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The U.S. Department of Education and Two Court Decisions Probe the Limits of "Disparate Impact" Theory

Civil Rights Practice Group Newsletter - Volume 3, Issue 2, Summer 1999
By Brian W. Jones
August 01, 1999

The impact of so-called "high-stakes tests"—in both the employment and educational contexts—is an issue of increasing importance to employers, educators, and lawyers alike. Amid a national movement toward educational standards and accountability measured by standardized tests in one form or another, the U.S. Department of Education's Office for Civil Rights has circulated a draft "Resource Guide," which indicates that tests having a disparate racial impact may violate Title VI of the Civil Rights Act of 1964. Absent a showing that a test having a disparate impact is "educationally necessary," the Resource Guide suggests that an administering institution will likely be found to be in violation of Title VI. While OCR has defended the draft Resource Guide as a mere recitation of applicable law, critics have assailed the document as nothing less than an assault on standardized tests and a dilution of objective notions of merit.

Much of the "disparate impact" case law arises under Title VII of the Civil Rights Act of 1964. Courts applying Title VI look to those Title VII cases for guidance. The Civil Rights Act of 1991 amended the Title VII "disparate impact" standard to provide that tests—in the Title VII context, employment tests—are illegal if they have a significant disparate impact and are not justified by "business necessity," a concept analogous to the "educational necessity" standard referenced in Title VI case law, and OCR's draft Resource Guide.

Amid OCR's efforts to extend the reach of disparate impact theory under Title VI, two federal courts of appeals have recently sought to define the Title VII concept of "business necessity." The cases are important not only for employers seeking to evaluate the skills and qualifications of employees and applicants, but also for educators administering high-stakes tests. Because courts and agencies often look to Title VII case law to interpret Title VI, these recent cases may in the future be used by courts and OCR to further define the concept of "educational necessity" when examining high-stakes test having a disparate impact.

In Lanning v. Southeastern Pennsylvania Transportation Authority, 1999 U.S. App. LEXIS 14607 (3d Cir. 1999), the Third U.S. Circuit of Appeals examined the use of a physical fitness test administered to candidates for transit police officer jobs with the defendant-employer.

The employer, Southeastern Pennsylvania Transportation Authority ("SEPTA"), hired a consultant to conduct a job analysis and prepare a test that would appropriately measure a job applicant's likelihood of success on the job. The consultant recommended that the employer use a test requiring applicants to run 1.5 miles in 12 minutes.

SEPTA implemented the test for both incumbent officers and applicants and decided that an applicant who failed to complete the run in the time allotted would be disqualified from employment as a transit officer. Incumbent officers who failed the test were not disqualified from further service.

For several years, the test yielded an average pass rate of 12 percent or less for female applicants and approximately 60 percent for male applicants. The passage rate for incumbent officers was initially low, but rose significantly over the course of a few years. In addition, the court noted that during the years in which the test was administered the employer had issued an array of commendations and satisfactory performance evaluations to incumbent officers who had failed the test.

The Lanning court held that "the business necessity standard adopted by [Title VII] must be interpreted in accordance with the standards articulated by the Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424 (1971), which demand that a discriminatory cutoff [score] be shown to measure the minimum qualifications necessary for the successful performance of the job in question in order to survive a disparate impact challenge." (Emphasis supplied.) The court then rejected the notion that an employer can use a cut-off score that allows it to identify the "cream of the crop." Rather, a test having a disparate racial or gender impact can only be justified under Title VII if it can be shown to be a threshold measurement of minimum qualification for the job in question.

Because the record demonstrated that several satisfactorily performing incumbents had failed the physical fitness exam, the court held that the test impermissibly measured more than minimum qualifications. It explicitly rejected the "more is better" rationale for SEPTA's high cutoff score, i.e., the notion that the better an officer's aerobic capacity the better his or her performance as an officer would be. It thus invalidated the SEPTA test on the novel—and extrastatutory—basis that it was insufficiently related to the minimum qualifications for the job of a transit officer. Under Lanning, the notion of using tests as an instrument of establishing high employment standards—that is to say, testing to find the best candidates rather than those minimally qualified—astonishingly runs afoul of Title VII where the test can be shown to have a significantly disparate racial or gender impact.

In contrast, the Eighth Circuit interpreted the business necessity test to provide greater latitude to employers. In Allen v. Entergy Corporation, 181 F.3d 902 (8th Cir. 1999), the court upheld the use of a skill test to determine which employees would survive a layoff precipitated by a reduction-in-force at an energy plant. The skill test was deemed important by the employer because employees would be expected to assume newly multi-tasked functions after the workforce reduction.

In developing the test, a professional psychologist retained by the employer compiled a checklist of crucial power plant job tasks by interviewing maintenance workers and plant operators at power plants throughout the United States. Based on the checklist, an experimental testing battery was developed and sampled throughout the industry. Employee performance evaluations were then mathematically correlated with the test results, confirming that higher test scores indicated a likelihood of better job performance.

The skill test ultimately had a disparate impact on black employees, who in the aggregate scored less well than non-black test-takers. The court nevertheless upheld the test against a Title VII challenge, finding that it was "valid and job related," and that it was "necessary to determine which employees would be best suited to the new multi-craft positions." (Emphasis supplied.) Paying particular attention to the employer's comprehensive effort to develop a sound test that legitimately measured skills related to the jobs in question, the Allen court's approach affords greater latitude to employers while safeguarding protected-group employees from pretextual, discriminatory exams. Importantly, the Allen court's job necessity analysis, unlike the Lanning court's, allows an employer to use a test that seeks to discern the better candidates for the job, rather than simply those that are minimally qualified.

Ultimately, the U.S. Supreme Court will likely be asked once again to revisit the "educational necessity" and "business necessity" standards under Titles VI and VII. The future of the nation's efforts to raise employment and educational standards will depend on its response.

Brian W. Jones, is a labor and employment attorney with Curiale Dellaverson Hirschfeld Kelly & Kraemer in San Francisco. He also serves as a director of the Center for New Black Leadership in Washington, D.C., and edits the Civil Rights Practice Group Newsletter.