment may be reported, the greater the likelihood a court might conclude (perhaps even quoting from a company handbook) that anybody in management, including low level supervisors, had the responsibility for ensuring the work environment was harassment free. Therefore, I would recommend against including in an employee handbook the suggestion that anyone who experiences harassment can report concerns to any “member of management” or some comparable phrase.
Second, the Third Circuit opinion and other like analyses suggest that a company may wish to consider carefully how titles are used at a company. In short, avoid title inflation. If everyone is a “manager” or a “vice president” of something or other, there is a greater risk that these individuals could be found to be appropriate individuals to whom concerns about the employment environment, whether based on harassment or other issues, should be reported. Particularly where there is a disconnect between the actual responsibilities performed by these individuals and the titles they are given, companies enhance the complaining plaintiff’s arguments on imputation of knowledge by giving too many employees grandiose titles.
Finally, as stated in the introductory observations, there is a divergence of judicial opinion on these issues. If you would like to see a case at the opposite end of the analytical spectrum, take a look at Bryant v. Livigni, 8 I.E.R. Cases (BNA) 1348 (Ill. Ct. App. 1993), a case supporting the maxim that ‘bad facts make bad law.’
Ricci v. DeStefano, Supreme Court Ruling In Adverse Impact Case
Ricci v. DeStefano, Supreme Court Holds Employer Liable for Trying to Avoid Claims of Adverse Impact Discrimination
On June 29, the United States Supreme Court issued its highly-anticipated and highly-divisive decision in the “white firefighters case,” Ricci v. DeStefano, 557 U.S. __ (2009). This 5-4 decision may have significant implications for both “disparate impact” and “disparate treatment” discrimination claims.
Disparate-treatment claims present the traditional case of intentional discrimination. Disparate-impact claims attack a neutral policy or practice that has a disproportionately negative impact on the basis of race, gender, or some other statutorily-protected characteristic. Notably, disparate-impact claims do not require proof of an intent to discriminate. In Ricci, the Supreme Court held that actions influenced by race or some other protected characteristic, even if taken in a good-faith effort to avoid possible disparate-impact claims, will subject an employer to claims for disparate-treatment discrimination except in very narrow circumstances.
Justice Kennedy delivered the majority opinion in Ricci v. DeStefano, joined by Chief Justice Roberts and Justices Alito, Scalia, and Thomas. The majority held that actions taken to avoid possible disparate-impact discrimination claims – even if taken in good faith and with good cause – are nonetheless subject to disparate-treatment discrimination claims if the actions were influenced by race or some other protected characteristic.
The majority set a high standard (which the dissent described as “enigmatic”) for this sort of defense, stating: “[B]efore an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious, discriminatory action.”
The Facts
Ricci involved a challenge to the refusal by the City of New Haven, Connecticut (“City”) to certify the results of a promotion examination because the test-passage results displayed a disparate impact on non-white applicants.
Under the City’s contract with the firefighters’ union, applicants for lieutenant and captain positions were screened using written and oral examinations. These examinations were developed by industrial/organizational consultants specializing in designing promotional examinations for police and fire departments.
The City administered the promotion examination to 118 firefighters who desired promotion. Of the 76 candidates who completed the lieutenant examination (43 whites, 19 blacks, and 15 Hispanics), 34 candidates passed – 25 whites, six blacks, and three Hispanics. The pass rate for white candidates was 58.1%, 31.6% for black candidates, and 20% for Hispanic candidates. The top ten candidates were eligible for immediate promotion to lieutenant, and all were white. Of the 41 candidates who completed the captain examination (25 whites, eight blacks, and eight Hispanics), 22 candidates passed – 16 whites, three blacks, and 3 Hispanics. The pass rate for white candidates was 64%, but only 37.5% for black and Hispanic candidates. The top nine candidates eligible for immediate promotion to captain were seven whites and two Hispanics.
After reviewing the test results, City officials became concerned that recognition of the test results might subject the City to claims of disparate-impact race discrimination. The City’s concern was not misplaced. Even the majority acknowledged that “[t]he racial adverse impact here was significant.” In fact, the results fell far short of the “80% Rule” recognized by the Equal Employment Opportunity Commission (“EEOC”). See 29 C.F.R. § 1607.4(D) (a selection rate that is less than 80% “of the rate for the group with the highest rate will generally be regarded by the Federal enforcement agencies as evidence of adverse impact”). This EEOC rule also has been recognized as a “rule of thumb for the courts.” See Watson v. Fort Worth Bank & Trust, 478 U.S., 995-96, n. 3 (plurality opinion). The City’s attorney also advised that there were significant legal risks of disparate-impact claims if the test results were certified.
The City held a series of public hearings on whether to recognize or set aside the results. Some firefighters argued the tests should be discarded because the results showed the tests were discriminatory against non-white candidates. This group threatened a disparate-impact race discrimination lawsuit if promotions were made based on the results. Another group of firefighters contended the examinations were neutral and fair, and threatened a disparate-treatment race discrimination lawsuit if the City relied on the statistical disparity to reject the test results and deny promotions to the high scorers. The atmosphere was highly charged politically, and, as the Court recognized, these hearings were “rancorous.” The City’s Civil Service Board deadlocked on whether to certify the test results, which had the effect of throwing out the examination results.
A group of 17 white firefighters and one Hispanic firefighter who passed the examinations but were not promoted sued the City (and certain officials, collectively referred to as the City to avoid confusion), alleging that the City intentionally discriminated against them on the basis of race, in violation of Title VII and the Equal Protection Clause of the Fourteenth Amendment. The City countered with the argument, bolstered by existing lower-court precedent, that it had a “good faith belief” that it would have violated the disparate-impact provision of Title VII had it certified the test results, and therefore could not be held liable for disparate-treatment discrimination. The District Court granted summary judgment to the City and the Second Circuit affirmed. At the Supreme Court, the U.S. Solicitor General sided with the City. Nonetheless, the Supreme Court reversed. Indeed, the majority did not even remand, but instead ordered that summary judgment be entered in favor of the plaintiffs.
The Court’s Legal Analysis
The claims before the Court included both a statutory disparate-treatment discrimination claim under Title VII, as well as a constitutional claim under the Equal Protection Clause of the Fourteenth Amendment. Following well-established precedent, the Court avoided the constitutional issue by first addressing the statutory claim. See Escambia County v. McMillan, 466 U.S. 48, 51 (1984) (per curiam) (“[N]ormally the Court will not decide a constitutional question if there is some other ground upon which to dispose of the case”).
However, the majority’s opinion seems to suggest that there could be constitutional limitations on disparate-impact claims. The standard which the majority adopted for its interpretation of Title VII was imported directly from the Court’s prior Equal Protection caselaw. In his concurring opinion, Justice Scalia was even more blunt in calling into question the constitutional validity of the disparate-impact provisions of Title VII, stating, for example, that “if the Federal Government is prohibited from discriminating on the basis of race, . . . then surely it is also prohibited from enacting laws mandating that third parties . . . discriminate on the basis of race” through Title VII’s disparate impact provisions, which “place a thumb on the scales, often requiring employers to evaluate the racial outcomes of their policies, and to make decisions based on (because of) those racial outcomes.” Assuming such constitutional limitations might be recognized in some future case, this obviously would prove a limitation on future Congressional action to limit or reverse Ricci, which Justice Ginsburg in her dissent (joined by Justices Stevens, Souter, and Breyer) essentially predicted, stating: “The Court’s order and opinion, I anticipate, will not have staying power.”
After dodging the constitutional issue, the issue before the Court, as viewed by the majority, was how to reconcile the disparate-treatment provisions of Title VII, which prohibit the use of race (or other protected characteristics) as a factor in employment decisions, with the disparate-impact provisions, which specifically contemplate consideration of race (or other protected characteristics). “Our task,” the majority wrote, “is to provide guidance to employers and courts for situations when these two prohibitions could be in conflict absent a rule to reconcile them.” The conclusion the majority reached was that “under Title VII, before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious, discriminatory action” (emphasis added).
The Court found that the City’s decision not to certify the results was “because of the statistical disparity based on race – i.e., how minority candidates had performed when compared to white candidates,” and thus was prohibited disparate-treatment discrimination. The Court expressly rejected the City’s and the Solicitor General’s argument that an employer trying to comply with Title VII’s disparate-impact provisions does not engage in prohibited discrimination on the basis of race, noting that this argument improperly focused on the City’s ultimate objective, rather than its conduct in pursuing that objective. “The City rejected the test results solely because the higher scoring candidates were white,” the Court noted. Therefore, “[t]he question is not whether that conduct was discriminatory but whether the City had a lawful justification for its race-based action.”
Next, the Court examined whether “the purpose to avoid disparate-impact liability excuses what otherwise would be prohibited disparate-treatment discrimination.” The Court drew upon standards developed in the application of the Equal Protection Clause in cases involving government actions to remedy past racial discrimination (including race-based affirmative action). In such cases, governmental remedial actions “are constitutional only where there is a ‘strong basis in evidence’ that the remedial actions were necessary.”
“The standard leaves ample room for employers’ voluntary compliance efforts, which are essential to the statutory scheme and to Congress’s efforts to eradicate workplace discrimination. . . . And the standard appropriately constrains employers’ discretion in making race-based decisions: It limits that discretion to cases in which there is a strong basis in evidence of disparate-impact liability, but it is not so restrictive that it allows employers to act only when there is a provable, actual violation.”
The Court emphasized also that Title VII does not prohibit employers “from considering, before administering a test or practice, how to design that test or practice in order to provide a fair opportunity for all individuals, regardless of their race.”
Applying the new standard to the facts of the case, the Court noted the City was faced with a prima facie case of disparate-impact liability, which it characterized as “a threshold showing of a significant statistical disparity, and nothing more,” because the disparities fell well below the 80% disparate-impact rule set by the EEOC. But the Court remarked that the statistics were far from a strong basis in evidence that the City would have been liable under Title VII had it certified the results. That is because the City could be liable for disparate-impact discrimination only if the examinations were not job related and consistent with business necessity, or if there existed an equally valid, less-discriminatory alternative that served the City’s needs but that the City refused to adopt.
The Court found no strong basis in evidence to establish the test was deficient in either respect. Finally, the Court clarified the scope of its holding that a “strong basis in evidence” can be a defense to a claim of discrimination: “ If, after it certifies the test results, the City faces a disparate-impact suit, then in light of our holding today it should be clear that the City would avoid disparate-impact liability based on the strong basis in evidence that, had it not certified the results, it would have been subject to disparate-treatment liability.”
Concurring Opinions And Dissent
The concurring opinions and dissent provide some insight into how the debate is likely to evolve in the future. Justice Scalia’s concurrence characterized the majority as holding “that Title VII not only permits but affirmatively requires [remedial race-based actions] when a disparate-impact violation would otherwise result.” This, he contended, amounts to government-compelled race-based discrimination, which “seemingly” would violate the Equal Protection Clause. In other words, as the dissent pointed out, Justice Scalia apparently would invalidate Title VII’s disparate-impact provisions as unconstitutional. At a minimum, Justice Scalia suggested, the use of statistics in discrimination cases should be “simply an evidentiary tool used to identify genuine, intentional discrimination – to ‘smoke out,’ as it were, disparate treatment.”
Justice Ginsburg vigorously dissented, joined by Justices Stevens, Souter, and Breyer. Justice Ginsburg argued that the Court should have considered the factual and legal contexts underlying the case, including historically-pervasive race discrimination in fire departments and Title VII’s approval of employer-driven remedial measures. The dissent urged that Title VII’s disparate-treatment and disparate-impact provisions “must be read as complementary,” such that “[a] reasonable endeavor to comply with [Title VII] and to ensure that qualified candidates of all races have a fair opportunity to compete is simply not what Congress meant to interdict.” The dissent suggested a better standard would be that an employer who discards a “device” based on statistically disparate results does not violate the disparate-treatment provisions if it had “good cause to believe the device would not withstand examination for business necessity.”
The hotly-contested decision promises to be controversial, and is likely to draw the attention of Congress and the EEOC in the future. It also promises to remain in the spotlight in the near future because Judge Sonia Sotomayor, President Obama’s first nominee to the Supreme Court, was one of the Second Circuit Judges who joined in the opinion the Supreme Court reversed.
Practical Take-Aways
Ricci involved a public employer in the relatively-unusual context of a written promotional examination. It is possible that the case ultimately may be limited in its impact, given this relatively-uncommon factual basis. There is nothing in the multiple opinions produced at the Supreme Court, however, or in the widespread the attention the case has received, to suggest that scenario is likely. Instead, the Court’s reasoning seems to extend much further, and the case is likely to affect all employers in any of a number of circumstances where there may be a conflict between potential disparate-impact and disparate-treatment discrimination claims. At least, that seems to be the clear intent of the majority. With this in mind, the following are a few practical “take-aways” from the decision.
• Reductions in Force. In today’s economic recession, reductions in force are quite common. The U.S. Bureau of Labor Statistics reported that through May of this year, there have been 13,544 “mass layoffs,” defined as involving at least 50 employees. Most employers do some sort of adverse-impact analysis as part of their process for selecting employees to be released. Under Ricci, any employer who changes its initial list of employees for layoff based on an adverse-impact analysis runs an increased risk of disparate-treatment discrimination claims from those employees not originally selected for layoff but who, because of some “adjustment” based on the adverse-impact analysis, ultimately lose their jobs. An employer in that circumstance would have to be able to meet the “strong basis in the evidence” test articulated in Ricci to avoid liability, which might be very difficult to do. Bear in mind, the Supreme Court in Ricci actually ordered summary judgment in favor of the plaintiffs. It is also noteworthy that the Equal Protection case from which the majority imported the “strong basis in the evidence test,” Wygant v. Jackson Bd. of Educ., 476 U.S. 267 (1986) (plurality), was itself a reduction-in-force case. In Wygant, the Supreme Court invalidated as unconstitutional a school district’s plan to layoff non-minority teachers while retaining minority teachers with less seniority. In short, employers will have to be much more thoughtful at the outset in developing their layoff criteria, and then much less willing to make adjustments based on adverse-impact analyses. It also may behoove employers to have any such adverse-impact analysis conducted by or under the direction of their attorneys, with the idea that such analysis and the advice based upon it will be subject to attorney-client or work-product privileges.
• Other policies, practices, procedures, and criteria. The holding in Ricci extends to any circumstance in which a policy, practice, procedure, test, or criteria are used that might be the subject of a disparate-impact claim. As with the development of reduction-in-force criteria, employers will have to invest much more time, attention, and thought into such employment practices and procedures, because their ability to modify their ultimate decisions may be more constrained after the fact. Ricci holds that once a process has begun, an employer may not deviate from that process or set aside the results unless there is a “strong basis in evidence” to believe that the process would not survive a disparate-impact lawsuit.
• Limitations of statistics. Ricci makes clear that a statistical disparity, even if very significant, is not sufficient in itself to meet the “strong basis in the evidence” test. Employers also will have to consider carefully the other elements of a disparate-impact claim, namely whether (1) the criteria leading to the statistical disparity are job related and consistent with business necessity, and (2) there was an equally effective, less-discriminatory alternative that could have been adopted. Unless there is “substantial evidence” that these other elements of a disparate-impact claim could be met, then the employer would not be able to rely on this defense to a disparate-treatment claim. Unfortunately, there are no bright line tests to guide this analysis (like the 80% rule adopted by the EEOC).
• Limitations of advice of counsel. The City attorney gave advice and counsel to the City of New Haven about the risks of disparate-impact claims if it were to certify the test results. Ultimately, however, the City lost the case, and the fact that it had relied upon advice of counsel provided no safe harbor or defense. This is not to suggest that there is no benefit in seeking advice of counsel, only that counsel’s advice ultimately may only provide protection if the advice is correct, underscoring the importance of seeking the advice of an attorney with specialized expertise in the area.
• Possible new defense to disparate-impact claims. The majority offers reassurance at the end of its opinion about possible disparate-impact claims, stating that “it should be clear that the City would avoid disparate-impact liability based on the strong basis in evidence that, had it not certified the results [of the testing], it would have been subject to disparate-treatment liability.” It follows, therefore, that other employers could likewise “avoid disparate-impact liability” in any instance where, based on Ricci, they decline to alter their course of action notwithstanding a significant statistical adverse impact. This may provide employers with a powerful additional defense against disparate-impact claims. Ricci might make summary judgment on such claims more likely, or provide the basis for a helpful jury instruction if the case must go to trial.
• Possible defense not asserted in Ricci. The dissent argued, in part, that the case should have been remanded. One reason justifying remand, according to the dissent, would have been to give the defense an opportunity to assert a defense based on 42 U.S.C. § 2000e-12(b), which the defendants had not asserted. See footnote 9 of dissent. Section 2000e-12(b) provides:
“In any action or proceeding based on any alleged unlawful employment practice, no person shall be subject to any liability or punishment for or on account of (1) the commission by such person of an unlawful employment practice if he pleads and proves that the act or omission complained of was in good faith, in conformity with, and in reliance on any written interpretation or opinion of the [EEOC] . . . . Such defense, if established, shall be a bar to the action or proceeding, notwithstanding that (A) after such act or omission, such interpretation or opinion is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect.”
As the dissent further noted, the EEOC guidelines set out in 29 C.F.R. §§ 1608.3 and 1608.4 might provide the basis for a defense under Section 2000e-12(b). These EEOC guidelines recognize that employers may “take affirmative action based on an analysis which reveals facts constituting actual or potential adverse action.” “If ‘affirmative action’ is in order,” as the dissent notes, “so is the lesser step of discarding a dubious selection device.” Since the defendants in Ricci never raised this defense, the majority did not consider this possible argument. While Ricci would preclude such a defense going forward, any employer facing a claim like that in Ricci based on acts that occurred prior to the Supreme Court’s decision in Ricci should be sure to assert a defense under 42 U.S.C. § 2000e-12(b) – it might prove effective.
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