DOJ: EEOC’s Disparate Impact Guidelines Are Unconstitutional

The Department of Justice’s (DOJ) Office of Legal Counsel released an opinion letter finding that the Equal Employment Opportunity Commission’s (EEOC) disparate impact regulations and guidance are unconstitutional.

Although the Constitution guarantees equal treatment, it has never guaranteed equal outcomes, T. Elliot Gaiser, assistant attorney general of the Office of Legal Counsel wrote, and the EEOC’s opinions, interpretative rules and guidance documents implementing disparate impact liability violate both Title VII and the Constitution.

“Rather than treating disparate impact as an evidentiary mechanism to smoke out intentional discrimination—imposing liability only when disproportionate adverse effects give rise to a strong inference of intentional discrimination—EEOC’s historic interpretations contemplate liability based on disproportionately adverse effects alone, without regard to an employer’s likely intent,” according to the letter. “Because EEOC’s historic approach divorces liability from circumstances giving rise to a strong inference that intentional discrimination occurred, it functions as a qualified racial-proportionality mandate and spurs employers to engage in race-based decision making to avoid liability. That approach is unlawful and unconstitutional.”

To resolve the tensions between disparate impact claims under Title VII and the colorblind Constitution, three corrections are necessary to the EEOC’s approach, the DOJ explained.

First, the business necessity defense is not a high bar, Gaiser wrote. It requires employers to demonstrate only that the challenged practice is rational, convenient or helpful for serving a valid business purpose.

“Employment practices are presumptively job-related, and only irrational or arbitrary practices with no plausible job-relatedness can create disparate-impact liability,” according to the letter.

Workplace requirements and selection procedures—such as background checks, aptitude tests, knowledge-based tests, SAT scores, high school graduation requirements or blind auditions—are all presumptively job-related, the DOJ added.

Second, disparate impact plaintiffs must satisfy a robust causality requirement by demonstrating—both at the pleadings stage and beyond—that the challenged employment practice itself (not external factors or other employer practices) causes the alleged disparate impact.

“To establish a prima facie case of disparate impact, a plaintiff must ‘demonstrate[] that the ‘particular’ policy actually ‘causes a disparate impact,’” the letter said. “If businesses ‘could be haled into court and forced to engage in the expensive and time-consuming task of defending’ their policies based on the mere existence of ‘racial[] imbalance[s]’ without a clear causal link between the policy and the outcome, then ‘racial quotas’ would become the ‘only practicable opinion.’ Such quotas are per se unconstitutional.”

For the third correction, disparate impact plaintiffs must establish with particular evidence that there is an available alternative practice that causes less disparate impact and would be equally effective for serving the employer’s valid business purpose, the letter said.

“It is only the refusal to adopt an equally effective and administrable alternative ‘without a similarly undesirable racial effect’ that permits a strong inference that the challenged employment policy is ‘a ‘pretext’ for discrimination,’” Gaiser wrote. “The plaintiff thus bears the burden to ‘rul[e] out the competing explanation’ for the challenged business practice by showing that it ‘cannot be explained’ apart from intentional discrimination.”

Nothing in the opinion letter precludes the use of statistical evidence as one evidentiary factor from which to infer intentional discrimination based on a protected characteristic, the DOJ said.

“Setting an appropriate threshold for business necessity, requiring robust causality and demanding evidence of an equally effective alternative practice that causes less disparate impact are essential prerequisites to any imposition of liability,” Gaiser concluded. “Disparate-impact liability as currently interpreted by EEOC is unconstitutional.”

To read the opinion letter, click .

Why it matters: The DOJ’s opinion letter follows the course of the current administration’s stance on disparate impact liability, which was the subject of an