Supreme Court: Disparate Impact Plaintiffs Can Sue Based on the Application of the Discriminatory Practice
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The Supreme Court today issued a judicial smackdown to the Seventh Circuit Court of Appeals, unanimously reversing its decision in Lewis v. City of Chicago (as we suggested it should when we reviewed the details of this case back in October!). Briefly put, the plaintiffs are a group of approximately 6,000 black firefighter applicants who filed charges of race discrimination with the EEOC more than 300 days after the initial announcement of their application test results, but within 300 days of the hiring of the new firefighter class from which they allege they were denied consideration. The Seventh Circuit held that the “discrimination was complete when the tests were scored...and the applicants learned the results.”
Justice Scalia, writing for the entire Court, stated that because there is no dispute that the claim was filed within 300 days of the hiring of the new class, the issue in this case is not “whether a claim predicated on the [on the hiring of the new firefighter class] is timely, but whether the practice thus defined can be the basis for a disparate-impact claim at all.” (Emphasis in original.) In other words, while the parties agreed that the adoption of a practice had a disparate impact, the real question was whether a cause of action can arise from the application of that same practice. The Court held that it could. Citing its recent opinion in another firefighter test case—Ricci v. DeStefano, the court noted that “a plaintiff establishes a prima facie disparate-impact claim by showing that the employer ‘uses a particular employment practice that causes a disparate impact’ on one of the prohibited bases.”
Per the Court, the City believes that this decision “will result in a host of practical problems for employers and employees alike,” in that it may subject employers to an increased number of disparate-impact lawsuits based on long-stranding practices. That may, in fact, be true. Following this decision, any employer engaging in a practice whose application may result in a disparate impact on some protected classification of employees should take the time to reevaluate that practice. While there may be a legitimate business defense for the practice (as remains to be seen in the Lewis case on remand), it’s going to be easier for employees to get their foot in the door and state a claim.
Supreme Court Lets Stand Ruling Allowing EEOC to Issue Subpoenas After Right-To-Sue
Yesterday the U.S. Supreme Court declined to review a Ninth Circuit Court of Appeals decision that allows the Equal Employment Opportunity Commission (EEOC) to continue investigating allegations of employment discrimination, and even to issue subpoenas to employers, after issuing a right-to-sue letter to the employee who filed the initial complaint. Click here to read the Ninth Circuit decision in Federal Express Corp. v. EEOC.
In order to file a lawsuit under Title VII of the Civil Rights Act of 1964, an employee must first file a complaint of discrimination with either the EEOC or an analogous state agency, a process known as "exhausting administrative remedies." Only after the EEOC issues a "right-to-sue letter" may the employee then file a lawsuit. It is not uncommon for an employee to file a complaint with the EEOC and withdraw it almost immediately, obtain the right-to-use letter and file a lawsuit, all before the EEOC has had a chance to investigate. In Federal Express, the employee did just that in order to join a pending class action lawsuit. The employer expected the EEOC to drop its investigation, but instead EEOC continued to investigate and issued a subpoena to the employer.
The Ninth Circuit enforced the subpoena, writing: "By continuing to investigate a charge of systemic discrimination even after the charging party has filed suit, the EEOC is pursuing its obligation to serve the public interest." The Ninth Circuit's decision is in line with a decision from the Third Circuit, but contrary to decisions from the Fifth, Seventh and Tenth Circuits. The Supreme Court will often take a case like Federal Express to resolve such splits between the circuit courts, but declined to do so in this case. As a result, the EEOC's investigatory powers will continue to vary depending on where a complaint is made.
Given the Supreme Court's ruling in Federal Express, employers can no longer safely assume that the EEOC will drop its investigation once it issues a right-to-sue letter. The EEOC may choose to continue investigating charges of discrimination, especially in cases involving allegations of systemic or widespread violations of anti-discrimination law. Employers (at least those in the Ninth and Third Circuits) should be prepared to comply with EEOC investigations even after the right-to-sue letter has issued.
Supreme Court to Decide Title VII Statute of Limitations Question
The U.S. Supreme Court agreed yesterday to hear a challenge to a Seventh Circuit Court of Appeals decision in a case with similar factual overtones to the Ricci case decided earlier this year. Like Ricci, this case involves a firefighter qualification test that had a disparate impact on black applicants; unlike Ricci, at issue here is the statute of limitations on a Title VII claim.
In this case, Lewis v. City of Chicago, the plaintiffs are a group of approximately 6,000 black firefighter applicants who filed charges of race discrimination with the EEOC more than 300 days after the initial announcement of their test results, but within 300 days of the hiring of the new firefighter class from which they allege they were denied consideration. The trial court held that the hiring of each new firefighter was a new violation of Title VII, so the EEOC charges were timely filed. On appeal, the Seventh Circuit reversed, holding that the “discrimination was complete when the tests were scored...and the applicants learned the results.” At issue for the Supreme Court is whether the limitations period for a Title VII claim begins to run when an employer announces the results of a test that could violate Title VII’s disparate impact provision, or if the right to sue begins only once the employer has acted on that policy.
At face value, it seems that the trial court probably got this one right and the Supreme Court should reverse the Seventh Circuit. How can an employee know what the actual disparate impact will be until the employer’s hiring decisions are actually made? If, for example, the employer’s business needs ultimately dictate that it need hire nobody, there has been no harm done regardless of the results of the test. An actual harm needs to occur before the right to sue accrues. Notwithstanding that analysis, and given the current makeup of the court, however, it is unclear which way the Court will go on this one. The Stoel Rives World of Employment will let you know when a decision is reached and how that decision may impact your workplace.
Seventh Circuit Rules FLSA Doesn't Protect Verbal Complaints
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Most employment lawyers and HR professionals know that firing an employee for making a complaint about being paid properly is a recipe for disaster. This week in Kasten v. Saint-Gobain Performance Plastics Corp., the Seventh Circuit Court of Appeals thought differently, at least for verbal complaints about violations of the Fair Labor Standards Act.
The plaintiff, Kevin Kasten, was reprimanded three times for failing to clock in and out. In response, he complained that the location of the time clock was illegal because, among other things, it prevented employees from being paid for time donning and doffing protective gear. After Kasten failed to clock in a fourth time, he was terminated. Kasten sued under the FLSA, claiming that he had been terminated in retaliation for his complaint.
The FLSA protects employees who have "filed any complaint" under FLSA and whose employers retaliate against them for complaining. The Seventh Circuit ruled that because a complaint must be "filed," verbal complaints are not protected by FLSA.
The takeaway? Despite this ruling, we at the Stoel Rives World of Employment think that employers should be wary of terminating employees for verbal complaints. As others have noted, the case law in other circuits may contradict the Seventh Circuit on this issue. Even more crucially, plaintiffs making verbal complaints may have other causes of action under state statutory law or common law.
