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The 14th Amendment of the Constitution guarantees that all Americans are treated as equal individuals, not as members of a racial group. Yet for decades, the federal Equal Employment Opportunity Commission (EEOC), using a legal theory known as disparate impact, pushed employers to do the opposite. Under disparate impact theory, an employer may be liable for using practices that have an adverse effect on members of one racial group, even if the employer did not intend to discriminate.
A recent opinion issued by the Department of Justice’s Office of Legal Counsel (OLC) holds that the EEOC’s historical interpretation of disparate impact violated the Constitution. This opinion will help ensure that employers make decisions based on merit and not on skin color.
How did the EEOC come to take this wrong turn? Title VII of the Civil Rights Act of 1964—the major federal statute prohibiting race, color, and other forms of discrimination in employment—was originally passed to prohibit only actual discrimination. Its text doesn’t mention disparate impact. During the floor debates about the act, some opponents voiced concerns that it could be interpreted to prohibit neutral practices like paper and pencil tests that have a racially adverse effect. It was the act’s supporters who urged that no, the act would not reach testing.
Yet almost from the start, the EEOC pushed interpretations of the act that reached neutral practices like testing. The Supreme Court blessed this mistaken interpretation in a landmark 1971 opinion, Griggs v. Duke Power Company. Some years later, Congress codified disparate impact into law as part of the 1991 Civil Rights Act. That statute prohibits employment practices that have an adverse effect based on race, sex, national origin, or religion that are not justified by business necessity.
To be sure, some employers, especially during the early years after the Civil Rights Act was enacted, adopted facially race-neutral practices to engineer racial outcomes. Duke Power Company’s testing practices may have been one example.
But those cases are best understood not as true disparate impact cases, but cases of intentional discrimination where the employer is using a proxy for race to reach a racial result. In the constitutional context, Arlington Heights v. Metropolitan Housing Corp. (1977), offers a framework for how courts can assess such claims.
The version of disparate impact developed and enforced by the EEOC became something far grander than a tool to smoke out hidden intentional discrimination. The agency developed extensive guidance limiting employers’ use of standardized aptitude testing. Such tests were common in the mid–20th century but have since faded away. While some employers may have used these tests as tools of racial exclusion, many others have used them for identifying talent without regard to race.
The decline of standardized employment testing closed off an important path to opportunity for young people of all races and ethnicities. Previously, a gifted young person could test into good jobs without necessarily pursuing a college degree. Increasingly, young people feel compelled to obtain a college degree as a signal of their potential as employees, often at the cost of significant student loan debt. While the decline of employment testing is not the only factor driving the higher education bubble, it has contributed.
A few decades later, in 2013, the EEOC rolled out extensive disparate impact guidance concerning employers’ use of criminal history. Employers’ use of this information has a disparate impact on blacks, the EEOC said, because black Americans are, as a group, more likely to have arrest or conviction records.
If an employer is intentionally using criminal background checks to exclude black Americans (or any other racial group), that would certainly be illegal. Yet the typical employer using criminal background checks was not doing so as a tool of racial exclusion. Rather, past criminal history is a signal (but not a perfect signal) of an employee’s honesty, conscientiousness, and character, and employers check it to discern potential risks to their other employees and customers. There is nothing racial about this practice.
What about the business necessity defense? In theory, employers could cite business necessity to justify practices that have a disparate impact but serve a valid, nonracial business purpose, such as the judicious use of standardized testing or criminal background checks.
In practice, the EEOC often applied business necessity so narrowly as to choke the life out of the defense. In the context of criminal background checks, for example, some employers (e.g., daycares or nursing homes) are required by state or local law to check applicants for employment or employees’ criminal histories. These laws are generally understood to protect vulnerable populations rather than as tools of racial exclusion. Yet the EEOC’s 2013 guidance took the extraordinary position that a state law requiring criminal background checks does not necessarily establish a business necessity defense.
If the federal government directly imposed quotas requiring employers to reach certain racial hiring quotas, everyone would see the constitutional problem. The 14th Amendment’s ban on race discrimination forbids the government from putting a thumb on the scale in favor of the private hiring of a racial group. Yet disparate impact law has allowed the government to do just that, except more sneakily. Meet the EEOC’s desired racial targets, disparate impact liability warns, or the agency will come investigate you. When that happens, be prepared to spend years hiring expensive attorneys, presenting reams of documents, and justifying your every decision. Or avoid the whole unpleasant matter by quietly, intentionally discriminating to achieve the government’s preferred racial numbers. For decades, unfortunately but understandably, many employers took the path of quiet, intentional discrimination.
The OLC’s recent opinion will help reverse that trend. America’s workers deserve employers who make hiring decisions based on an applicant’s character and competence, not skin color. The OLC opinion should be praised for helping open up a future of merit-based equal opportunity.
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