reconciling disparate impact and adverse treatment … · reconciling disparate impact and adverse...

NATIONAL CONFERENCE ON EQUAL OPPORTUNITY EMPLOYMENT LAW

SAN ANTONIO, TX MARCH 2010

RECONCILING DISPARATE IMPACT AND ADVERSE TREATMENT AFTER RICCI

Caught Between Scalia and Charybdis

Mark S. Dichter Paul C. Evans

Morgan, Lewis & Bockius LLP 1701 Market Street

Philadelphia, PA 19103-2217

© Morgan, Lewis & Bockius LLP 2010

©Morgan, Lewis & Bockius LLP March 2010

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TABLE OF CONTENTS I. INTRODUCTION ............................................................................................................. 1

II. RICCI V. DESTEFANO, 129 S. CT. 2658 (2009) ............................................................ 2

A. Summary of the Supreme Court’s Decision in Ricci ............................................. 3

1. Background ................................................................................................ 3

2. The Majority’s Reasoning in Ricci ............................................................ 5

3. Justice Scalia’s Concurring Opinion .......................................................... 8

4. The Dissenters’ Reasoning in Ricci ........................................................... 9

B. Practical Implications of Ricci on Employer Testing Programs .......................... 10

1. Avoid Disparate Impact Before Implementing a Test ............................. 10

2. Prepare to Prove Business Necessity ....................................................... 12

3. Practical Limitations to Ricci’s Holding .................................................. 13

C. Practical Implications of Ricci ............................................................................. 14

1. Ricci’s Application to Private Employers ................................................ 14

2. Ricci’s Reach Beyond Reverse Race and National Origin Discrimination.......................................................................................... 15

3. Ricci’s Reach Beyond Testing Programs ................................................ 15

a. Ricci’s Impact on Employer Recruiting ...................................... 16

b. Ricci’s Impact on Hiring and Promotion Efforts ......................... 17

c. Ricci’s Impact on Compensation Programs ................................. 18

d. Ricci’s Impact on Termination/RIFs ........................................... 18

D. Ricci and Affirmative Action Laws/Programs .................................................... 20

E. Is This the End of the Debate? ............................................................................. 22

III. THE FUTURE OF RISK ASSESSMENTS AND PREVENTIVE ACTION AFTER RICCI ................................................................................................................. 25

A. Conducting Legal Risk Assessment ..................................................................... 26

1. Protecting Risk Assessments from Disclosure| ........................................ 26

a. Attorney-Client Privilege ............................................................. 26

b. Attorney Work Product ................................................................ 27

c. Self-Critical Analysis Privilege ................................................... 30

d. Conclusion ................................................................................... 31

2. Multiple Regression Analysis .................................................................. 32

3. Assessing Risk Using Multiple Regression Analyses ............................. 33


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B. Taking Action To Eliminate Statistical Disparities While Mitigating Risk of Ricci Claims .................................................................................................... 34

1. Preserving the Privilege ........................................................................... 34

a. Avoiding Reliance on Both the “Strong Basis in Evidence” and Voluntary Affirmative Action Defenses ............................... 35

2. Race-Neutral and Gender-Neutral Options .............................................. 38

3. Targeted Individual Reviews ................................................................... 39


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TABLE OF AUTHORITIES

Abdallah v. Coca-Cola Co., 2000 WL 33249254 (N.D. Ga. Jan. 25, 2000) ...............................................................................27 Accounting Principals, Inc. v. Manpower, Inc., 2009 WL 2252123 (N.D. Okla. July 28, 2009) .............................................................................29 Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975) .......................................................................................................................23 Baker v. General Motors Corp., 209 F.3d 1051 (8th Cir. 2000) .......................................................................................................28 Banks v. Lockheed-Ga. Co., 53 F.R.D. 283 (N.D. Ga. 1971) ......................................................................................................31 Bazemore v. Friday, 478 U.S. 385 (1986) .................................................................................................................32, 33 Bew v. City of Chicago, 252 F.3d 891 (7th Cir. 2001) .........................................................................................................12 Billish v. City of Chicago, 962 F.2d 1269 (7th Cir. 1992), rev'd on other grounds, 989 F.2d 890 (7th Cir. 1993) ...................................................................16 Bridgeport Guardians, Inc. v. City of Bridgeport, 933 F.2d 1140 (2d Cir. 1991).........................................................................................................23 Carney v. City and County of Denver, 534 F.3d 1269 (10th Cir. 2008) .....................................................................................................33 Cavallaro v. U.S., 284 F.3d 236 (1st Cir. 2002) ..........................................................................................................27 Cleveland Fire Fighters for Fair Hiring Practices v. City of Cleveland, 2009 WL 2602366 (N.D. Ohio Aug. 20, 2009) .............................................................................22 Doe v. Kamehameha Schools, 470 F.3d 827 (9th Cir. 2006) .........................................................................................................21 Duffy v. Wolle, 123 F.3d 1026 (8th Cir. 1997) .......................................................................................................16


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EEOC v. City of Madison, 2007 WL 5414902 (W.D. Wis. Sept. 20, 2007) ............................................................................30 Ensley Branch NAACP v. Seibels, 31 F.3d 1548 (11th Cir. 1994) .......................................................................................................16 Etienne v. Mitre Corp., 146 F.R.D. 145 (E.D. Va. 1993) ....................................................................................................31 Fickling v. N.Y. Department of Civil Serv., 909 F. Supp. 185 (S.D.N.Y. 1995).................................................................................................23 Freiermuth v. PPG Industrial, Inc., 218 F.R.D. 694 (N.D. Ala. 2003)...................................................................................................31 Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581 (2004) .......................................................................................................................15 Gratz v. Bollinger, 539 U.S. 244 (2003) .......................................................................................................................20 Griggs v. Duke Power Co., 401 U.S. 424 (1971) .......................................................................................................................23 Hazelwood Sch. District v. United States, 433 U.S. 299 (1977) .......................................................................................................................35 Hill v. Ross, 183 F.3d 586 (7th Cir. 1999) .........................................................................................................21 Holloway v. Best Buy Co., 2009 WL 1533668 (N.D. Cal. May 28, 2009) ...............................................................................18 Hondale v. University of Vermont and State Agriculture College, 56 F. Supp. 2d 419 (D. Vt. 1999)...................................................................................................21 Humphries v. Pulaski County Special School Dist., __ F.3d __, 2009 WL 2778309 (8th Cir. Sep. 3, 2009) .................................................................20 Johnson v. Santa Clara County, 480 U.S. 616 (1987) .......................................................................................................................20 Johnson v. UPS, 206 F.R.D. 686 (M.D. Fla. 2002)...................................................................................................30


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MacNamara v. City of New York, 2007 WL 755401 (S.D.N.Y. Mar. 14, 2007) .................................................................................31 Maloney v. Sisters of Charity Hospital, 165 F.R.D. 26 (W.D.N.Y. 1995) ....................................................................................................29 McPeek v. Ashcroft, 202 F.R.D. 332 (D.D.C. 2001) .......................................................................................................29 Raytheon Co. v. Hernandez, 540 U.S. 44 (2003) .........................................................................................................................15 Reid v. Lockheed Martin Aeronautics Co., 199 F.R.D. 379 (N.D. Ga. 2001) ....................................................................................................31 Rudebusch v. Hughes, 313 F.3d 506 (9th Cir. 2002) ...................................................................................................36, 37 Schlegel v. Kaiser Foundation Health Plan, 2008 WL 4570619 (E.D. Cal. Oct. 14, 2008) ................................................................................30 Serrano v. Cintas Corp., 2009 WL 910702 (E.D. Mich. Mar. 31, 2009) ..............................................................................18 Shuford v. Alabama State Board of Education, 897 F. Supp. 1535 (M.D. Ala. 1995) .............................................................................................16 Smith v. City of Jackson, 544 U.S. 228 (2005) .......................................................................................................................15 Smith v. Va. Commonwealth University, 84 F.3d 672 (4th Cir. 1996) ...........................................................................................................37 Treat v. Tom Kelley Buick Pontiac GMC, Inc., 2009 WL 1543651 (N.D. Ind. June 2, 2009) ...........................................................................26, 29 U.S. v. Adlman, 134 F.3d 1194 (2d Cir. 1998).........................................................................................................29 U.S. v. Frederick, 182 F.3d 496 (7th Cir. 1999) .........................................................................................................29 U.S. v. Kovel, 296 F.2d 918 (2d Cir. 1961)...........................................................................................................27


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U.S. v. Vulcan Society, Inc., ___ F. Supp. 2d ___, 2009 WL 2180836 (E.D.N.Y July 22, 2009) ..............................................12 Vanguard Justice Society, Inc. v. Hughes, 592 F. Supp. 245 (D. Md. 1984) ....................................................................................................23 Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989) .......................................................................................................................24 Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609 (1973) .........................................................................................................................9 Westinghouse Electric Corp. v. Rep. of Philippines, 951 F.2d 1414 (3d Cir. 1991).........................................................................................................27 Williams v. Sprint/United Management Co., 2006 WL 1867478 (D. Kan. July 1, 2006) ....................................................................................27 In re Woolworth Corp. Sec. Class Action Litigation, 1996 WL 306576 (S.D.N.Y. June 7, 1996) ...................................................................................29 Wygant v. Jackson Board of Education, 476 U.S. 267 (1986) .........................................................................................................................6 York v. Ala. Board of Education, 581 F. Supp. 779 (M.D. Ala. 1983) ...............................................................................................23

STATUTES

42 U.S.C. § 2000e ............................................................................................................1, 8, 14, 16

MISCELLANEOUS Daniel L. Rubinfeld, Reference Guide on Multiple Regression, in Federal Judicial

Center, Reference Manual on Scientific Evidence (2d ed. 2000) ............................................32 David H. Kaye & David A. Freedman, Reference Guide on Statistics, in Federal Judicial

Center, Reference Manual on Scientific Evidence ..................................................................33 Sean Farrell, Citi Faces $1bn Class Claim on Discrimination, The Independent, Feb. 26,

2009..........................................................................................................................................18 Sluss, Michael, Michelle Obama Discusses Economy, The Roanoke Times, September

18, 2008, available at http://www.roanoke.com/politics/wb/177288. ....................................12


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RECONCILING DISPARATE IMPACT AND ADVERSE TREATMENT AFTER RICCI

Caught Between Scalia and Charybdis

March 2010

Mark S. Dichter Paul C. Evans

I. Introduction

In June 2009 the Supreme Court decided Ricci v. DeStefano, 129 S. Ct. 2658 (2009). In

Ricci, the Court addressed the delicate balance and perceived conflict between disparate impact

and disparate treatment law under Title VII of the Civil Rights Act of 1964, as amended, 42

U.S.C. § 2000e, et seq. (“Title VII”). The case involved the City of New Haven, Connecticut’s

decision not to certify results of a test implemented to determine the promotion of firefighters

after learning that the test had a disparate impact on African-American and Hispanic firefighters.

The Court held that refusing to certify the test results was a race-based employment action

adverse to whites that can only lawfully be taken for the purpose of avoiding disparate impact

against minorities if the employer has a “strong basis in evidence” that failing to do so would

result in disparate impact liability. The Court expressly stated that statistical disparities alone

will not meet this standard. In Section II.A of this paper, we describe the Court’s ruling in Ricci,

as well as the opinions of Justice Scalia in concurrence and Justice Ginsberg in dissent. We then

discuss the practical implication of the ruling on employer testing programs in Section II.B. In

Section II.C, we discuss the broader implications of Ricci across the broad spectrum of


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employment practices. In Section II.D, we discuss the interplay between the defense created by

Ricci and longstanding jurisprudence regarding an employer’s ability to defend race and gender-

based decisions on voluntary affirmative action grounds and/or as part of judicially endorsed

consent decrees. Finally, based on early announcements from some in Congress denouncing the

Ricci decision and this Congress’s willingness to legislatively overturn employment decisions

with which it disagrees, we discuss in Section II.E whether any potential legislative responses to

Ricci could be forthcoming.

We end this paper with a discussion of how employers can navigate the space in between

the proverbial rock and hard place where they find themselves after the Ricci decision.

Specifically, we address how employers can conduct litigation risk assessments to ascertain their

exposure to claims of discrimination, and how they can use separate statistical studies for

business purposes to help adjust employment practices where their exposure is greatest. As

explained in Section III, any adjustments to employment practices made by employers should not

be based upon race or gender, but rather should be either race and gender-neutral changes that

apply across a broader group of employees or should be the product of specific, individualized

reviews of employee records demonstrating that the changes are warranted based upon company

policies.

II. Ricci v. DeStefano, 129 S. Ct. 2658 (2009)

In Ricci v. DeStefano, 129 S. Ct. 2658 (2009), the Court considered whether and when an

employer can engage in intentional discrimination for the asserted purpose of avoiding a

potential disparate impact claim – essentially evaluating the interplay between the disparate

treatment and disparate impact prohibitions of Title VII. The Court held that an employer may


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take such action only where it has a “strong basis in evidence” to believe it will be subject to

disparate impact liability if it fails to take race-conscious action. Id.

The majority opinion in Ricci was authored by Justice Kennedy and joined by Chief

Justice Roberts and Justices Scalia, Thomas, and Alito. Id. at 2663. The majority based its

holding on the “strong basis in evidence” rule applied to government actions to remedy past

discrimination in the context of the Equal Protection Clause of the Fourteenth Amendment. Id.

at 2675. The dissent, lead by Justice Ginsburg, and joined by Justices Stevens, Souter and

Breyer, vehemently disagreed with the majority’s rule and favored a “good cause” standard

instead. This section of the paper summarizes the Supreme Court’s decision in Ricci, discusses

the delicate balancing between disparate treatment and disparate impact laws, and addresses the

practical implications on employers as a result.

A. Summary of the Supreme Court’s Decision in Ricci

1. Background

In 2003, 118 firefighters in the City of New Haven, Connecticut (the “City”) took

examinations to qualify for promotion to the rank of lieutenant or captain. Id. at 2664. The

examinations that were administered to these firefighters had been formulated by an outside,

independent consulting firm that specialized in designing such examinations for fire and police

departments. Id. at 2665. The examination consisted of both a written and oral portion, with the

written piece accounting for sixty percent and the oral exam for forty percent of the total score.

Id. The tests were specifically formulated to fit the New Haven Fire Department, and the

consulting firm undertook a seemingly extensive research and analysis period to ensure that the

examination correlated directly to job-related knowledge and would not disparately impact

minority candidates. Id.


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For the written portion of the exam, the firm conducted job analyses to identify the tasks,

knowledge, skills, and abilities essential for the lieutenant and captain positions. Id. Incumbent

lieutenants and captains were interviewed, the firm’s members rode along with on-duty officers,

and it administered questionnaires to most incumbent ranking members of the Department. Id.

For the oral portion, the firm crafted hypothetical situations to test various skills germane to the

desired positions, and a panel of trained assessors (which was balanced between minority and

non-minority ranking firefighters from outside Connecticut) determined competency. Id. at

2666. After the firm completed the tests, it compiled a list of training materials to use as sources

for the test questions. Id. at 2665. The City then opened a three-month study period and gave

candidates a list that identified the source materials for the questions. Id. at 2666.

For the lieutenant exam, 77 candidates completed the test – 43 whites, 19 blacks, and 15

Hispanics. Of those, 34 passed – 25 whites, 6 blacks, and 3 Hispanics. Id. Eight lieutenant

positions were vacant, and, per rule, the top 10 candidates were eligible for immediate

promotion. All 10 were white. Id. Subsequent vacancies would have allowed at least 3 black

candidates to be considered. Id. For the captain exam, 41 candidates completed the test – 25

whites, 8 blacks, and 8 Hispanics. Of those, 22 passed – 16 whites, 3 blacks, and 3 Hispanics.

Id. Seven captain positions were vacant at that time, and, per rule, 9 candidates were eligible for

an immediate promotion. Seven were white and 2 were Hispanic. Id.

Certain individuals, including some within the City’s government, concluded that the test

results had a racially disparate impact on minority firefighters. Others argued that the exam was

race-neutral and that the exam identified the firefighters best suited for promotion regardless of

race. The New Haven Civil Service Board (“CSB”) met several times to consider certifying the

test results. Id. at 2667. The CSB requested input from the firefighters themselves, the


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firefighters’ union, the independent consulting firm, and outside witnesses selected by the CSB

to express their views on the testing and methodology. Id. at 2667-68. The City’s attorney and

mayor implored the CSB not to certify the results and instead reconfigure the exam. Ultimately,

the CSB voted 2-2, with one member recused. Thus, the results were not certified and no

promotions were implemented based on the exam. Id. at 2671.

Because the CSB refused to certify the results, 18 firefighters who passed the

examination but were denied the chance at promotions brought a lawsuit. Id. These firefighters

argued, inter alia, that the City violated the disparate treatment prohibition contained in Title VII.

Id. In response, the City asserted that it had a good faith belief that it would have violated the

disparate impact prohibition in Title VII had it certified the exam results, and, as such, it cannot

be held liable. Id. The United States District Court for the District of Connecticut granted

summary judgment in favor of the City, stating that the City’s “motivation to avoid making

promotions based on a test with a racially disparate impact … does not, as a matter of law,

constitute discriminatory intent” under Title VII. 554 F. Supp. 2d 142, 160. The Second Circuit

Court of Appeals affirmed the district court’s decision without substantive opinion1, and the U.S.

Supreme Court granted certiorari. See 530 F.3d 87 (2d Cir. 2008); Ricci, 129 S.Ct. at 2672.

2. The Majority’s Reasoning in Ricci

Justice Kennedy, writing for the majority of the Court, began by stating that “[t]he City’s

actions would violate the disparate-treatment prohibition of Title VII absent some valid defense.”

Ricci, 129 S. Ct. at 2673. The Court noted that it was undisputed that the City chose not to

1 Some may recall that the Second Circuit panel included then-Supreme Court nominee Judge Sonia Sotomayor.

Judge Sotomayor was criticized profusely for providing a virtual “rubber stamp” on the district court’s opinion without formally considering what many perceived to be a crucial issue for judicial consideration. This remained a central issue during her confirmation hearings, and the corresponding debates, in Congress. See 155 Cong. Rec. 6908 (2009) (statement of Sen. McConnell); 155 Cong. Rec. 8782 (2009) (statement of Sen. Grassley, 155 Cong. Rec. 8827 (2009) (statement of Sen. Coburn).


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certify the results because of the statistical disparity based on race, and, as such, that decision

was expressly race-based and barred by Title VII’s disparate treatment prohibition. Id. The

Court rejected the United States’ (as amici) argument that “[t]he structure of Title VII belies any

claim that an employer’s intent to comply with Title VII’s disparate impact provisions

constitutes prohibited discrimination on the basis of race.” Id. (internal quotation omitted). The

court explained that “[w]hatever the City’s ultimate aim – however well intentioned or

benevolent it might have seemed – the City made its employment decision because of race. The

City rejected the test results solely because the higher scoring candidates were white.” Id. at

2674. Therefore, the only question in the eyes of the majority was whether the City had a lawful

justification for its race-based action. Id.

The Court initially rejected the City’s claim that an employer’s race-conscious conduct is

justified by its good faith belief that its actions are necessary to comply with Title VII’s disparate

impact provision. Id. at 2674-75. Rather, the Court pointed out that when Congress codified the

disparate impact provision in the Civil Rights Act of 1991, it made no exception to disparate

treatment liability for actions taken in a good faith effort to comply with the new disparate

impact provision. Id. at 2675. “Allowing employers to violate the disparate treatment

prohibition based on a mere good faith fear of disparate impact liability would encourage race-

based action at the slightest hint of disparate impact.” Id.

In ruling under Title VII, the Court drew from its Fourteenth Amendment Equal

Protection decisions in Richmond v. J.A. Croson Co., 488 U.S. 469 (1989), and Wygant v.

Jackson Board of Education, 476 U.S. 267 (1986), where the Court held that certain government

actions to remedy past racial discrimination – actions that are themselves based on race – are

constitutional only where there is a “strong basis in evidence” that the remedial actions were


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necessary. Ricci, 129 S. Ct. at 2675. Balancing the interplay between the disparate treatment

and disparate impact provisions of the Act, the Court adopted the same standard for employers

under Title VII, stating that “[a]pplying the strong basis in evidence standard to Title VII gives

effect to both the disparate treatment and disparate impact provisions, allowing violations of one

in the name of compliance with the other only in certain, narrow circumstances.” Id. at 2676.

Therefore, the specific rule expressed by the Court is 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.” Id. at 2677. The Court was careful to note, however, that it was not

deciding whether a legitimate fear of disparate impact is ever sufficient to justify discriminatory

treatment under the Constitution. Id. at 2676. Moreover, it clarified that Title VII does not

prohibit an employer 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 race. Id. at

2677. Its reasoning was based, in part, on the fact that prior to implementation, employees

and/or applicants did not have any reasonable expectations with regard to the test or practice

being considered. Ricci, 129 S. Ct. at 2676 (“Examinations like those administered by the City

create legitimate expectations on the part of those who took the tests” by investing “substantial

time, money and personal commitment in preparing for the tests.”). As noted below, this point

will be important to employers as they seek to navigate a means of mitigating the risk of

disparate treatment and disparate impact discrimination claims under Title VII without

increasing exposure to reverse discrimination claims under Ricci.


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Based on this rule, the Court held that the district court erroneously granted summary

judgment in favor of the City, and that summary judgment instead was appropriate for the

aggrieved firefighters. Although the Court acknowledged that the City was faced with a prima

facie case of disparate impact liability as a result of the statistical disparities, it held that such

disparities alone were “far from a strong basis in evidence that the City would have been liable

under Title VII had it certified the results.” Id. at 2678. Indeed, according to Title VII, § 2000e-

2(k)(1)(A) and (C), the City would have been liable only if the exams were not job related and

consistent with business necessity, or there existed an equally valid, less-discriminatory

alternative that the City refused to adopt. Id. Because the Court concluded that there was no

strong basis in evidence to establish that the test was deficient in either of those respects, the

firefighters were entitled to summary judgment. Id.

Importantly, the Court noted that its ruling also permits an employer to defend a disparate

impact claim if it can prove it has a “strong basis in evidence” that changing an announced

employment practice would subject it to liability for intentional discrimination. In addressing

concerns raised by the City that certifying the results of the test would expose it to disparate

impact claims, the Court held “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 fraudulent liability.” Id. at 2681.

3. Justice Scalia’s Concurring Opinion

Justice Scalia’s concurring opinion, with which no other Justice joined, adds an

interesting commentary on the validity of disparate impact prohibitions. In his brief

concurrence, Justice Scalia stated that the real question the Court someday will have to face is

whether Title VII’s disparate impact provisions are constitutional at all, or rather in violation of


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the guarantee of equal protection in the Fourteenth Amendment. Id. at 2682. In his opinion, just

because disparate impact laws do not mandate quotas does not mean they are not intentionally

discriminatory in violation of the Constitution. Id. Justice Scalia closed by predicting that “the

war between disparate impact and equal protection will be waged sooner or later, and it behooves

us to begin thinking about how – and on what terms – to make peace between them.” Id. at

2683. It remains to be seen whether Justice Scalia’s premonition is correct and the Court

someday will face a constitutional challenge to disparate impact laws. For now, however,

employers must continue to balance disparate impact and disparate treatment in the manner

outlined by the majority.

4. The Dissenters’ Reasoning in Ricci

Justice Ginsburg wrote a vigorous opinion in dissent, and she was joined by Justices

Stevens, Souter and Breyer. The dissenters expressed concern that the majority failed to

harmoniously reconcile the disparate treatment and disparate impact provisions of Title VII, as is

required by Supreme Court precedent. Id. at 2699 (citing Weinberger v. Hynson, Westcott &

Dunning, Inc., 412 U.S. 609, 631-32 (1973) (holding that two provisions in a single act must be

given comprehensive meaning)). In contrast to the “strong basis in evidence” test utilized by the

majority, the dissenters felt that “an employer who jettisons a selection device when its

disproportionate racial impact becomes apparent does not violate Title VII’s disparate treatment

bar automatically at all, subject to one key condition: The employer must have good cause to

believe the device would not withstand examination for business necessity.” Id. Therefore,

instead of forcing employers to have a “strong basis in evidence” to believe that a specific device

will create an unlawful disparate impact, the dissenters felt that an employer need only have

“good cause” to believe it would not withstand the business necessity test. Id.


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The dissenters predicted a “parade of horribles” as a result of the Court’s decision – “[a]s

a result of today’s decision, an employer who discards a dubious selection process can anticipate

costly disparate treatment litigation in which its chances for success – even for surviving

summary judgment motion – are highly problematic.” Id. at 2701. Indeed, they felt that the

majority’s rule now essentially requires an employer to make a “strong” showing that the device

was not job related and consistent with business necessity, or that the employer refused to adopt

an equally valid, less discriminatory alternative. Id. In the end, the dissenters would have

upheld summary judgment in favor of the City based on its “good cause” standard.

B. Practical Implications of Ricci on Employer Testing Programs

1. Avoid Disparate Impact Before Implementing a Test

One potentially underappreciated aspect of the Court’s decision in Ricci is that it

provides some much-needed guidance to employers regarding how to avoid disparate impact

liability for employment tests. This section discusses that guidance.

So what should an employer do? For starters – prepare. After Ricci, in many cases, an

employer who has already implemented a testing program will have to live with the results.

Therefore, the work must be done up-front, and prior to implementation of a test. The Court

provided wide latitude to employers in this regard, noting that Title VII does not prohibit an

employer 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 race. Id. at 2677

(approving of “affirmative efforts to ensure that all groups have a fair opportunity”). The Court

suggested that the “strong basis in evidence” standard would only apply “once the [employment]

process has been established and employers have made clear their selection criteria . . .” Id. The

Court emphasized that “[e]xaminations like those administered by the City create legitimate


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expectations on the part of those who took the tests” who invested “substantial time, money and

personal commitment in preparing for the tests.” Id. at 2676. Relying on this language, an

employer may consider possible race or gender outcomes when designing or developing an

employment test or selection process and before announcing the criteria to employees or

implementing the criteria or processes to make actual selections.

Thus, employers should, to the extent feasible, analyze at the outset the likelihood that a

test may have a disparate impact on protected groups. This can be done through pilot studies on

an employer’s current employees or applicants, which are used only for the purpose of assessing

adverse impact, and which do not affect employment decisions.2 At a minimum, employers

working with third party testing vendors should require the vendors to provide documentation

that proposed tests have not been found to have an adverse impact on a relevant comparison

population.

The Uniform Guidelines on Employee Selection Procedures (“Uniform Guidelines”)

contain a “rule of thumb” for calculating adverse impact, where, if the pass rate for the protected

group is at least 80 percent of the pass rate for the non-protected group, the test would not be

deemed to have an adverse impact (the “80% rule”). See 29 C.F.R. part 1607.4(D). However,

because the 80% rule is just a rule of thumb, some courts have allowed plaintiffs to prove an

adverse impact by showing that protected group members’ pass rates are statistically

2 An employer utilizing such a study will likely want to advise test takers that the scores will not be used to

make employment decisions, thereby avoiding the creation of expectations among employees about the significance of test scores. See Ricci, 129 S. Ct. at 2676 (“Examinations like those administered by the City create legitimate expectations on the part of those who took the tests”). The employer will need to work with its test vendor to ensure that such a communication will not compromise the adverse impact study by reducing the incentive of test takers to do well. Likely, personality tests, such as the Millon Multiphasic Personality Inventory II (“MMPI II”), would not be affected because they are not tests for which applicants are expected to study. By contrast, test takers can improve scores on cognitive skills tests, such as the Wonderlic, by preparing for the tests, and there is professional literature suggesting that by providing study materials and sample questions, an employer may be able to lessen or alleviate any adverse impact.


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significantly lower than those of non-protected group members, even where the relative pass

rates would not have raised concerns under this 80% Rule. See, e.g., Bew v. City of Chicago,

252 F.3d 891, 893 (7th Cir. 2001) (“The district court properly noted that the 80% guideline may

be ignored when other statistical evidence indicates a disparate impact.”); U.S. v. Vulcan

Society, Inc., ___ F. Supp. 2d ___, 2009 WL 2180836, at *17 (E.D.N.Y July 22, 2009) (holding

statistical analysis established prima facie case of adverse impact, despite not satisfying the 80%

Rule). Thus, employers should consider, on a privileged basis, calculating adverse impact using

both measures to determine potential adverse impact of a test.

Employers should attempt to find tests that meet their business needs without having an

adverse impact on protected groups. If an employer determines that a test it is considering will

have an adverse impact, it is free to discard that test without meeting the strong basis in evidence

standard. Even if the employer does not wish to discard the test altogether, it will want to study

whether certain sections of the test or questions are causing an adverse impact and can be

removed without affecting the test’s validity. Similarly, the employer should consider whether

the cutscore can be set at a different level to lower the adverse impact of the test without

compromising its effectiveness. Regardless of the adverse impact expected based on pre-

implementation studies, once implemented, employers should continue to monitor whether

employment tests or other selection criteria/procedures are causing an adverse impact against

applicants or employees in protected categories.

2. Prepare to Prove Business Necessity

Ricci also provided employers with additional information regarding factors the Court

viewed as significant in proving the business necessity defense in testing cases, i.e.,

demonstrating that the test used complies with professional validation requirements. Id. at 2681


13

(“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.”). Although an employer’s particular circumstance may not lend

itself to each of these validation points, employers should attempt to structure pre-

implementation studies to reflect:

• Test creation by independent experts with specialized expertise. Id. at 2665 (noting that the tests had been created by an outside, independent consulting firm that specialized in designing such examinations for fire and police departments).

• “Local” validation specific to the employer’s workforce rather than mere reliance on

“transporting” validity from generalized studies done by the vendor across the industry or related industries. Id. (noting that the tests were specifically formulated to fit the New Haven Department).

• Job analyses and on-site research to ensure the test correlates directly to job-related

knowledge, skills and abilities. Id. (noting that the vendor interviewed incumbent lieutenants and captains, rode-along with on-duty officers, and conducted studies using incumbent ranking members of the Fire Department).

• Use of a diverse panel of testing experts to determine compliance with professional

standards. Id. at 2666 (noting that the oral portion of the exam was based upon information from a diverse panel of trained assessors).

Finally, employers should consider alternative selection devices as well. Nothing in

Ricci requires an employer to continue to use a particular employment test or other selection

criterion/procedure; employers should consider alternatives if they find that a selection criterion

or procedure causes an adverse impact against women or minorities.

3. Practical Limitations to Ricci’s Holding

The Court’s Ricci decision leaves employers questioning what they should do if, after

implementing a seemingly race-neutral test, they later discover that it has a disproportionate

adverse impact on a protected group. Unlike the City’s test in Ricci, however, the reality is that


14

very few private employers will know whether or not a test being used has a disparate impact

until after the test has already been used as part of a selection process. In such cases, nothing in

Ricci requires an employer to continue to use a particular employment test or other selection

criterion/procedure. In fact, employers are potentially obligated to search for alternative tests

with no adverse impact under disparate impact law. Employers that discover adverse impact

should consider eliminating testing programs and/or replacing them with tests that do not have

adverse impact.

C. Practical Implications of Ricci

Because Ricci was just decided at the very end of June, courts have yet to provide any

guidance on how its ruling will be interpreted outside of the public employer testing arena. That

said, the decision has a number of likely practical implications on all employers. The following

sections address those implications, and discuss how employers can navigate the delicate balance

between disparate impact and disparate treatment liability that exists after Ricci.

1. Ricci’s Application to Private Employers

Although the Ricci decision involved a public employer, its holding applies with equal

force to private employers as well. Ricci was (perhaps deliberately) decided on Title VII

grounds and not under the Fourteenth Amendment, and Title VII applies to all employers, public

or private, that maintain 15 or more full-time employees. 42 U.S.C. § 2000e(b). Therefore, all

private employers that are covered by Title VII must ensure that they comply with the holding in

Ricci.


15

2. Ricci’s Reach Beyond Reverse Race and National Origin Discrimination

Although Ricci involved claims of reverse race discrimination, the opinion is premised

upon a balancing of disparate impact and disparate treatment law under Title VII. As a result, it

also applies equally to claims of reverse gender discrimination under Title VII.

The Supreme Court has held that the ADA and ADEA also prohibit disparate impact, as

well as intentional discrimination. See Smith v. City of Jackson, 544 U.S. 228 (2005)(ADEA);

Raytheon Co. v. Hernandez, 540 U.S. 44 (2003) (ADA). However, both of those acts do not

cover reverse discrimination claims; in other words, there are no federal legal prohibitions to

discriminating on the basis of someone being under the age of 40 or not being disabled. See 42

U.S.C. §12201 (2009) (“Nothing in [the Americans with Disabilities] Act shall provide the basis

for a claim by an individual without a disability that the individual was subject to discrimination

because of the individual’s lack of disability.”); Gen. Dynamics Land Sys., Inc. v. Cline, 540

U.S. 581 (2004) (holding ADEA does not prohibit discrimination against those under the age of

40). As a result, Ricci likely has no bearing on actions taken to avoid disparate impact on the

basis of age or disabilities. This is particularly important in reduction in force (“RIF”) programs,

where employers often face exposure to age discrimination claims, and should still be permitted

to protect against such liability using measures that may not be permitted under Title VII.3

3. Ricci’s Reach Beyond Testing Programs

In Ricci, the Court solely evaluated a testing program implemented to evaluate

employees for promotions, but the rule it established for balancing disparate impact and disparate

treatment prohibitions applies to Title VII more generally. Pursuant to Title VII, employers

3 Some state laws, however, do prohibit discrimination against younger workers, and in such states the rationale

of the Ricci decision might lead to a similar result if an employer decided to lay off younger workers to avoid a disparate impact age claim.


16

generally may not discriminate against protected employees in hiring, firing, or with regard to

other terms and conditions of employment. 42 U.S.C. § 2000e-2(a)(1). Therefore, Ricci extends

beyond employment decisions potentially causing disparate impact in the testing and promotion

context; rather, the Court’s “strong basis in evidence” rule will apply to all employment

decisions in which a disparate impact analysis may arise – including, potentially, recruiting,

hiring, promotion, compensation, and termination/RIFs.

a. Ricci’s Impact on Diversity Recruiting

First, it does not appear that Ricci will have an impact on employers’ efforts to recruit

minority employees. The starting point for the Court’s Ricci decision was its opening assertion

that, absent a viable defense, the City’s decision not to certify the test results due to the disparate

scores of white and nonwhite test takers was a form of intentional discrimination. 129 S. Ct. at

2673. By contrast, many courts have held that employers may consider race or gender when

making recruitment decisions without violating Title VII’s prohibition against intentional

discrimination. See, e.g., Duffy v. Wolle, 123 F.3d 1026, 1038-39 (8th Cir. 1997) (“An

employer’s affirmative efforts to recruit female and minority applicants does not constitute

discrimination.”); Ensley Branch NAACP v. Seibels, 31 F.3d 1548, 1571 (11th Cir. 1994)

(noting that efforts to actively encourage minorities to apply for jobs, including waivers of

application fees for minorities, are “race neutral”); Billish v. City of Chicago, 962 F.2d 1269,

1290 (7th Cir. 1992) (holding that aggressive recruiting practices targeting minorities are “race-

neutral procedures”), rev’d on other grounds, 989 F.2d 890 (7th Cir. 1993) (en banc); Shuford v.

Alabama State Bd. of Educ., 897 F. Supp. 1535, 1552 (M.D. Ala. 1995) (holding that efforts to

include more qualified minority candidates in a selection pool “do not require the traditional

Title VII and equal protection analysis”). Because an employer’s attempt to recruit minorities is


17

not itself discriminatory against non-minorities, it would not implicate a Title VII disparate

treatment analysis. Ricci applies only when balancing disparate impact and disparate treatment,

and it thus should not affect employers’ minority recruiting efforts.

b. Ricci’s Impact on Hiring and Diversity Promotion Efforts

Similar to inclusive recruiting efforts, nothing in Ricci prevents an employer from

ensuring that it requires or considers diverse panels of candidates for open positions to satisfy its

legitimate objective of achieving a diverse workforce, especially in management, professional,

and other categories where female and minority representation has not been significant. Much

like the recruiting analysis set forth above, Ricci does not touch on these employer efforts

because they are not themselves discriminatory. 129 S. Ct. at 2677 (“Title VII does not prohibit

an employer 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.”).

On the other hand, Ricci’s decision clearly reaches employer hiring and promotional

programs that directly consider an applicant’s protected class as a factor. As explained above,

the City’s decision to deny promotions to the aggrieved firefighters was made solely on the basis

of the racial disparity in testing results; therefore, it was deemed to be disparate treatment in

violation of Title VII. Id. at 2673. Ricci could be applied to preclude an employer from directly

considering race or gender as a factor in making such hiring or promotion decisions absent a

“strong basis in evidence” that failing to do so would require the employer to violate Title VII’s

disparate impact prohibitions.

It is hard to envision a circumstance in which any individual hiring or promotion decision

would meet such a standard, or where an analysis of all factors would lead an employer to

believe it was in its best interests to even attempt to meet the Ricci standard. As a result,


18

employers wishing to move beyond diverse panels for hiring and promotion decisions in an

effort to meet a goal of increasing diversity within a workforce will likely need to look toward

traditional voluntary affirmative action defense. These are discussed in more detail below.

c. Ricci’s Impact on Compensation Programs

For years, employers have faced disparate impact and disparate treatment challenges to

compensation systems. Typically, such challenges are brought as pattern or practice claims by

the government or in a private class action. See, e.g., Serrano v. Cintas Corp., Nos. 04-40132,

06-12311, 2009 WL 910702 (E.D. Mich. Mar. 31, 2009) (pattern and practice class action filed

on behalf of female and minority Cintas employees); Holloway v. Best Buy Co., 2009 WL

1533668 (N.D. Cal. May 28, 2009) (pattern and practice class action filed on behalf of female

and minority Best Buy employees). As a result, employers have increasingly undertaken

affirmative risk assessments designed to identify any pay disparities and correct them before a

lawsuit is filed. Ricci creates potential risks for employers depending on the manner in which

employers take action based upon such risk assessments, and counsels for race-neutral and

gender-neutral pay changes and/or sophisticated individualized pay changes for protected group

members based upon observed inconsistencies in the application of an employer’s pay policies.

This paper discusses best practices for structuring compensation studies and pay adjustments in

Section III below.

d. Ricci’s Impact on Termination/RIFs

Employers are all too aware of the potential for class actions premised upon disparate

impact flowing from RIF programs. See, e.g., Sean Farrell, Citi Faces $1bn Class Claim on

Discrimination, The Independent, Feb. 26, 2009 (“Citigroup faces a potential class-action lawsuit

for more than [1 billion dollars] over allegations that the stricken bank discriminated against


19

women when slashing jobs last year.”). As a result, many employers finalize RIF decisions only

after considering the effect of the chosen RIF criteria on women and minorities. Ricci permits

such analysis prior to implementation of RIF programs, and employers would, therefore, be best

suited to study RIF factors in advance of announcing and implementing a RIF program. For

example, if an employer is considering using tenure or past performance ratings as factors to be

considered in determining who will be terminated in a RIF, it can study the impact of those

factors on the relevant workforce before finalizing their inclusion in the RIF program. If it

determines that one or both factors have an adverse impact based on race and gender, Ricci

permits the employer to decide not to implement those factors as part of its “affirmative efforts to

ensure that all groups have a fair opportunity.” 129 S. Ct. at 2677.

In many RIFs, however, employers may desire to have managers complete ratings on

similarly situated employees as either one factor or the sole factor in determining whom to

include in the RIF. Although Ricci arguably would permit an employer to decide not to use

manager ratings as part of the pre-implementation design of the RIF program, an employer that

simply changes managerial decisions based on race or gender to avoid statistical disparities

adverse to women and minorities runs the risk under Ricci that this could result in a finding of

disparate treatment.

As set forth below, employers can best position themselves to avoid the potential

quagmire created in this circumstance by undertaking individualized assessments of managerial

decisions in situations in which manager ratings were not consistent with business practices and

making changes based upon these individual reviews, rather than because of race or gender.

This paper discusses this approach in Section III below.


20

D. Ricci and Affirmative Action Laws/Programs

Some commentators have expressed concern about the potential impact Ricci could have

on affirmative action laws and/or employers’ affirmative action programs. The Court in Ricci

did not specifically address the parameters of employers’ consideration of race and gender in

voluntary affirmative action and diversity programs under Title VII. Ricci established a separate

defense to race or gender-based actions, establishing only when employers may take such actions

as an effort to avoid otherwise violating discrimination laws. Where an employer’s defense to

race or gender-based actions rests upon a desire to engage in voluntary affirmative action, the

existing Supreme Court precedent in that area should continue to control. Humphries v. Pulaski

County Special School Dist., -- F.3d --, 2009 WL 2778309, at *4 (8th Cir. Sep. 3, 2009) (noting

that Ricci requires an employer that makes a race-based decision to assert a “valid defense,” and

applying longstanding affirmative action defense, rather than “strong basis in evidence” test, to

claim of reverse discrimination).

The standards for legal voluntary affirmative action programs under Title VII were

announced in Johnson v. Santa Clara County, 480 U.S. 616 (1987), and Steelworkers v. Weber,

443 U.S. 193 (1979). Under the Johnson/Weber framework, an employer may take race-

conscious action pursuant to a voluntary affirmative action program under Title VII only if the

program is designed to “eliminate manifest imbalances in traditionally-segregated job

categories,” and it does not “unnecessarily trammel the interests of white employees.” Johnson,

480 U.S. at 628, 630.

The most recent affirmative action cases decided by the Supreme Court, Grutter v.

Bollinger, 539 U.S. 306 (2003), and Gratz v. Bollinger, 539 U.S. 244 (2003), approved diversity


21

as a justification for voluntary measures in the education context under a constitutional analysis.

In the private employment sector, courts continue to utilize the traditional Title VII framework

established in Weber to analyze voluntary, remedial affirmative action plans, recognizing the

“laudable goal of achieving diversity and proportional representation in the workplace.” Doe v.

Kamehameha Schools, 470 F.3d 827, 842 (9th Cir. 2006).

Courts have viewed affirmative action efforts along a spectrum, generally approving

measures that expand opportunities for consideration and inclusiveness (i.e., recruiting) but

requiring justification for exclusive forms of affirmative action and diversity, i.e., decision-

making. See, e.g., Hill v. Ross, 183 F.3d 586, 588 (7th Cir. 1999) (“Affirmative action plans

may be arranged along a spectrum. On the one end are detailed hiring quotas designed to

overcome past discrimination. On the other end are the sort of plans that all federal contractors

must adopt . . . . Plans of the latter kind promise to search intensively for minority candidates and

to ensure equal opportunity by clearing away barriers to employment; they do not entail

preferential treatment for any group in making offers of employment.”); Hondale v. Univ. of

Vermont and State Agric. Coll., 56 F. Supp. 2d 419, 427-28 (D. Vt. 1999) (citations omitted)

(“[A] racial classification that does not confer a benefit or impose a burden on an individual

would not implicate the equal protection clause. This description supports a distinction between

‘inclusive’ forms of affirmative action, such as recruitment and other forms of outreach, and

‘exclusive’ forms of affirmative action, such as quotas, set asides and layoffs. Inclusive as

opposed to exclusive forms of affirmative action serve to broaden a pool of qualified applicants

and to encourage equal opportunity, not to subject persons to unequal treatment in

employment.”). This distinguishing between inclusiveness and exclusiveness seems consistent


22

with the Court’s expressions in Ricci. Therefore, it is unlikely that Ricci will have a direct

impact on affirmative action law or employers’ corresponding programs.

Most consent decrees are justified as a form of voluntary affirmative action, and therefore

are not directly affected by Ricci. However, in considering the need for continuation of a

consent decree that called for hiring quotas in a public fire department since the 1970s, the

Northern District of Ohio recently noted that Ricci “reminds us of how far we have come from

the origination of affirmative action in 1960s.” Cleveland Fire Fighters For Fair Hiring Practices

v. City of Cleveland, Nos. 1:00 CV 301, C73-330, 2009 WL 2602366, at *15 (N.D. Ohio Aug.

20, 2009). In holding that the requirements of the consent decree no longer met the standard for

voluntary affirmative action, the court stated:

Places such as the Cleveland Fire Department, which were virtually all white, now more closely mirror the population within the City. Progress has been made, but the judiciary continues to struggle to find the proper balance to ensure equal opportunity between minorities and non-minorities alike. Ricci calls to mind what this Court noted in Rutherford, that its decision with respect to the necessity or propriety of race-based remedies has a wide-ranging impact on everyone's lives, regardless of the color of their skin.

Id. As the City of Cleveland case makes clear, consent decrees may be subject to greater

scrutiny in light of Ricci.

E. Is This the End of the Debate?

It is very possible that the rule established by Ricci may not last long. The reach of this

rule as well as Justice Ginsburg’s comment that “[t]he Court’s order and opinion … will not have

staying power” have led many to speculate that, like Ledbetter, the Democratic-led Congress

may react by amending Title VII. There is precedent for such action, especially in the disparate

impact context.


23

In 1971, the Court issued its landmark decision in Griggs v. Duke Power Co., 401 U.S.

424 (1971), recognizing for the first time that Title VII was meant to prohibit not just disparate

treatment, but also disparate impact. In Griggs, the Court addressed Duke Power’s testing policy

that was adopted seemingly without discriminatory purpose but operated to adversely affect

African-Americans. Id. at 428. In holding that the testing requirements violated Title VII, the

Court focused not on the motivation for the employment practice, but instead on the

consequences. Id. at 432. The Court held that in determining whether a test or practice violates

Title VII’s disparate impact prohibition, the standard is “business necessity.” Id.

Just four years later in Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975), the Court

elaborated on its decision in Griggs, stating that when an employer implements a test for hiring

or promotion that has a racially disparate impact, the employer must demonstrate a “manifest

relationship” between the test and the job. The Court cautioned that such a showing alone does

not automatically insulate the employer. Rather, the employee(s) may show that another less

discriminatory alternative existed and would similarly serve the employer’s purpose. Id. These

rules resulted in several testing programs being overturned in the following years. See, e.g.,

Bridgeport Guardians, Inc. v. City of Bridgeport, 933 F.2d 1140, 1149 (2d Cir. 1991) (affirming

district court decision enjoining proposed use of civil service examination due to disparate

impact on minorities); Fickling v. N.Y. Dep’t of Civil Serv., 909 F. Supp. 185, 193 (S.D.N.Y.

1995) (invalidating use of competitive examination by Department of Civil Service due to

finding of disparate impact as to Hispanic and African-American job applicants); Vanguard

Justice Soc’y, Inc. v. Hughes, 592 F. Supp. 245, 270 (invalidating written sergeant’s examination

given to police officers due to disparate impact and defendant’s failure to show job-relatedness);

York v. Ala. Bd. of Educ., 581 F. Supp. 779, 787 (M.D. Ala. 1983) (enjoining use of national


24

teacher examination scores to make employment decisions due to showing of disparate impact

on African-American teachers).

Almost 15 years after the Court’s decision in Albemarle, it again was faced with

interpreting disparate impact under Title VII. See Wards Cove Packing Co. v. Atonio, 490 U.S.

642 (1989). But this time, the Court retreated from its prior decisions. A slim majority of the

Court in Wards Cove held that the employer bears only the burden of production (and not

persuasion) for showing that a practice is of business necessity. Id. at 659-60. The Court also

eliminated the “manifest relationship” test from Albemarle and instead held that a practice would

be permissible so long as it “serve[d], in a significant way, the legitimate employment goals of

the employer.” Id. at 659.

This history of disparate impact decisions is important because the Court’s arguable

erosion of Griggs and Albemarle lead, in part, to Congress’s passage of the Civil Rights Act of

1991, which for the first time codified a disparate impact claim and its analysis. In amending

Title VII, Congress made explicit that it was reinstituting the concepts of “business necessity”

and “job related” as they existed prior to Wards Cove. 123 Stat. 5, § 3(2). Justice Ginsburg’s

dissent in Ricci included this history. This was likely not just to reminisce, but rather as an

impetus for the legislature to take remedial action. Indeed, some in the media have dubbed Ricci

as “Wards Cove II,” and called for swift legislative action. As the Chairman of the Senate

Judiciary Committee, Patrick Leahy, said after the decision was handed down, “[I]t is less likely

now that employers will conscientiously try to fulfill their obligations under this time-honored

civil rights law. This is a cramped decision that threatens to erode these protections and to harm

the efforts of state and local governments that want to build the most qualified workforces.”

Comment of Senator Leahy, accessed at leahy.senate.gov/press/200906/062909a.html. Thus far,


25

however, with Congress caught in a major healthcare debate, the implications from Ricci have

taken a back seat.

Contrasting Justice Ginsburg’s dissent, Justice Scalia’s concurring opinion offers

something of a premonition that the majority’s opinion merely “postpones the evil day on which

the Court will have to confront the question: Whether, or to what extent, are the disparate impact

provisions of Title VII of the Civil Rights Act of 1964 consistent with the Constitution’s

guarantee of equal protection?” This question, along with attempts to reconcile the disparate

impact provision of Title VII with equal protection under the Constitution, have plagued

commentators in the months since Ricci was decided. Indeed, Justice Scalia’s concurrence, at its

extreme, may be interpreted as a warning to Congress to take heed of constitutional implications

before it acts to overrule the Court’s decision in Ricci. It remains to be seen whether any of the

Justices predictions will prove true.

III. The Future of Risk Assessments and Preventive Action After Ricci

For years, employers have proactively undertaken analyses designed to determine the

degree of legal risk associated with ongoing employment practices (such as compensation

systems) or one-time employment events (such as RIFs). The potential for liability associated

with years-old decisions created by the Lilly Ledbetter Fair Pay Act of 2009 (the “FPA”) further

emphasizes the need for such risk assessments. However, in the wake of Ricci, many employers

find themselves grappling with how to construct such studies and make changes to existing or

proposed systems without creating liability for reverse discrimination claims. While the actions

taken by the Supreme Court and Congress have narrowed employers’ options while increasing

their exposure, there are still several steps that employers can take to undertake effective risk

assessments and mitigate risk across the board.


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A. Conducting Legal Risk Assessment

One first step employers should consider is legal risk assessments designed to allow

inside and outside counsel to provide legal advice regarding potential exposure to class litigation

over employment practices such as compensation systems or RIFs. Although a detailed

discussion of how such risk assessments can be structured is beyond the scope of this paper, we

provide an overview below of the considerations regarding the attachment of privilege to such

studies, the use of multiple regression analyses to study employment practices, and the possible

ways an employer may wish to construct such studies to assess legal risk.

1. Protecting Risk Assessments from Disclosure

There are three privileges that, depending on the circumstances, may apply to preclude

discovery of a risk assessment: the attorney-client privilege, the attorney work product doctrine,

and the self-critical analysis privilege.

a. Attorney-Client Privilege

Parties seeking to invoke the attorney-client privilege must satisfy three elements:

(1) counsel must be acting as an attorney giving legal advice (as opposed to business or

management advice); (2) the communication must be between attorney and client; and (3) the

communication must have been made and maintained in confidence.

In the context of an employment risk assessment, whether the attorney-client privilege

applies often turns on the purpose for conducting the analysis. If an analysis is done for business

reasons, e.g., to determine if the system is working properly, the analysis may not be privileged,

even if an attorney is involved in the process. Treat v. Tom Kelley Buick Pontiac GMC, Inc.,

2009 WL 1543651, at *6 (N.D. Ind. June 2, 2009) (The attorney-client privilege may be waived

where counsel's role was not limited to investigation for ongoing litigation, but also used for

other business purposes).


27

If, however, a risk assessment is done to provide legal advice regarding a company’s

compliance with various EEO laws, or litigation risk, the attorney-client privilege should apply. 4

See Williams v. Sprint/United Management Co., 2006 WL 1867478, at *7 (D. Kan. July 1, 2006)

(holding that disparate impact analysis of RIF decisions done at direction of counsel for purpose

of providing legal advice was protected from disclosure by the attorney-client privilege);

Abdallah v. Coca-Cola Co., 2000 WL 33249254 (N.D. Ga. Jan. 25, 2000) (holding that attorney-

client privilege protected from disclosure an internal audit of compliance with affirmative action

requirements that was prepared at the behest of counsel so that counsel could advise the

employer regarding its response to an OFCCP inquiry).

Because a legal risk assessment will often require counsel to work with business leaders,

it is crucial that counsel communicate the privileged nature of the risk assessment at the outset of

the project. More importantly, counsel must document the reason for conducting the analysis –

to provide legal advice – in a manner that ensures business leaders understand the limited

purpose of the study. Failure to do so may lead a court to conclude that the information is

discoverable. In Beck v. Boeing, Case No. C00-301P (W.D. Wash. Oct. 30, 2003), for example,

Boeing argued that its own internal statistical analyses of its compensation practices were

privileged because they were performed at the direction of counsel to help counsel provide legal

advice to the company. The court, however, rejected Boeing’s claim. After an in camera review

4 It is well-settled that analyses performed by an expert, such as a statistician, for the purpose of enabling an

attorney to provide legal advice to a client are protected by the attorney-client privilege. See, e.g., U.S. v. Kovel, 296 F.2d 918, 920 (2d Cir. 1961) (J. Story) (finding communications to accountant employed by an attorney to interpret defendant’s tax information covered by the attorney-client privilege); Cavallaro v. U.S., 284 F.3d 236, 246 (1st Cir. 2002) (holding that the attorney-client privilege extends to “third parties employed to assist a lawyer in rendering legal advice”); Westinghouse Elec. Corp. v. Rep. of Philippines, 951 F.2d 1414, 1423 (3d Cir. 1991) (“When disclosure to a third party is necessary for the client to obtain informed legal advice, courts have recognized exceptions to the rule that disclosure waives the attorney-client privilege. For example, courts have held that the client may allow disclosure to an ‘agent’ assisting the attorney in giving legal advice to the client without waiving the privilege.”).


28

of the documents, the court found that the analyses were used for regular business purposes, not

just to obtain legal advice, and therefore were not privileged.

b. Attorney Work Product

The work product doctrine protects from disclosure confidential information that an

attorney has obtained or prepared in anticipation of litigation. The protection covers two kinds

of information: “opinion” and “factual” work product. Opinion work product consists of the

attorney’s mental impressions, conclusions, opinions, or legal theories. Factual work product is

any factual, non-opinion material gathered in preparation for a lawsuit. See, e.g., Baker v. Gen.

Motors Corp., 209 F.3d 1051 (8th Cir. 2000) (“There are two kinds of work product--ordinary

work product and opinion work product. Ordinary work product includes raw factual

information. Opinion work product includes counsel's mental impressions, conclusions, opinions

or legal theories.”). Opinion work product is, when applicable, afforded almost absolute

protection; factual work product, by contrast, may be discoverable under some circumstances:

Ordinary work product is not discoverable unless the party seeking discovery has a substantial need for the materials and the party cannot obtain the substantial equivalent of the materials by other means. In contrast, opinion work product enjoys almost absolute immunity and can be discovered only in very rare and extraordinary circumstances, such as when the material demonstrates that an attorney engaged in illegal conduct or fraud.

Id.

If an attorney is involved in designing and implementing a statistical analysis of

employment practices, such an analysis will necessarily reflect the attorney’s opinions and

mental impressions. Whether an analysis is protected from disclosure as attorney-work product

therefore often will turn on whether the documents were prepared in anticipation of litigation.

Most courts require that the information be prepared “because of” the prospect of litigation. See,


29

e.g. U.S. v. Adlman, 134 F.3d 1194 (2d Cir. 1998) (holding that the proper standard was

whether the memorandum was prepared “because of” the prospect of litigation, not prepared

“principally or exclusively” for litigation, and noting that five other circuits had adopted this

formulation); Treat, 2009 WL 1543651, at *6 (holding that “[w]hen determining whether the

work product protection applies, the court must consider ‘whether, in light of the nature of the

document and the factual situation in the particular case, the document can fairly be said to have

been prepared or obtained because of the prospect of litigation’”). Courts are split, however, on

whether documents prepared for dual purposes, i.e., those that are prepared both in anticipation

of litigation and for other business purposes, are considered work product. Compare U.S. v.

Frederick, 182 F.3d 496 (7th Cir. 1999) (“[A] dual-purpose document . . . is not privileged.”),

with In re Woolworth Corp. Sec. Class Action Litig., 1996 WL 306576 (S.D.N.Y. June 7, 1996)

(company’s business purpose for creating material would not preclude application of work

product privilege).

Typically, the litigation must be reasonably anticipated on an objective basis before work

product protection is afforded. Thus, a letter from an experienced plaintiffs’ attorney making

claims of civil rights act violations and warning of the initiation of administrative action with the

EEOC was sufficient to invoke the work product protection. See McPeek v. Ashcroft, 202

F.R.D. 332 (D.D.C. 2001). Most courts, however, have held that general concerns that litigation

might be instituted, without a specific threat, are usually insufficient to invoke the work product

privilege. “The inchoate possibility, or even likely chance of litigation, does not give rise to

work product.” Accounting Principals, Inc. v. Manpower, Inc., 2009 WL 2252123 (N.D. Okla.

July 28, 2009). There are exceptions to this rule, however. For example, in Maloney v. Sisters

of Charity Hosp., 165 F.R.D. 26 (W.D.N.Y. 1995), the plaintiff sought discovery of computer


30

printouts containing statistical information and analysis pertaining to a proposed RIFand a

worksheet consisting of the human resources director's notes, all of which were prepared at the

direction of counsel in preparation for a meeting regarding the planned RIF. The court held that

all of the documents were protected by the work product doctrine because, based on counsel's

experience in the area of employment and labor law, it was reasonable for counsel to believe that

litigation would likely result from the employees affected by the downsizing.

Ultimately, whether an internal risk assessment constitutes protected attorney work

product will depend on the motivation for conducting the analysis, i.e., whether it was prepared

in anticipation of litigation, and the use made of the results.

c. Self-Critical Analysis Privilege

The self-critical analysis privilege is the least accepted of the three privileges. It is

designed to protect from disclosure certain internal self-critical analyses that meet five criteria

(or some variation thereof):

(1) the information sought must be the result of a critical self-analysis undertaken by the party seeking protection; (2) there must be a strong public interest in preserving the free flow of the type of information sought; (3) the information sought must be of the type whose flow would be curtailed if discovery were permitted; (4) the information sought must have been prepared with the expectation that it would be kept confidential; and (5) the information sought must be subjective analysis designed to have a positive societal effect.

Johnson v. UPS, 206 F.R.D. 686 (M.D. Fla. 2002).

Although some courts recognize the privilege, many do not. See, e.g., Schlegel v. Kaiser

Found. Health Plan, 2008 WL 4570619 (E.D. Cal. Oct. 14, 2008) (“The ‘self-critical’ analysis

privilege also invoked by defendants has not been recognized by the Ninth Circuit.”); EEOC v.

City of Madison, 2007 WL 5414902 (W.D. Wis. Sept. 20, 2007) (noting that the Seventh Circuit


31

does not recognize the self critical analysis privilege). Even where the privilege is recognized,

moreover, it is narrowly applied. The court in Johnson explained:

In the context of employment discrimination, the self-critical analysis privilege was first recognized in Banks v. Lockheed-Ga. Co. [, 53 F.R.D. 283 (N.D. Ga. 1971)] . . . . Since the Banks decision, many courts have addressed the self-critical analysis privilege in the context of employment discrimination. “A fair number” of district courts have recognized the privilege in this context, while an equal or greater number have either categorically denied the existence of a “self-critical analysis” privilege or have rejected its application as to particular documents.

206 F.R.D. at 689 (collecting cases); see also MacNamara v. City of New York, 2007

WL 755401 (S.D.N.Y. Mar. 14, 2007) (noting uncertain status of self-critical analysis

privilege in Second Circuit and finding no such privilege exists when party seeking

protection has strong incentive to critique itself notwithstanding risk of disclosure).5

Because the existence of the privilege is questionable at best, and the applicability of the

privilege is dependent on the jurisdiction considering the question, employers cannot expect the

analysis to be protected from discovery solely because of the self-critical analysis privilege.

Therefore, only by conducting the analyses of compensation for the purpose of obtaining legal

advice and analyzing litigation risks can an employer offer the best chance of protecting its

compensation analysis from disclosure.

d. Conclusion

Any risk assessment should be undertaken with the understanding that it may be

discoverable. Nonetheless, an employer should follow these steps before the analysis is

5 See also Reid v. Lockheed Martin Aeronautics Co., 199 F.R.D. 379, 385-86 (N.D. Ga. 2001) (finding that self-

critical analysis privilege applied to employer’s diversity reports but did not apply to documents containing information mandated by OFCCP); Freiermuth v. PPG Indus., Inc., 218 F.R.D. 694, 697 (N.D. Ala. 2003) (refusing to recognize self-critical analysis privilege; “[t]he policy arguments espoused in support of recognizing a self-critical analysis in the employment context ring hollow in this post-Enron era where corporate governance is not only expected, but en vogue.”); see also Etienne v. Mitre Corp., 146 F.R.D. 145, 148-49 (E.D. Va. 1993) (holding that the self-critical analysis privilege did not apply to salary and promotion reviews performed by an outside consultant).


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conducted to increase the likelihood of protecting it from disclosure: (1) defining the purpose of

the analysis in advance, in writing (e.g. to obtain legal risk assessment); (2) controlling those

involved in collecting data for the analysis, preparing the analysis, and reviewing the results of

the analysis (e.g., inside counsel and key executives); (3) identifying the information in question

as confidential; and (4) ensuring that the results of the analysis are not used for ordinary business

purposes or for purposes other than those identified above.

2. Multiple Regression Analysis|

An assessment of the litigation risks associated with employment practices will

ultimately analyze whether disparities exist among similarly situated groups of employees based

upon their protected characteristics. The most widely accepted and widely used statistical

approach for analyzing compensation in litigation is the multiple regression analysis. See

Bazemore v. Friday, 478 U.S. 385 (1986).

A multiple regression analysis attempts to reveal relationships between explanatory

variables and a dependent variable. Daniel L. Rubinfeld, Reference Guide on Multiple

Regression, in Federal Judicial Center, Reference Manual on Scientific Evidence, at 181 (2d ed.

2000).6 Explanatory variables are the expected influences on the dependent variable. Id. For

example, in a pay equity analysis, compensation is the dependent variable. The regression

controls for the nondiscriminatory explanatory variables and then compares the wages of

protected group and non-protected group employees

6 The Reference Manual on Scientific Evidence, a “product of a cooperative effort by the Federal Judicial Center

and the Carnegie Corporation of New York,” was created in 1990 after the Federal Courts Study Committee recommended the creation of a manual to help federal judges deal with scientific evidence. See Reference Manual on Scientific Evidence, at vii.


33

However, “when inappropriately used, regression analysis can confuse important issues

while having little, if any, probative value.” David H. Kaye & David A. Freedman, Reference

Guide on Statistics, in Federal Judicial Center, Reference Manual on Scientific Evidence, at 183.

As the Tenth Circuit has observed,

In order for statistical evidence to create an inference of discrimination, the statistics must ... eliminate nondiscriminatory explanations for the disparity. In other words, a plaintiff's statistical evidence must focus on eliminating nondiscriminatory explanations for the disparate treatment by showing disparate treatment between comparable individuals.

Carney v. City and County of Denver, 534 F.3d 1269 (10th Cir. 2008). More specifically, two

variables that are closely related (e.g., age and salary) may be misinterpreted as having a causal

relationship, even though they are both caused by a third, unexplained variable (e.g.,

productivity). Kaye & Freedman, supra at 183. For this reason, courts require that the “major”

factors affecting salary be accounted for in any model testing for compensation disparities.7

Bazemore, 478 U.S. at 399.

3. Assessing Risk Using Multiple Regression Analyses

Employers should consider conducting a series of studies to replicate the possible

approaches that may be taken by both parties in potential litigation. Rarely will an employer

reach agreement with an adversary, whether it be the government or plaintiffs, as to the

appropriate method for examining whether a pattern or practice of discrimination exists, except

perhaps in a settlement context. Typically, a party will utilize the methods of analyzing

compensation that are most favorable to it and are the easiest to defend against a challenge in

litigation. Accordingly, despite attempting to compile a multiple regression model that

7 In Bazemore, the Supreme Court rejected the notion that a multiple regression analysis must account for all

variables affecting the dependent variable. 478 U.S. at 399-400.


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accurately reflects legitimate, nondiscriminatory explanatory variables, as part of a risk

assessment, employers may also want to undertake analyses similar to those expected from

plaintiffs and the government. Of course, before doing so, employers will want to review a

number of considerations, including (1) cost, which will vary depending upon the uniformity and

number of databases maintaining employee data; (2) the existence of or imminence of litigation

regarding the employment practice being studied; and (3) the party, if any, challenging the

employment practice being studied. Any such analysis should document the employer

objections to the plaintiff model so that in the event of inadvertent disclosure, the employer can

avoid any implication that any disparities found in that model can serve as evidence of an

intentional decision to continue a process with a discriminatory effect or that the model used is

an appropriate model to use.

B. Taking Action To Eliminate Statistical Disparities While Mitigating Risk of Ricci Claims

Once an employer has assessed its legal risk, it may wish to take some action to mitigate

its exposure to employment discrimination claims, particularly those asserted on a class basis or

brought by the government. Doing so has several ramifications, potentially affecting the

privilege of any studies taken with the initial purpose of assessing legal risk and also creating

potential exposure to claims of reverse discrimination. Thus, employers need to think critically

about the pros and cons before undertaking corrective action. Nevertheless, when done

appropriately, such actions can effectively mitigate risk without creating undue exposure to new

claims.

1. Preserving the Privilege|

Employers cannot simply use their legal risk assessments to use as a basis for

modifications to employment practices without risking that they will lose the protection of one or


35

more of the privileges described above. Therefore, an employer should decide before

undertaking any modifications whether it wants to risk waiving the privilege by relying upon a

risk assessment in working with business leaders to make modifications to employment

processes. If not, the employer should consider whether business leaders can work with experts

to create a new, non-privileged study to guide the business goal of reviewing employment

practices for compliance with company policies. Unlike a privileged risk assessment, such a

study would not focus upon the potential statistical models that may be used in litigation, but

rather would consist of a single model per employment practice designed to reflect the

employer’s actual workforce and policies as much as possible.

a. Avoiding Reliance on Both the “Strong Basis in Evidence” and Voluntary Affirmative Action Defenses

As noted above, Ricci provides an employer with two defenses if it takes an action

explicitly based upon race or gender. First, the employer can argue that it had a strong basis in

evidence that failing to take the action would have resulted in disparate impact liability. A

finding of statistical disparities, such as any that may be found through a privileged risk

assessment, is not likely to be sufficient to make this showing. Second, an employer can justify

actions taken on the basis of race based upon a strong basis in evidence that the employer would

otherwise violate disparate treatment law. Unlike disparate impact claims, “[w]here gross

statistical disparities can be shown, they alone may in a proper case constitute prima facie proof

of a pattern or practice of discrimination.” Hazelwood Sch. Dist. v. United States, 433 U.S. 299,

307-08 (1977) (emphasis added). Thus, an employer arguably can defend a reverse

discrimination claim using only statistical evidence of intentional discrimination. An employer

can also defend race or gender-based decisions as a form of voluntary affirmative action. To do

so, the employer must show a manifest imbalance in its historical treatment of women and/or


36

minorities. A manifest imbalance “need not be such that it would support a prima facie case

against the employer,” Rudebusch v. Hughes, 313 F.3d 506, 520 (9th Cir. 2002), but it also is

proven through a showing of statistical disparities in the treatment of women/minorities and

white men.

Practically, none of these defenses is likely to be tenable for an employer. At base, each

requires an employer to concede past disparities in its treatment of women and minorities as

compared to white male counterparts. Most employers would not want to face the public

relations impact of conceding past disparate treatment. Moreover, while not technically an

admission of liability under Title VII, such concessions would severely undermine an employer’s

ability to defend its past practices. In fact, insofar as an employer makes changes to an existing

employment practice that affects compensation and is covered by the FPA, such a concession

could expose it to liability for two years’ worth of back pay for a class of female or minority

employees.

Employers who want to avoid the need to assert a “strong basis in evidence” or voluntary

affirmative action defense must take care to base any adjustments it makes to an employment

practice on factors other than race or gender. Employers, however, may find that in the wake of

legal risk assessments they are presented with options using statistical measures to help “correct”

disparities found. Typically, these adjustments can be accused of being premised upon race and

gender-based decision-making. The most frequent example of employers using statistical

models to make race or gender based decisions occurs in the area of compensation, where labor

economists are able to construct models that predict pay for employees on the basis of factors

considered important by an employer. Some employers have used such studies to increase the

pay of women and/or minorities based solely upon a statistical study, while not making


37

corresponding increases for white men whose pay falls below the predicted amount. See

Rudebusch, 313 F.3d at 523-24 (class action brought by professors alleging equal protection and

Title VII violations based on salary adjustments made for female and minority professors as a

result of an internal pay equity analysis; fact issues mandated reversal of summary judgment for

university); Maitland v. Univ. of Minn., 155 F.3d 1013, 1018 (8th Cir. 1998) (reversing

summary judgment for university in reverse discrimination action brought by male professor

challenging salary adjustment plan for female academic employees implemented pursuant to

consent decree); Smith v. Va. Commonwealth Univ., 84 F.3d 672, 677 (4th Cir. 1996) (en banc)

(class action brought by professors alleging Title VII violations based upon salary adjustments

for female professors as result of internal pay equity analysis; summary judgment for university

reversed). In the RIF context, some employers may use disparate impact to determine how many

more minority employees than expected are targeted for termination. If an employer simply

“swaps” that number of white employees for minorities who otherwise would have been

included, it will need to defend that action based on Ricci and/or voluntary affirmative action

law.

In either context, adjustments made only for protected groups based upon such models

are subject to an increasing likelihood of attack after Ricci. Employers should not undertake

such measures without fully understanding that they may need to defend those actions using

Ricci’s “strong basis in evidence” standard or as a form of voluntary affirmative action.

Accordingly, in most cases, employers will be better served by considering other approaches,

such as those described below, rather than formulaic reliance solely upon statistical models that

take race and gender into account.


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2. Race-Neutral and Gender-Neutral Options

Employers should first consider whether possible race-neutral or gender-neutral

modifications to its employment practices may have the effect of reducing disparities found for

protected group members. For example, an employer considering changes to its compensation

system can develop a multiple regression model that does not account for the protected

characteristics of its employees. Using this model, the employer can determine employees’

statistically anticipated compensation and identify individuals who are earning significantly more

or less than that amount. If it appears that some employees are underpaid relative to similarly

situated co-workers, compensation adjustments can then be made on a race and gender-neutral

basis. Such adjustments, even though undertaken without regard to a protected characteristic,

may help an employer avoid any statistically significant differences in compensation for its

minority employees because the difference corrected may drive any overall disparity between

protected group compensation and non-protected group compensation below statistical

significance. By making such adjustments, an employer avoids race or gender-based decisions,

and the corresponding need to defend its actions under Ricci or as a form of voluntary

affirmative action.

Furthermore, by making these adjustments without regard to protected characteristics,

employers avoid the argument that last-minute compensation adjustments to a relatively few

number of employees were used by the employer to mask its intentional discrimination. Indeed,

many employers already have procedures in place to make equity adjustments to employees who

appear underpaid relative to their peers. Using a statistical analysis to identify those individuals

adds an additional layer of objectivity, and the appearance of fairness, to the process. Of course,

race and gender-neutral adjustments will be more costly to employers than adjustments targeted


39

only to one protected group. Moreover, the adjustments will be less effective than race or

gender-based adjustments in eliminating a gender or race disparity, as some adjustments will

actually increase that disparity by increasing the pay of white men.

As the above discussion demonstrates, a formulaic race and gender-neutral approach can

work well in assessing compensation. Unfortunately, it may be difficult to utilize a similar

method of addressing selection decisions, such as RIF decisions, particularly where the criteria

are already implemented. In such cases, Ricci may require that a change to a process post-

implementation cannot be done to avoid statistical disparities without satisfying the “strong basis

in evidence” test. To the extent the changes can be made as part of designing the process,

reverse discrimination under Ricci should be reduced or eliminated. In these cases, employers

should consider undertaking a targeted individual review of outlier employees to determine if

changes are needed not to avoid overall statistical disparities, but rather to ensure compliance

with the company’s employment policies.

3. Targeted Individual Reviews

Employers can also consider using their statistical analyses to help conduct a targeted

review of individual employment decisions. In the context of a compensation analysis, in this

individualized review, employers could undertake case studies that look at categories of

employees, or cohorts, who despite being similarly situated are identified as having significant

disparities in compensation. Appropriate company representatives can conduct a more detailed

review of those groups by reviewing appropriate performance and personnel files and

interviewing relevant managers and human resources personnel. This detailed review may

unearth factors that explain the compensation for those groups, but that were not or could not be

accounted for in the aggregate statistical model. Alternatively, this detailed review may help the


40

employer identify areas where targeted compensation adjustments are warranted. If required to

defend such targeted adjustments, employers would not be required to rely upon a “strong basis

in evidence” standard, as the actions would be undertaken based upon the specific findings of the

individualized review.

In the context of RIF decisions, the individualized review would consist of focusing on a

human resources review of managerial decisions for compliance with RIF criteria. As noted

above, an employer can or may want to assess possible RIF criteria with known impact, such as

performance ratings or tenure, before implementing a RIF program. In those cases, employers

can consider the effect of possible criteria before implementing a RIF program, and therefore can

avoid Ricci’s prohibition on race or gender-based decisions entirely. Where a RIF includes

rankings done by managers on the employees under their supervision as the determinant of who

will be terminated, it will likely not be possible to study the impact of that criteria before the

managers make the decisions. Ideally, these initial manager decisions should be only

preliminary, as part of the design process. Employers can also use a study of the impact of the

decisions to guide an individualized review of decisions within groups that appear to have an

adverse impact on women and minorities. As with the individual compensation review, one

would not expect every decision or even a majority to be changed based on this review, but

where a second-level analysis of employee files and performance records indicates that a

manager did not appropriately apply the RIF criteria, changes can be made for that reason. A

similar process would work for other forms of selection decisions, such as mass hiring events,

promotions, demotions, etc.

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