Lewis v. Chicago (2010), 130 S.Ct. 2191
Since the development of disparate impact employment discrimination claims almost 40 years ago, an issue has developed concerning the time limit in which an employee can assert such a claim – does the statute of limitations begin upon the development of the employment practice that forms the basis of the disparate impact claim or does it commence when the employment practice is placed into effect? The Supreme Court for the United States recently addressed this issue in Lewis v. Chicago (2010), 130 S.Ct. 2191, to provide clarity.
Disparate impact discrimination claims are distinguishable from direct impact discrimination claims. In direct impact cases, an employee must establish that the employer acted with discriminatory intent when it took an adverse employment action against the employee. In other words, the employer intentionally discriminated against the employee. In such circumstances, the statute of limitations for filing a claim begins to run at the time the adverse employment action was taken against the employee.
Disparate impact claims, however, do not require the employee to establish intent on the part of the employer. In fact, generally speaking, a disparate impact claim involves an employment practice that is facially neutral and fair in form but has a discriminatory effect. A perfect example of an employment policy that is neutral on its face but which has a disparate impact is a height and weight requirement for a position. Such requirements will have a disparate impact on females and are prohibited unless the employer can demonstrate that the requirements are necessary for the position. Because a disparate impact claim involves a practice that is not discriminatory on its face and, thus, the discriminatory nature of the practice is not revealed until the practice is implemented, the statute of limitations issue has not been clear – until now.
In reviewing the statute of limitations issue, the Supreme Court discussed the history behind disparate impact claims. Disparate impact claims were first derived in 1971 when the Supreme Court interpreted the anti-discrimination statutes to preclude not only “overt discrimination but also practices that are fair in form, but discriminatory in operation.”
In this case, the city of Chicago administered a written screening examination to applicants for firefighter positions in 1995 dividing the applicants into three categories – well-qualified, qualified and not qualified. In 1996, the city began to randomly interview and hire individuals from well-qualified category. Over the following six years, the city repeated the process ten more times. In the last round of hires, the well-qualified list was exhausted so the city filled the remaining positions with candidates from the qualified category.
In 1997, an African-American applicant who was in the qualified category and who was not hired by the city filed a lawsuit claiming the city’s “practice of selecting for advancement only applicants [in the well-qualified category] caused a disparate impact on African-Americans in violation” of law. Although the city conceded that the practice caused a severe impact on African-American candidates, the city argued that applicant’s lawsuit was not timely because it was not filed within the requisite time period after the employment practice complained of (the written application and subsequent classification of applicants) in 1996. The applicant countered by arguing that the statute of limitations commenced each time the city utilized the policy to fill the firefighter positions.
Although the Supreme Court found the city’s premise sound, it stated that “it does not follow that no new violation occurred-and no new claims could arise-when the city implemented that decision down the road.” The Court concluded that each time an employer uses an employment practice that has a disparate impact, the statute of limitations for each employee actually affected by the practice begins to run anew from the date the employer utilizes the practice.
The import of this decision is far reaching in that “[e]mployers may face new disparate-impact suits for practices they have used regularly for years.” Thus, an employer who has instituted an employment practice that is neutral on its face but which has a disparate impact, commits a new violation each time the employer utilizes the policy to make employment decisions.
In practice, an employer that has instituted any practice that affects employment decisions, i.e. a screening policy, layoff procedures, etc., must be aware of the effect that policy has on its employment decisions each and every time it utilizes the policy. Even if the policy has been in effect for years and has not previously resulted in a disparate impact, any time it appears that utilizing the policy has a disparate impact on a protected class of individuals, the employer should abandon the policy or modify it to ensure no disparate impact occurs.
If you would like a copy of the full opinion or if you have any other questions regarding Employment Practices Liability, feel free to contact one of our practice area attorneys.