The Department of Justice’s Office of Legal Counsel (OLC) issued a Memorandum Opinion for the Chair of the Equal Employment Opportunity Commission (EEOC) stating that the EEOC’s current interpretive rules and guidance interpreting the disparate-impact provisions of Title VII of the Civil Rights Act are unconstitutional. In response to the OLC Memo, EEOC Chair Andrea Lucas stated: “We believe this opinion will provide clarity regarding the Constitutional limits of disparate impact in employment discrimination matters.”[1]
In its Memo, OLC articulated the position that the EEOC’s existing guidelines are unconstitutional because “[r]ather 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.”[2] OLC stated that “[b]ecause 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 decisionmaking to avoid liability” and “[t]hat approach is unlawful and unconstitutional.”[3] According to the OLC, the EEOC’s current approach pressures employers to engage in race-based decision-making to avoid liability for statistical disparities and thus “allows the government to engage in race discrimination indirectly.”[4]
The OLC Memo further concludes that the EEOC’s Affirmative Action Guidelines are “inconsistent with Title VII and prohibited by the Constitution” because they “purport[] to authorize—and expressly encourag[e]— racial preferences . . . in response to actual or anticipated disparate impacts.”[5] And the OLC Memo states that the EEOC Guidelines “unconstitutionally saddle employers with an atextual and onerous validation requirement for employment practices that are presumptively job-related and matters of business necessity.”[6]
The OLC identified three limiting principles to the EEOC’s approach that it views as necessary to avoid constitutional concerns with potential disparate impact liability:
- The business-necessity defense should not impose a high bar; employers need only show that a challenged practice rationally serves a “valid business purpose”;
- Plaintiffs must identify the specific employment practice alleged to have caused the disparate impact and establish causation as to that practice; and
- Plaintiffs must identify an available alternative practice that would be equally effective in serving the employer’s “valid business purpose” and cause less disparate impact.[7]
The OLC Memo further explains that workplace requirements and selection procedures such as background checks, aptitude tests, SAT scores, and similar facially neutral tools are “presumptively job-related, and only irrational or arbitrary practices with no plausible job-relatedness” can create disparate-impact liability.[8]
In light of the OLC Memo, employers should review any relevant practices, including validation-study practices, voluntary affirmative-action plans, and any policies that use race, sex, or other protected characteristics in employment decisions. Because the opinion reflects the DOJ’s interpretation and does not itself amend Title VII or bind courts, employers should evaluate any changes in light of existing law and further agency action.